The inflation beast may finally be getting tamed.

The latest PPI report came in weaker than expected, adding another piece to the growing story that inflation is cooling. After the softer CPI reading earlier this week, today’s PPI data gives the bond market another reason to breathe a little easier.

And the market is responding.

Rates are improving.

This is exactly the combination we’ve been looking for: softer inflation + a weakening labor market means more room for the Federal Reserve to consider lower rates.

Last week’s weak jobs report showed the labor market losing momentum, and now we’re seeing additional evidence that inflationary pressures may be easing. If this trend continues, the argument for the Fed to maintain higher rates becomes increasingly difficult.

Nothing is guaranteed, and we still have plenty of geopolitical and economic uncertainty. But for mortgage rates, this is the direction we want to see.

The beast isn’t dead yet—but we’re starting to tame it. 🐉

Lower inflation. Weaker jobs. Better rates.

Now let’s see what the Fed does with it.

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