Wednesday's PCE report did the damage, and it did it on the headline rather than the core. The Bureau of Economic Analysis put the headline index up 0.2% monthly and 3.7% annually, a tenth above forecast on both lines, while core landed on target at 0.2% and 3.3% — though the unrounded core figure was 0.246%, and Mortgage News Daily's read was that a number that nearly rounds up is not the reassurance a positioned market wanted. Ten-year yields had been near Tuesday's lows going into the 8:30 release and closed at 4.665% after repeatedly failing to break a 4.67% ceiling; the UMBS 30-year 5.5 coupon shed 0.13 to 99.41. Roughly three dollars of crude between 5am and noon Eastern added to it. Bankrate's 30-year conventional is 6.73% this morning against 6.70% yesterday, three basis points cheaper. This morning's jobless claims did not help the dovish case either — 203,000 for the week ending August 22 against 207,000 prior, a labor market that is still not cracking.
The calendar from here is front-loaded and then goes quiet. The Jackson Hole symposium opened today and runs through Saturday, with Chair Kevin Warsh's first keynote as Chair on Friday morning against a program themed on financial innovation in payments and policy. That speech is the single largest scheduled risk on this tape, and it is a genuine unknown — there is no prior Jackson Hole address from this Chair to calibrate against. Boston Fed President Susan Collins gave the hawkish frame on Tuesday, saying rates will need to rise soon absent a continued decline in inflation. After Friday, the data thins out: the 10-year series updates Monday, weekly claims return September 3, and the next real event is the September 4 employment report. The next FOMC is September 15-16 and it carries a Summary of Economic Projections, so Friday's tone is the only read on that dot plot the market gets for two and a half weeks. The next PCE report is not until September 30.
Against its own recent history, today is unremarkable and that is the point. The 30-day Bankrate band is 6.67% to 6.82% with an average of 6.74%, so 6.73% sits a hair under its own monthly average — dead center. Widen to 90 days and the band is 6.47% to 6.82% against an average of 6.65%, which puts today 26 basis points above the quarter's best print and only 9 below its worst. Rates are two basis points lower than a week ago and seven higher than a month ago; the honest description is stable in the high 6.7s, not trending in either direction. The MBA's own survey read 6.78% for the week ending August 21, a three-week high, and its application composite fell 1% with refinances down 2%. Nothing in the last month has opened a new refi cohort, and nothing this week has closed one either.
The segment that matters today is the note above 7.25%, because that math works at 6.73% and has worked all quarter without needing a rally to justify it — roughly $139 a month on a $400,000 balance, $104 on $300,000, $174 on $500,000. Those borrowers do not need a better rate, they need a phone call. The second list is in-flight files with locks expiring inside 30 days, where the calculus is simpler: a new Chair's first Jackson Hole keynote is a two-sided risk with no historical read, and there is no float case that survives it. Do this today: lock every in-flight file with a lock expiring within 30 days before Friday's 10am keynote, and call your 7.25%-and-up list while the payment gap is still worth their time.