Portland Mortgage Market Update — February 23, 2024

Rates are having a sunny end of the week but are being pinched between their three-week worsening trend and the 200-day moving average. If treasuries fall below the 200-day moving average today it is likely rates will worsen quite a bit. If they continue to be supported and bounce back, we should see an improvement through the beginning of next week. Time will tell because...

Next week brings a bunch of news! Housing Data! GDP! And the Fed's favorite inflation metric, the PCE report on Thursday! The PCE will be the big one to follow, with market expectations that the "Headline Inflation" dropping from 2.6% to 2.4% and for the core to drop from 2.9% to 2.8%. Remember, the Headline number is the weighted average of all the component price changes in PCE "basket". The Core number removes food an energy which are traditionally more volatile. A lower than expected reading on both will likely yield improved rates because...

The Fed has been on repeat this week that they are in no rush to drop rates. If there is one thing that can be said about this Reserve Board it is that they are consistent that their decisions will be based on incoming data. They will not rush into any decisions to raise or lower rates and have shown this to be the case. They were late to start increasing rates (if you remember them calling inflation "transitory" for some time) and it stung them. Then, last October we started to see inflation weakening and the market got out over their skis anticipating rate cuts, with some Fed members publicly saying they were open to cuts. Then the most recent bump to inflation reinforced their data-dependent ways so they are now resolute in waiting to be sure inflation is under control before cutting rates. Case and point: Fed Member Waller delivered a speech yesterday titled "What's the rush", where he anticipated the Fed cutting rates at some point this year, but they still needed a couple more months of data that inflation is falling before doing so.