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What happened this week??
The 10-year treasury yield, a key mortgage rate benchmark, has been volatile recently. After the July 4th holiday, it was around 3.85%. But, after the release of last week's economic data, it surged to over 4.05%, its highest level since March.
However, as of Thursday morning, it has dropped back to 3.81%.
The main reason for this change was the softer-than-expected Consumer Price Index (CPI) data announced on Wednesday, indicating weakening inflation. This suggests that the desired results of Fed rate hikes are being achieved.
The question remains: How many more rate hikes are needed to reach the goal?
While a 25 basis point increase in July is expected, the possibility of a second hike is uncertain. The strong labor market allows for a potential "soft landing." The Federal Reserve is committed to achieving its 2% inflation target, but it's unclear if more than one additional rate hike will be necessary.
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