The inflation print landed on the hot side. August producer prices rose 0.4% on the month, seasonally adjusted, and 5.4% over the twelve months ended in August; the core cut — final demand less foods, energy and trade services — was 0.3% on the month and 4.7% on the year. Weekly jobless claims came in at the same hour, 206,000 for the week ending September 5, down 1,000, with the four-week average also 206,000 and continuing claims 1,774,000. Producer inflation running and no labor softening to offset it is the combination the bond market handles worst. Bankrate's conventional 30-year printed 6.85% this morning, two basis points above yesterday's 6.83% and back into the upper part of the range. The supply story is still underneath it: the 10-year Treasury was 4.80% at its last published read on September 8, after Treasury announced a $6 billion buyback round that the market answered by selling rather than rallying.
The rest of the week is the whole trade. August CPI lands tomorrow, Friday September 11, at 8:30 a.m. Eastern — the second half of the inflation pair, with today's PPI already printed above trend. The FOMC then meets Monday and Tuesday of next week, September 15 and 16, and that meeting carries a Summary of Economic Projections, so a dot plot comes with it: statement 2:00 p.m. Eastern on the 16th, press conference at 2:30. Two levels are worth having on the screen. 6.91% is the top of both the 30-day and 90-day ranges and has been touched twice in three weeks without holding; 6.67% is the 30-day floor. A hot CPI tomorrow puts the first one in play before the committee ever speaks.
Today's 6.85% sits nine basis points above the 30-day average of 6.75% and seventeen above the 90-day average of 6.68%. The 30-day band is 6.67% to 6.91% and the 90-day band is 6.47% to 6.91% — so the quote is in the top quarter of one and the top eighth of the other. Freddie Mac's weekly PMMS reads the same direction from a slower angle: 6.71% as of September 3, up five basis points on the week and two on the month. There is no version of the last three months in which rates came down; the June 12 Bankrate print was 6.57%, which is twenty-eight basis points below today. Government pricing has not opened any relief either — FHA is 6.57% and VA 6.55%, both twenty-eight to thirty basis points under conventional, the same spread as yesterday. Jumbo went the other way, adding ten basis points to 6.91% and crossing back above conforming after a week below it.
The segment that matters today is the approved-and-floating file with no cushion. Anybody who talked themselves into floating through PPI now has to decide about CPI with the first print already against them, and the difference between 6.85% and a retest of 6.91% is real money on a purchase with a tight debt-to-income ratio. The second segment is the borrower whose current rate starts with a 7 and who has not run the numbers since spring — on a $400,000 loan, 7.25% is about $108 a month above today, which is not a refinance on its own but is enough to justify a conversation about a term change or a cash-out that solves something else. Do this today: sort your floating approvals by remaining cushion and call the tightest five before tomorrow's 8:30 print.