Mortgage Rates Move Higher Despite Decent Inflation Reading

Mortgage rates are based on bonds and bonds don’t like inflation.  When inflation reports are higher than the market expected, rates tend to rise, all other things being equal.  

But today’s inflation numbers were a bit lower than the median forecast. This scenario is typically more likely to push rates lower.  Indeed, in the first hour following today’s Consumer Price Index (CPI) release, bond trading implied lower rates. 

Then things changed.  

Recall our closing reminder from yesterday which qualified the conventional wisdom reactions, saying “even then, traders will look into the underlying composition of the number and assess whether changes were driven by tariff-dependent categories. For example, if CPI comes in at 0.2, but it was due to a big shift in…