July 15,2025

Mortgage rates are driven by bonds—and bonds aren’t fans of inflation. So when today’s Consumer Price Index (CPI) report came in slightly cooler than expected, rates initially dipped as markets reacted positively.

But the celebration was short-lived.

While the "shelter" component—think rent and housing costs—posted its lowest monthly increase since early 2021 (great news!), traders dug deeper. They noticed inflation pressures lingering in tariff-sensitive categories. That raised some red flags.

Even though overall inflation was soft, the Fed’s cautious tone was echoed by the market. Instead of charging ahead with hopes for rate cuts, investors hit pause—waiting for more convincing data.

📌 Bottom line: Today’s CPI was good, but not good enough to spark a big drop in mortgage rates. The Fed's still playing the long game.