Rate Watch As the Second Half Begins

Mortgage and Lending with Watermark Capital NMLS #311662

We saw rates pop last Friday. This was due to a strong jobs report. If there is strong economic data, the Fed will translate that data to mean the economy is doing well (and no need to fear a recession) and therefore more aggressive rate hikes to battle inflation are warranted. The markets will cheers to the bad news/data because that means the Fed won’t raise rates.


The unemployment data, however, does not consider everyone who is unemployed. For example, it only considers those that are not working but actively looking for work within the past 4 weeks (if you are unemployed and haven’t done a job interview, you are not included).


We have an incredibly important week. We get the CPI numbers, and inflation expectations and hear from a few Fed members. Rates will be volatile. I think the most important piece of data in the CPI will be the month-over-month change. Remember, we already saw a year-over-year decline in May’s report, but we have yet to see a month-over-month decline (or even flattening). The importance of the month-over-month decline is the market will assume that inflation has peaked, and they will believe there will be no more rate hikes and we will go back to the asset inflation celebration.


The Calendar This Week




  • 3 Year Inflation Expectations
  • NY Fed President John Williams Speaks




  • Richmond Fed President Tom Barkin Speaks




  • CPI Data Released




  • Initial and Continuous Jobless Claims
  • Fed Gov. Chris Wallace Speaks




  • 5 Year Inflation Expectations
  • Atlanta Fed President Raphael Bostic Speaks
  • Retail Sales Data


Keep in mind that GDP is coming out at the end of this month. Q1 was revised down an extra .2% so we do have a -1.6% contraction. Q2 should also be negative. If so, a lot of economists define a recession as 2 quarters (back to back) of negative growth. A lot will point to the low unemployment numbers to counter the “recession” debate, but it is something to be aware of.


Chart Check (see above)


The trend continues to be down. We had a great week 2 weeks ago, and another one end of May. Besides those, it has been a volatile roller coaster with the 30yr MBS trending downward. The story continues to be the same: inflation needs to be tackled first, and then a recession – if it comes.


This chart looks like it wants to push lower, but again, everything is depending on this week’s CPI report. If we get decreased inflation, get ready for those price improvements.



Click HERE to stay current with the Fed’s meetings this year. You can also view the statements and minutes from previous meetings.

Posted by

Matt Brady

Branch Manager, NMLS ID#311662

(858)342-8659 cell |

8885 Rio San Diego Dr │ Suite 201  San Diego, CA 92108     


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Comments (3)

Ray Henson
eXp Realty of California, Inc. (lic. #01878277) - Elk Grove, CA

Thank you for your update.  Do you think a formal declaration of a recession could help ease or reduce lender rates?

Jul 11, 2022 09:17 AM
Matt Brady

Hi Ray Hensen, 

My expectation is that we would experience a recession in the first or second quarter of next year and the Fed would be able to reverse course, lowering the funds rate they have been hiking all year to try and reign in inflation. So I see rates moving down beginnin in the middle of next year.

Jul 11, 2022 10:47 AM
Dave Halpern
Dave Halpern Real Estate Agent, Inc., Louisville, KY (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

If the administration calls off its war on oil then gasoline prices will fall, inflation will subside, and the need for interest rate hikes will subside.

Jul 11, 2022 07:51 PM
Matt Brady

Dave, you mean you are not on board with forcing people to buy electric cars powered by coal and gas from an already overwhelmed grid? You need to get on board with the program. We will run out of lithium in 40 years and then we can figure out how to dispose of all those batteries

Jul 13, 2022 11:38 AM
Anne Corbin
Long and Foster - Lake Anna - Spotsylvania, VA
Serving Lake Anna & Central Virginia

Let's hope current trends will sustain. I don't want to see rates go higher!

Jul 12, 2022 07:13 AM
Matt Brady

Unfortunately Anne Corbin we will experience more pain before we see any relief next year.

Jul 13, 2022 11:34 AM