PCE INFLATION, JOBS REPORT, MORTGAGE RATES, + THE FED

Rates are FLAT?as we end the week!? Check em' out and then read our 30 second commentary below.?Rates are averages / examples for network use only: Pricing as of 11/1/2024 at 10:21 AM.

PCE INFLATION, JOBS REPORT, MORTGAGE RATES, + THE FED

Mortgage Rates Remain Steady

This week, mortgage rates held relatively flat as the U.S. 10-year Treasury bond remained stable between 4.2% and 4.3%, ending Friday morning just above 4.3%. With the upcoming election, financial markets remain cautious, and many consumers are waiting for a clearer outlook before making decisions.

Inflation Closes in on Federal Reserve Target

A Commerce Department report released Thursday (10/31) showed inflation nudging closer to the Federal Reserve's target. The personal consumption expenditures (PCE) price index rose by a seasonally adjusted 0.2% for September, with a 12-month inflation rate of 2.1%. These figures align with expectations, indicating that inflation is progressing towards the Fed's preferred 2% annual rate—a target it hasn’t met since February 2021.

However, the core PCE inflation, which excludes food and energy, rose 0.3% monthly and reached an annual rate of 2.7%, slightly above forecasts. This suggests persistent inflationary pressures in some sectors even as overall inflation inches down.

Federal Reserve Rate Cut Expected

Markets are anticipating another rate cut by the Federal Reserve at its upcoming meeting. In September, the Fed made an unexpected half-point cut, a rare move outside of a recession, which reflected its confidence in achieving stable inflation. Despite positive progress on inflation, the Fed remains concerned about labor market strength, even as hiring has continued steadily.

October Employment Report: Hiring Slows

According to Friday’s (11/1) report from the Bureau of Labor Statistics, job creation slowed significantly in October. Nonfarm payrolls increased by only 12,000, the smallest gain since December 2020, impacted by recent storms and a notable labor impasse. This fell well below the anticipated 100,000 increase. Despite this, the unemployment rate held steady at 4.1%, and a broader measure, which includes discouraged and underemployed workers, remained at 7.7%.

Markets Hold Steady Amid Lower Hiring Numbers

Despite weaker job growth, markets responded positively, with stock futures pointing up, and Treasury yields fell. The modest job gains and steady wage growth may further support the Fed’s expected rate cut.

Stay tuned next week for updates on Fed decisions and potential shifts in mortgage rates.

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