Mortgage Rates

Both the Consumer Price Index (CPI) and Producer Price Index (PPI) reported figures that were either entirely in line with expectations or just slightly below them. This does not set any new precedent for the potential of a rate increase from the Federal Reserve, as inflation is still rising, just at a largely expected rate.

Retail sales have also shown signs of a slump compared to previous quarters, with gas prices and Amazon Prime Day among the primary culprits. This isn’t necessarily a broader indicator of overall economic health, but there is certainly pressure being felt from persistent inflation across both consumer and manufacturing sectors.

Consumer Price Index
CPI increased 0.1% m/m (3.4% y/y) following a 0.4% monthly decline in June. The core index rose 0.2% after having been unchanged in June. The Action Economics Forecast Survey expected a 0.1% monthly gain for the headline index and a 0.2% monthly increase for the core index. The 3-month rate for the headline index fell to 0.5% annualized in July from 2.8% in June while the 3-month rate for the core index slipped to 1.6% from 2.3% in June.

Producer Price Index
The producer price index, a measure of underlying inflation pressures, was unchanged for the month, below the 0.2% Dow Jones consensus estimate and after falling 0.1% in June. The June figure was revised from a previously reported decline of 0.3%. Excluding food and energy, the core PPI rose 0.2%, against the forecast for a 0.3% gain. The core PPI excluding trade services increased 0.4%.

Primary Mortgage Market Survey Index

• 15-Year FRM rates saw a decrease of -0.05%, bringing the current rate to 5.96%.
• 30-Year FRM rates saw a decrease of -0.02%, bringing the current rate to 6.67%.

MND Rate Index

• 30-Year FHA rates saw an increase of 0.01%, with current rate at 6.29%.
• 30-Year VA rates saw an increase of 0.01%, with current rate at 6.31%.

Jobless Claims
Initial Claims were reported to be 209,000 compared to the expected claims of 204,000. The previous week landed at 199,000.

What’s Ahead
A very light release week proceeding the inflation data, with only the economic leading indicators having any outsized influence.

While unemployment rates have fallen to their lowest levels since 2025, they have not fallen for the right reasons. Many people who have dropped out of the labor force have also stopped looking for work, which can skew the unemployment numbers. This has been followed by a smaller-than-expected increase in hourly pay, which has continued to lag behind inflation, especially in the current environment.

This weakness has also been reflected in a reduction in overall payrolls, indicating an overall decline in employment. As a result, these labor market conditions could make the Federal Reserve more hesitant to raise rates.

U.S. Employment Rate
The U.S. unemployment rate fell for the second month in a row, to 4.1%, a level it last reached in June 2025. Ordinarily that would be good news. This time it wasn’t. The unemployment rate declined because 264,000 people dropped out of the labor force. In other words, they stopped looking for work.

Payroll
Economists surveyed by Bloomberg had expected a gain of 80,000 positions, an improvement from June’s revised addition of 20,000 jobs. Those predictions were dashed as leisure and hospitality dropped 40,000 roles as the World Cup wound down and local government positions fell by 57,000. Retailers also axed jobs. 

Primary Mortgage Market Survey Index

• 15-Year FRM rates saw a decrease of -0.03%, bringing the current rate to 6.01%.
• 30-Year FRM rates saw an increase of 0.03%, bringing the current rate to 6.69%.

MND Rate Index

• 30-Year FHA rates saw a decrease of -0.06%, with current rate at 6.28%.
• 30-Year VA rates saw a decrease of -0.06%, with current rate at 6.30%.

Jobless Claims
Initial Claims were reported to be 199,000 compared to the expected claims of 204,000. The previous week landed at 198,000.

What’s Ahead
CPI and PPI inflation data will be released this week, while Consumer Sentiment and Retail Sales reports will provide a clearer picture of the overall economic outlook.

With the Federal Reserve meeting now concluded, and the board has decided to maintain current interest rates. However, attention remains focused on the potential for rate hikes at the next meeting. While inflation has continued to decline on a month-to-month basis, the overall year-over-year inflation rate remains well above the Federal Reserve’s target.

The PCE Index came in within expectations and has remained largely flat for the first time since the pandemic. Even so, inflation remains a significant challenge overall, as consumers continue to feel the effects of higher fuel and energy prices, along with rising household costs. Personal income data also indicates that wage growth has not kept pace with inflation.

PCE Index
The personal consumption expenditures, or PCE, index dipped 0.1% last month, the government said Thursday, to mark the first decline since 2020. Lower oil prices following a temporary truce with Iran were the chief source of falling prices.

Personal Income
Consumer spending rose again in June to cap off a strong second quarter, but households had to dig deep into their savings to pay for their purchases after a recent surge in inflation. Personal spending rose a modest 0.3% last month, the government said, but it followed even bigger increases in both May and April.

Primary Mortgage Market Survey Index

• 15-Year FRM rates saw an increase of 0.08%, bringing the current rate to 6.04%.
• 30-Year FRM rates saw an increase of 0.08%, bringing the current rate to 6.66%.

MND Rate Index

• 30-Year FHA rates saw a decrease of -0.03%, with current rate at 6.34%.
• 30-Year VA rates saw a decrease of -0.03%, with current rate at 6.36%.

Jobless Claims
Initial Claims were reported to be 197,000 compared to the expected claims of 200,000. The previous week landed at 187,000.

What’s Ahead
U.S. Trade Balance, U.S. hourly wages and employment data, and consumer credit figures will be released next week. However, it is unlikely that these reports will have a significant impact on the Federal Reserve’s next rate decision.