Mortgage rates have a painful history with Fed rate cuts ✂️🤕📈
The Week Ahead
WEEK AHEAD 🗓️
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The first FOMC meeting and Fed rate policy decision of 2026 is scheduled for Wednesday Jan 28.
This week there is also a collection of backlogged data from 2025, including durable goods on Monday, factory orders and U.S. balance of trade on Thursday, plus the December Producer Price Index (PPI) report on Friday.
Along the way there is a dose of current econ data, with Conference Board Consumer Confidence and Home Price data on Tuesday, Jobless Claims on Thursday, and the Chicago Business barometer survey on Friday.
The emphasis this week will of course be on the Fed, especially after the Trump DOJ subpoenaed Chairmen Powell two-weeks ago, in what many consider to be a pressure tactic for more rate cuts.
However, a purely data-driven Fed doesn’t seem to have much room for another 25-bps.
The 2-Year bond is a strong barometer of where markets think the “Fed Funds Rate” should be set.
It is also a popular belief that the 2-Year actually dictates Fed policy - hence why I reference “the tail that wags the dog”.
If The Fed does use the 2-Year as a guide, then they are probably comfortable with keeping rates unchanged, at least until we get through the post-shutdown economic backlog.
Without up-to-date information, the Fed (and markets) are flying more blind than usual.
It’s also worth pointing out 5 of the last 6 rate cuts have not been bond friendly.
I suspect another rate cut this week will make 6 out of 7.
Monday I will take a deeper look at how mortgage rate prices, bond spreads, and longer-term trends are unfolding in my Monday Data Deluge.
The latest Lock-O-Meter risk scores and rate lock recommendations will be posted with it.
In the meantime, check out this week’s Mortgage Rate Price Tracker for a closer look at how specific mortgage rates have changed.
Thanks for reading.
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