Episode summary
Inflation misses estimates but rates still elevated
HousingWire Daily
· · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Logan Mohtashami argued that the June inflation report was a major miss, but it did not automatically translate into a big drop in mortgage rates because the market had already been pricing in a hawkish Federal Reserve. He said the 10-year yield fell sharply at first, then moved back up as other Fed officials kept a restrictive tone, leaving mortgage rates stuck in a familiar range rather than breaking lower.
He tied the rate outlook to three forces: Fed messaging, the labor market, and the conflict that has kept oil and inflation risks alive. Logan said the Fed had been warning that a hot print could force a July hike, so the downside surprise made that position harder to defend. Even so, he believes the Fed is still running the show and that a more dovish shift, or softer labor data, would be needed for a sustained move lower in yields.
On housing, Logan said mortgage rates are constrained by the relationship between Fed policy and long-term yields, and he does not expect a return below 5.75% unless policy and market conditions change materially. He also argued that China’s use of oil reserves has helped keep energy prices from spiking further, while the conflict remains the key wild card.
Key takeaways
- Logan Mohtashami said the June CPI miss was big enough to take a July rate hike off the table, but not big enough to force mortgage rates sharply lower.
- He said the 10-year yield stayed elevated because Fed officials kept a hawkish tone even after the inflation surprise.
- Logan argued that mortgage rates are still capped by Fed policy, and he does not see a path below 5.75% without a meaningful shift in rates or yields.
- He said oil and the conflict remain the main upside risk to inflation, while China’s reserve use has helped keep oil prices from surging.
- Logan expects the Fed to talk less and potentially change its communication strategy at the next meeting.
Notable quotes
“if we get another month-to-month print or you know, inflation's hot, we got to hike rates in July”
“the 10-year yield had a waterfall dive because it was elevated”
“until the Federal Reserve uh makes uh more dovish statements, and we're not going to have like supposedly any more forward-looking statements, we're kind of up here”
“I think when we get the new Fed uh meeting coming up, we'll see how much change he's going to really have for this year”
“And the core core non-services were negative”
How the episode opens
Welcome everyone. My guest today is lead analyst Logan Motashami to talk about that June inflation report and what it means for mortgage rates. First, here is the recap of the top five trending stories on housingwire.com.
At the top is Logan's article, July rate hike should be off the table with big June inflation miss. Followed by what the road to Housing Act means for agents and home buyers. And JMG brings 5.9 billion Team Ridge platform to Keller Williams.
Wrapping up the top five is the tracker, Iran conflict lifts mortgage rates but housing demand stays positive. And MBA analysis finds minimal pricing impact from single credit score approach. Great content over there and remember you can get 20% off your subscription with the code podcast 20.
Okay, we're ready to focus on today's discussion. Logan, welcome back to the podcast.
Again, it's wonderful to be here. We're going to have a very, very nerdy discussion because a lot just happened uh this morning. Uh and it wasn't just the big inflation uh uh uh miss.
Uh there's a lot going on because initially the 10-year yield had a waterfall dive because it was elevated um because you know, as we talked about uh yesterday, it was Christopher Waller that said, "Oh my lord, if we get another month-to-month print or you know, inflation's hot, we got to hike rates in July. So, if you're making vocal policies off of a number that you don't have, then all of a sudden it comes out as one of the biggest misses in history, then it's like, "Whoa, wait a second, homie. Y'all been talking about core inflation month-to-month and look at that.
Super core is even negative. So, bond yields had a waterfall drop, but then it slowly moved up uh throughout the day as Kevin Warsh was talking about it, and I'm sure there's other Fed people uh uh making still hawkish tone.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- june inflation report
- mortgage rates
- federal reserve rate hikes
- mortgage pricing expectations
- housing market demand
Watch the episode
Watch “Inflation misses estimates but rates still elevated” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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