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Kaitlyn Davis Loan Officer

NMLS ID: 2023181

Weakening Inflation Data Creates Dilemma for the Fed

By: Movement Team
July 14, 2023

The 10-year treasury yield, which is a key benchmark for mortgage rates, has been a rollercoaster the past few weeks. After the July 4th holiday, the 10-year yield hovered around 3.85%. However, following the release of the economic data we discussed last week, the yield surged past 4.05%, reaching its highest level since March. But, as of Thursday morning, the 10-year yield has retreated to 3.81%. The primary catalyst for this reversal was the softer-than-expected Consumer Price Index (CPI) data, which was announced on Wednesday. The CPI figures revealed a decrease across the board, indicating the ongoing weakening of inflation. 

This shows that the Fed rate hikes are having the desired results. The discussion remains the same: How many more rate hikes are needed? While the market still anticipates a 25 basis point increase in July, the possibility of a second hike remains uncertain. The labor market continues to demonstrate strength, extending the opportunity for a "soft landing." The Federal Reserve has consistently emphasized its commitment to achieving its inflation target of 2%. The question is, will we need more than one additional rate hike to achieve that goal?

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Author: Movement Team

About Movement Mortgage
Movement Mortgage exists to love and value people by leading a Movement of Change in its industry, corporate culture, and communities. Funding approximately $30 billion in residential mortgages annually, Movement is the sixth-largest retail mortgage lender in the U.S. Movement is best known for its innovative mortgage process and referable experience, which begins with Upfront Underwriting and a seven-day loan processing goal. The company employs more than 4,000 people, has more than 650 branches in the U.S. and is licensed in 50 states. After funding its balance sheet and investing in future growth, Movement's profits are paid to its primary shareholder, the nonprofit Movement Foundation. To date, Movement Foundation has received more than $360 million of Movement profit to invest in schools, affordable housing, communities, and global outreach. For more information, visit www.movement.com.

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