Markets Calmer With PCE Inflation Report Ahead

What Is Happening Today

Mortgage rates are stabilizing this morning after several volatile sessions driven by global bond markets and geopolitical headlines. Overnight selling pressure has eased as Japanese officials and U.S. Treasury leadership pushed back against fears of foreign selling and a broader “sell America” narrative. Stocks are modestly higher and mortgage bonds are holding near yesterday’s levels as investors wait for tomorrow’s PCE inflation report, which will be the next major driver for rates.

While global uncertainty remains in the background, today’s focus is shifting back toward economic fundamentals. Lower mortgage rates are already translating into stronger application activity, and expectations are building that inflation data could continue showing gradual progress.

Global Bond Market Developments

Japan’s finance minister called for calm after a wave of bond selling lifted yields to multi decade highs
Officials cited lower borrowing needs and stronger tax revenues as signs of fiscal stability
U.S. Treasury Secretary noted foreign demand for Treasuries remains near record levels
Denmark’s recent reduction in holdings had little impact on markets

These comments helped cool fears of widespread foreign selling and brought some stability back to global bond markets.

Mortgage Application Activity

Average mortgage rates fell from 6.18% to 6.16% last week
Rates are now about 62 bps lower than one year ago
Purchase applications rose 5% for the week and 18% year over year
Refinance activity increased 20% for the week and 183% year over year
Refinances made up 62% of total application volume

Lower rates are clearly driving renewed demand from both buyers and refinancers, signaling that affordability improvements are already translating into real activity.

PCE Inflation Preview

October and November PCE data will be released tomorrow
Headline inflation is expected to ease from 2.8% to 2.7% year over year
Core inflation is also forecast to decline to 2.7%
Markets are likely to respond favorably if results meet expectations

The Fed’s preferred inflation gauge will be a key test for whether recent disinflation trends remain intact.

Market Sentiment

Recent volatility has cooled after last week’s sharp rate move
Japanese bond markets recovered modestly overnight
No new geopolitical escalation emerged from global meetings
Investors are returning focus to inflation and growth data

With geopolitical pressure easing, economic data is once again becoming the primary driver of rate direction.

Bottom Line

Mortgage rates are steady today as global bond fears ease and investors refocus on tomorrow’s PCE inflation report. Strong mortgage application data shows that lower rates are already pulling buyers and refinancers back into the market, reinforcing the sensitivity of demand to even modest rate improvements.

If inflation continues to trend lower as expected, rates could find room to improve further in the near term. For now, markets appear calmer, but tomorrow’s inflation data will play a major role in determining whether this recent stabilization can turn into a more sustained move lower in mortgage rates.