The stock market is down, and bond yields are following, which means mortgage rates continue to improve. We officially broke through the 4.00% yield floor, hitting 3.971% as of this morning.

That’s good news.

However, rates now need to hold these gains.

The biggest challenge? The latest Producer Price Index (PPI) report.

• Headline inflation rose 0.5% (we expected 0.3%).
• Year-over-year inflation declined to 2.9%, but expectations were 2.6%.

In short, inflation is cooling, just not as fast as projected.

What does that mean? Less motivation for the Fed to cut rates. They remain laser-focused on inflation.

Now this next part is important.

The Bureau of Labor Statistics (BLS) jobs report has a major influence on economic policy, but job growth has been overstated. The primary issue is something called the “Birth-Death Model.” This model estimates job creation from new businesses opening (births) and subtracts estimated losses from businesses closing (deaths).

Here’s where it gets interesting:

In April, May, and June of 2025, the Birth-Death model added 74,000 jobs to payroll estimates.

Today’s updated data shows the actual number was a negative -321,000 jobs.

That’s an overstatement of 395,000 jobs.

The sheer breadth of these downward revisions is staggering.

So what does this mean for interest rates?

Lower.

When economic data weakens and job growth is revised down significantly, investors move money into safer assets like bonds. That “flight to safety” pushes bond prices up and yields down, which ultimately helps mortgage rates improve.

We just need the bond market to keep believing the trend.

Time to get pre-qualified, soft credit pull. http://www.YourApplicationOnline.com