Portland Mortgage Market Update — December 13, 2024

It was Inflation week! The CPI and PPI were both released this week, and one of them came in a little hotter than expected. The PPI reported at a .4% increase (vs the .2% estimated) and the CPI reported at the expected .3% increase. While the PPI is bad news for rates by way of hotter inflation, the market tried to temper the beatdown by focusing on some interesting labor data that was released at the same time.

First Time Unemployment claims spiked for the weeke ending December 7th, coming in at seasonally adjusted 242K vs the 220K forecasted. Remember, the Fed has a dual mandate to keep inflation down and the labor market strong, so while inflation didn't worsen significantly, this surprise in worsening employment puts pressure on the Fed to take notice. Currently, the market is betting an over 90% chance we see a 25 basis point cut at the Fed meeting next week.

Yes it is already coming up on the Fed week, with the meeting adjourning on the 18th. In addition to the anticipated rate cut, we get to see a new dot-plot chart for the Fed where we can get a gauge of how many rate cuts they are expecting to see next year.