Mortgage rates start Fed week near a one-month low, with inflation data close behind

Mortgage rates edged up slightly on Friday after Thursday's sharp drop, but they still finished the week lower and close to their best level in about a month. Longer-term Treasury yields, which mortgage pricing tends to follow, have now fallen for three straight weeks, helped by investors moving money out of AI-related tech stocks and into bonds.

The Fed announces its decision Wednesday afternoon, followed by Chair Kevin Warsh's press conference. A hold is widely expected. The bigger question is what Warsh signals about December, where markets still see another hike as more likely than not. On Thursday morning the government releases the first estimate of third-quarter GDP and September PCE inflation, the Fed's preferred inflation gauge. Microsoft, Alphabet and Amazon also report earnings, and those results could steer whether the tech sell-off that helped bonds continues.

Energy is the wild card. Yemen's Houthi rebels said they struck Saudi oil facilities over the weekend, including a pipeline used to route oil around the Strait of Hormuz, though damage has not been confirmed. Oil prices eased early Monday, but higher fuel costs feed inflation, and inflation is what keeps the Fed leaning toward tightening.