Mortgage rates improved yesterday following the release of the June PPI (wholesale) inflation report, which showed that PPI fell to 2.3%, below the expected 2.5%. Core PPI inflation decreased to 2.6%, also below the expected 2.7%. Month over month, there was 0% inflation for June, which was below the expected 0.2%.

This came after the less positive June CPI inflation report, which showed inflation rose to 2.7%, above expectations of 2.6%. Core CPI inflation rose to 2.9%, slightly below the expected 3.0%. A positive change was that inflation due to shelter costs declined, and the increase was blamed on tariffs.

There was some drama surrounding talks of Trump firing Fed Chair Powell (besides the fact that the Supreme Court ruled that the president doesn’t have that power), which caused bond and mortgage rates to move higher. Trump later dismissed that notion, and mortgage rates corrected.

There appears to be a misconception that a new Fed chair who lowers the Fed rate will cause mortgage rates to drop; however, this is likely inaccurate. To the contrary, it can increase mortgage rates due to higher inflation caused by lower rates.

Next week, the Fed is starting the blackout period until the next FOMC meeting on July 30th. The Fed is not expected to cut rates.