Summary:
The August 2025 CPI report showed inflation metrics largely in line with expectations, with a notable drop in “supercore” inflation (services excluding energy and shelter) offsetting elevated core numbers. Mortgage-backed securities (MBS) remained stable, and 10-year Treasury yields saw a modest decline. The report’s alignment with forecasts reinforced signals from the previous jobs report, maintaining market stability. This data suggests inflation is not accelerating unexpectedly, which helps steady investor sentiment.
What This Means for You:
- Monitor inflation trends: Keep an eye on supercore inflation metrics, as they play a key role in future rate decisions.
- Evaluate MBS performance: Stabilized MBS prices indicate a potential opportunity for mortgage holders and investors.
- Prepare for rate changes: With inflation in check, the Federal Reserve may continue its cautious approach to rate adjustments.
- Stay informed on jobless claims: Rising claims could signal economic shifts, impacting future policy decisions.
Original Post:
Very Calm Reaction But Not Too Surprising
Thu, Sep 11 2025, 4:25 PM
One could argue that CPI is the next biggest potential market mover after the jobs report. With that in mind, it might seem surprising that MBS are heading out the door roughly unchanged and 10yr yields are down less than 3bps. It becomes less surprising when we consider inflation was mostly in line with expectations. Elevated unrounded core numbers were offset by decent drop in supercore (services excluding energy and shelter). When it comes to this morning’s initial rally, we’d give more credit to supercore than we would to the pop in Jobless Claims, but both probably played a role. Either way, all today’s CPI really needed to do was stay out of the way of rate cut signals in the last jobs report, and it generally did.
- Continued Claims (Aug)/30
- 1,939K vs 1950K f’cast, 1940K prev
- Continued Claims (Aug)/30
- 1,939K vs 1950K f’cast, 1940K prev
- Jobless Claims (Sep)/06
- 263K vs 235K f’cast, 237K prev
- Jobless Claims (Sep)/06
- 263K vs 235K f’cast, 237K prev
- m/m CORE CPI (Aug)
- 0.3% vs 0.3% f’cast, 0.3% prev
- m/m CORE CPI (Aug)
- 0.3% vs 0.3% f’cast, 0.3% prev
- m/m Headline CPI (Aug)
- 0.4% vs 0.3% f’cast, 0.2% prev
- m/m Headline CPI (Aug)
- 0.4% vs 0.3% f’cast, 0.2% prev
- y/y CORE CPI (Aug)
- 3.1% vs 3.1% f’cast, 3.1% prev
- y/y CORE CPI (Aug)
- 3.1% vs 3.1% f’cast, 3.1% prev
- y/y Headline CPI (Aug)
- 2.9% vs 2.9% f’cast, 2.7% prev
- y/y Headline CPI (Aug)
- 2.9% vs 2.9% f’cast, 2.7% prev
- Continued Claims (Aug)/30
08:46 AM
Initially stronger after data, but pulling back a bit. MBS roughly unchanged and 10yr down 1.7bps at 4.032
02:03 PM
Holding modest gains. MBS up 2 ticks (.06) and 10yr down 3.2bps at 4.017
04:05 PM
Fairly flat, but near weaker levels of the past few hours. MBS up only 1 tick (.03) and 10yr down 2.9bps at 4.02
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Extra Information:
Federal Reserve Monetary Policy – Learn how the Fed’s decisions impact inflation and interest rates. Bureau of Labor Statistics CPI Reports – Access official CPI data and analysis.
People Also Ask About:
- What is supercore inflation? – Supercore inflation measures services excluding energy and shelter, offering insight into underlying price pressures.
- How does CPI affect mortgage rates? – CPI trends influence the Federal Reserve’s rate decisions, which in turn impact mortgage rates.
- Why are jobless claims important? – Rising jobless claims can signal economic weakness, affecting monetary policy and market stability.
- What drives MBS prices? – MBS prices are influenced by interest rates, inflation, and economic data like CPI and job reports.
Expert Opinion:
The August CPI report underscores the importance of monitoring inflation components like supercore metrics, which provide deeper insights into economic trends. While stability in MBS and Treasury yields suggests market confidence, future shifts in jobless claims and Fed policy will be critical to watch. A balanced approach to data analysis will help investors navigate potential rate changes effectively.
Key Terms:
- CPI inflation trends 2025
- Supercore inflation explained
- Mortgage-backed securities (MBS) performance
- Federal Reserve rate decisions
- Jobless claims economic impact
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