fed comments freeze mortgage rally

As expected, the Federal Reserve delivered another 25-basis-point cut to the inter-bank borrowing rate, known as the federal funds rate. This move had been widely anticipated, and markets had already priced it into current bond and mortgage valuations. However, because bond and mortgage markets are forward-looking, much of the optimism was tied to expectations of another cut in December. That’s where things went off script.

At the post-meeting press conference, Fed Chair Jerome Powell, visibly irritated by market assumptions, pushed back hard. He emphasized that a December cut was not predetermined, noting that the labor market remains “reasonably strong” and inflation “still too high for comfort.”

This splash of cold water was quickly reinforced by several Fed officials later in the week, who echoed Powell’s “not so fast” message. By week’s end, despite the 25-point rate cut, the 30-year mortgage rate had actually risen by nearly 20 basis points, alongside the 10-year Treasury yield.

In short, the Fed appears intent on seeing hard data—not just market sentiment—before committing to a more accommodative path. With the ongoing government shutdown limiting access to key economic reports, that data may be slower to arrive. In the meantime, expect mortgage and bond rates to tread water near current levels until more reliable readings on inflation and employment emerge.

Home Loan Rate Volatility: MODERATE
Home Loan Rate Trend: SLIGHTLY HIGHER