Episode summary
July rate hike in play if inflation is hot this week
HousingWire Daily
· · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Logan Mohtashami argued that inflation week has become a crucial test for mortgage rates because the Fed has turned more hawkish just as geopolitical risk has risen. He said Christopher Waller, once a dovish voice, is now signaling that July rate hikes are on the table if core inflation comes in hot, and he emphasized that the Fed is now focused on month-to-month core readings rather than headline inflation or lower oil prices.
Mohtashami said the bond market is reacting to both the conflict and the Fed’s messaging, with the 10-year yield already elevated and mortgage rates vulnerable to further upside. He argued that lower oil prices no longer guarantee lower rates because Fed policy and hawkish rhetoric are doing most of the work. In his view, anything above 0.2% month-to-month core inflation would be a problem, while 0.3% to 0.5% would strengthen the case for rate hikes.
He also said the worst-case setup could push mortgage rates just above 7%, which would likely slow housing demand. Even so, he noted that much of the bad news is already priced in, and the market now needs either softer core inflation or a calmer geopolitical backdrop to prevent rates from rising further.
Key takeaways
- Logan Mohtashami said Christopher Waller now sees July rate hikes as possible if core inflation worsens.
- Mohtashami said the Fed is focused on month-to-month core inflation, with 0.2% or lower looking acceptable and 0.3% to 0.5% no longer tolerable.
- He said the conflict is helping keep the 10-year yield elevated even as oil prices fall.
- Mohtashami said mortgage rates could move just above 7% in a worst-case scenario, which would pressure housing demand.
- He argued that lower oil prices alone will not pull rates down because Fed policy is doing most of the pricing work.
Notable quotes
“Waller basically said today hikes are on the table in July in a few weeks if if inflation is worse”
“The Federal Reserve does not do just one rate hike. They do multiple rate hikes”
“focus on the month-to-month, not the headline. The headline data might on a year-over-year basis might look better”
“anything like 0.3, 0.4, 0.5, these are no longer tolerable by even dovish people on the Fed anymore”
“when the conflict is over, the base right now should be 6.5 to 6.75 because Fed policy has gotten restrictive during the conflict”
How the episode opens
Welcome everyone. My guest today is lead analyst Logan Mohtashami to talk about inflation and mortgage rates. First, here's the wrap-up of the top five trending stories on housingwire.com.
Leading the list is the passage of the Road to Housing Act, followed by JMG brings $5.9 billion brokerage platform to Keller Williams. That's a huge deal. Next is our RealTrends Verified City Rankings and a really interesting one, new policy impact may ignite a manufactured housing blue sky era.
Finally, our coverage of data centers emerge as real estate's newest pricing wildcard. Okay, we are ready to get started. Logan, welcome back to the podcast.
It is wonderful to be here and the hawks are definitely in control. It's inflation week. We're shooting missiles.
We're guardian of the Strait of Hormuz. All these things are not good in this uh current environment and when this podcast comes out and inflation will come out and we wrote the article yesterday about like what to look for, but we're also going to have Fed for Fed uh uh uh people speak to uh today and also Christopher Waller, the dove is becoming a super hawk. So, it'll be a very interesting week to see how this settles out by the end of the week.
Okay, let's talk about uh Waller's statements because they were pretty they were pretty out there. So, let's start with that because we Last week we talked about what um Beth Hamrick had said. We talked about uh other people. What is Waller saying?
To To me, Waller kind of wants to be the ringleader now of where he was a ringleader of being dovish last year. He wants rate hikes uh if core inflation. Now, you know, when we wrote the article, you know, we talked about another dove um John Williams of the New York Fed, and he basically says hikes are on the table if inflation core inflation.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- mortgage rates
- inflation week
- fed rate hike expectations
- ten-year yield
- iran escalation
Watch the episode
Watch “July rate hike in play if inflation is hot this week” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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