A string of reports over the last few weeks showed that the economy wasn’t as weak as what was assumed, and the September inflation report showed inflation gains. Markets lowered their assumption of how quickly the Fed will cut rates. On top of that, the market is also pricing in the chances of former president Trump winning the election. This is a concern for higher inflation due to his tariff policies.

Today, we got some better news on inflation, with September PCE inflation down to 2.1%, in line with expectations of 2.1% and Core PCE inflation was unchanged, at 2.7%, above expectations of 2.6%.

The more significant news will be tomorrow’s October Jobs Report, the final jobs report before the November Fed meeting. We also have the elections, and the November Fed meeting will be just 2 days after the election. Markets see a 95% chance of a 25 basis point Fed rate cut (not mortgage rate).

There’s no way to know if these significant events will be good or bad for rates–only that the potential reaction is enormous.

Today’s national average 30-year mortgage rate is 7.03%