What’s Happening?
All news below is color-coded as “good“, “bad“, or “neutral” for mortgage rates.
•Government is shut down (good for rates): The government shut down on October 1st as congress deliberates over a new budget that has yet to be passed. This uncertainty pushes money into bonds which helps keep rates down. Once a new budget is passed, the market will react, especially since some reports (like the BLS jobs report) aren’t being released during the shutdown.
•Federal Reserve cut rates on 10/29 however future rate cut expectations have diminished (bad for rates): You probably heard the news this week that the Federal Reserve cut interest rates by 0.25%, but the real news is the Fed Chairman cast some doubts on the likelihood that they’ll cut rates again during their December meeting and into 2026. The probability of another cut in December dropped from 95% last week to only about 60% now and if they do cut, it’s probably the last one we see until next summer. Market uncertainty is generally bad for rates so we might be holding at current rates for the next several months unless we have a bombshell inflation or jobs report.
•Jobs Report (neutral for rates): The September BLS Labor Report has not been released due to the government shutdown. Markets will react once the next report is released.
•Inflation Report (good for rates): The September CPI (Consumer Price Index) and PPI (Produce Price Index) reports were released last week. Headline inflation came in at 3.0% versus the 3.1% expected and the 2.9% we saw in August. Lower-than-expected inflation numbers like these help keep mortgage rates down. Although CPI is remaining higher than it has been for most of 2025 (~2.4%), markets don’t seem to mind too much due to the Fed’s more prominent focus on the labor market.
