Mortgage Rates Today, Oct. 7, 2024: Mayhem for Rates Last Friday

In brief

Last Thursday, we wrote about our fears for the following day's jobs report. We were right to be scared. But even we didn't anticipate such a huge surge in mortgage rates.

Friday's climb wasn't a record movement for a single day. But such a large jump was rare indeed.

So, what now? Well, such sharp changes are often followed by corrections as markets move past their panic.

But these can't be relied on and tend to be limited. And, looking at bond yields overnight, there were few signs we'd see a drop in mortgage rates today. Maybe tomorrow or soon.

The lead story on MarketWatch earlier was, "Stock market’s soft-landing rally faces CPI inflation test." And the same goes for bond markets and mortgage rates. This Thursday's consumer price index (CPI) is the most likely economic report to improve or worsen those rates this week. Read on for more.

Meanwhile, fears over a possible escalating war between Israel and Iran continue to push oil prices higher. These concerns exert an upward pressure on mortgage rates and likely contributed to Friday's big jump.

That's because increases in oil prices are likely to rekindle inflation if tensions continue for long. And any resurgence in consumer prices could see the Federal Reserve pause future rate cuts and possibly even reverse the one it just made.

Coming up

Mortgage rates today, tomorrow and Wednesday

With mortgage rates already contending with the aftermath of Friday's jobs report, continuing tensions in the Middle East, and a looming CPI, they don't need more distractions.

And they probably won't get any from the economic reports scheduled for the first three days of this week. Four are on the calendar but they're all ones that rarely affect mortgage rates in a noticeable way. They are:

• Today — Consumer credit in September
• Tomorrow — September small business optimism index from the National Federation of Independent Business. Plus the trade deficit for August
• Wednesday — Wholesale inventories in August

Wednesday also brings publication of the minutes of the last meeting of the Federal Reserve's rate-setting committee. These sometimes provide additional helpful insights into the Fed's thinking. But so much of great importance has happened since the meeting that the minutes will likely be woefully outdated.

Instead, markets may look for such insights from the speeches of senior Fed officials. And no fewer than 10 such speeches are scheduled over the first three days of this week.

Two are due today, from Fed Governor Michelle Bowman and St. Louis Fed President Alberto Musalem. And mortgage rates might move in response to their remarks, though we doubt they'll generate big changes.

Fed speeches might have a bigger impact later in the week when more speakers have added their opinions, helping investors to identify a consensus.

Thursday and Friday

There are more Fed speeches due on Thursday and Friday. But those days are all about inflation, with Thursday's CPI for September by far the most potentially influential report this week. MarketWatch says markets are expecting three of the four headline figures to show consumer price rises continuing to slow a little and the fourth holding steady.

Normally, that would be great, although mortgage rates tend to fall when price rises slow even more than markets are expecting.

Our only concern is if events in the Middle East get worse before the report lands. If, by Thursday morning, oil prices are much above $80 a barrel, investors might view the CPI as already out of date because future higher prices will effectively be inevitable.

The same applies to Friday's report, the September producer price index (PPI). That's the CPI's much less important sibling. PPIs measure price changes earlier in the supply chain than retailer's shelves so often predict future CPI movements.

We'll brief you more fully on the CPI and PPI before they land.