Mortgage Rates Hold Steady
It was a very light week for economic reports last week with few market moving events. As a result, mortgage rates ended the week with little change.
ISM Reports Show Mixed Signals
Two significant economic reports released by the Institute of Supply Management were a bit weaker than expected. The ISM national services sector index fell to 50.1, and the national manufacturing index dropped to 48.0. Readings above 50 indicate an expansion in the sectors and below 50 a contraction. Service firms continue to outperform manufacturers, but higher tariffs on foreign goods may help domestic manufacturing companies narrow the gap over time.
Jobless Claims Edge Higher
The Department of Labor releases the total number of new claims for unemployment insurance each week. The latest reading was 226,000, up from 218,000 last week and slightly above the consensus forecast. Bigger picture, this was far below the inflated figures seen during the early months of the pandemic, and in line with the levels which were typical during 2019. Weekly jobless claims are important because they are one of the timeliest indicators of labor market trends. While other recent economic reports suggest that companies may be scaling back on hiring new employees, this report indicates that they remain reluctant to lay off workers.
Core PCE Holds Steady
Fed officials keep a close eye on inflation, and the PCE price index is their favored indicator. In June, Core PCE was 2.8% higher than a year ago, the same annual rate of increase as last month and matching the consensus forecast. Progress toward the 2.0% target of the Fed has not been easy, and this desired level has not been achieved since February 2021. The big question remains how large an impact higher tariffs will have on future inflation levels.
Trade Deficit Falls Sharply
The U.S. trade deficit surged to a record high of around $140 billion in March, as companies and consumers rushed to purchase ahead of potentially higher prices due to increased tariffs. With the easing of trade tensions, however, more typical levels have returned over the last few months. In June, the deficit was down to just $60 billion, which was below the consensus forecast.
Mortgage Rates for the week of 8-11-2025