Inflation Climbs

Although oil prices climbed, it was another good week for mortgage markets. Investors continued shifting money out of riskier technology stocks and into safer investments, including bonds, helping push mortgage rates lower.

The Fed meeting on Wednesday revealed no significant surprises. As anticipated, the Fed left the federal funds rate unchanged at a range of 3.75 to 4.00%, and the meeting statement was nearly identical to the prior one. Notably, two of the twelve voting Fed officials dissented from the decision, preferring to raise rates by 25 basis points, an unusually high level of disagreement. Fed Chair Warsh continued to emphasize that future policy decisions will depend on incoming economic data rather than providing specific guidance. Although the Fed maintained the status quo at this meeting, most investors anticipate a rate hike at the next meeting in December.

Gross Domestic Product (GDP) is the broadest measure of economic activity. During the third quarter of 2026, U.S. GDP grew at an annualized rate of 3.4%, above the consensus forecast and up from 2.2% in the second quarter. Consumer spending and business investment remained solid, with much of the business growth tied to continued investment in artificial intelligence. In particular, business spending on mostly technology equipment surged 21%, the most since 2020.

Bottom Line: Expect more volatility in mortgage rates as investors weigh comments from Fed officials, upcoming economic reports, and changing oil prices tied to the conflict in the Middle East. For homebuyers and homeowners watching rates, inflation data will be especially important in the weeks ahead.

Looking ahead, the conflict in the Middle East and oil prices will remain a major focus. For economic reports, the ISM national manufacturing sector index will be released on Monday and the services sector index on Wednesday. JOLTS and the Trade Deficit will come out on Tuesday. The key Employment report will be released on Friday, and these figures on the number of jobs, the unemployment rate, and wage inflation are always closely watched.