The print came in on the soft side of the risk. BEA's August core PCE price index rose 0.2% on the month and 3.0% from a year ago, headline rose 0.3% and 3.4%, while personal spending jumped 0.9%. The 10-year was trading near 5.24% after the release, a little under Tuesday's 5.26% close, which reads as bonds taking a breath rather than a reversal. Bankrate's conventional 30-year is 7.34% this morning, up one basis point from 7.33% and 23 above the 7.11% of a week ago; its FHA 30-year rose to 7.11% and VA to 7.14%. The spending number is the catch in the report: MPA reads the cooler core as dimming October hike odds, but a 0.9% jump in outlays is the demand side the Fed has been watching. Note that this release carries BEA's annual revision, back to January 2021, so prior months have moved too.
NEXT, Freddie Mac's survey and weekly jobless claims land tomorrow, Thursday, October 1 (claims last printed 197,000), and the September jobs report arrives Friday, October 2, with unemployment last at 4.1%. The next FOMC meeting is October 27–28 and carries no new dot plot. With PCE out of the way, Friday is the print that can reprice the curve before that meeting: a strong payroll number puts the hike conversation right back on the table, while a soft one gives bonds room to retrace part of this month's move.
On range, the conventional 30-year is at the top of both windows: 6.75% to 7.34% over 30 days (average 7.01%) and 6.54% to 7.34% over 90 days (average 6.80%). That is 59 basis points of climb from this month's low. The 15-year is at 6.70%, also the top of its 90-day range of 5.85% to 6.70%. On a $400,000 loan, principal and interest at 7.34% is about $2,753 a month, against about $2,594 at this month's 6.75% low. Mortgage News Daily's 5/1 ARM index is 6.87%, and the MBA reported ARMs rose to 10.3% of applications last week, priced about 80 basis points under fixed.
The borrowers to focus on today are purchase clients who are floating inside 30 days of closing. The PCE print took one risk off the board but left Friday's, and a quarter point either way moves the $400,000 payment by about $68 to $69 a month. For clients who are further out, or who are stretching on payment, an ARM or a seller-paid buydown quote is worth putting next to the fixed number. Do this today: call every client floating inside 30 days of closing, show them their payment at today's rate and a quarter point higher and lower, and get a lock-or-float decision before Friday morning.