Core PCE cools to 0.2% as the 30-year holds 7.34%

The number the market waited all week for landed this morning, and it leaned soft. The BEA says the core PCE price index rose 0.2% in August and 3.0% from a year ago, with the headline index up 0.3% on the month and 3.4% on the year. The catch is on the other side of the ledger: personal spending jumped 0.9% while income rose just 0.2%, and the saving rate sits at 4.1%. Two reads on this: MPA frames the cooler core print as dimming the odds of an October hike, while the spending surge is exactly the kind of demand signal that keeps the Fed wary. One more caveat worth knowing before you quote anything: this release carries the annual update of the national accounts, with revisions reaching back to January 2021, so month-to-month comparisons against what you remember from earlier this year may not line up.

Yesterday's brief covered the 30-year climbing to 7.33% as markets priced a possible October hike. Bankrate's 30-year fixed is 7.34% this morning, the top of both its 30-day range (6.75% to 7.34%) and its 90-day range (6.54% to 7.34%), and 23 basis points above where it sat a week ago. The 10-year Treasury is near 5.24%, a touch under yesterday's 5.26% close.

The rate pressure is already showing up in the pipeline. The MBA's weekly survey for the week ending September 25 had the composite index down 6%, refinances down 9% (56% below a year ago) and purchase applications down 4%. The MBA's 30-year conforming contract rate rose for a sixth straight week to 7.30%, which the MBA's Joel Kan called the highest since November 2023. ARMs rose to 10.3% of applications, the highest share since October 2025, priced about 80 basis points under fixed. Meanwhile FHFA's House Price Index rose 0.3% in July and 2.6% from a year ago, so buyers are facing firmer prices and higher rates at the same time.

For rates and originations, today's print does not settle the October question on its own. The next FOMC meeting is October 27–28 (no dot plot at this one), and before then come weekly jobless claims and Freddie Mac's PMMS tomorrow, then the September jobs report on Friday. A softer core number takes some pressure off, but a strong payroll print could hand it right back. Borrowers who are within their lock window and comfortable with today's payment have a reason not to wait on Friday; for anyone further out, an ARM or a seller-paid buydown is now a real part of the conversation, with ARMs priced well under fixed.

On the credit side, FHFA Director Bill Pulte announced that Fannie Mae and Freddie Mac will move to one pricing grid, with VantageScore 4.0 joining the existing Classic FICO grid. That replaces the separate VantageScore grids introduced earlier this month, which priced VantageScore 4.0 scores 20 points lower than FICO. The announcement came by social media post; watch for the Fannie Mae lender letter and Freddie Mac bulletin that write it into the pricing exhibits, since the published grids govern until they do. Rocket Mortgage separately said it will make VantageScore 4.0 its default model for eligible loans. Elsewhere: a federal judge in the Western District of Washington denied Zillow's motion to dismiss an antitrust suit alleging it ties its agent referral program to Zillow Home Loans and its Follow Up Boss CRM; HUD's Section 184 upfront guarantee fee rises to 1.50% tomorrow, October 1; and CSBS launched a Nonbank Industry Advisory Council to bring industry members into dialogue with state supervisors.