Market Update for August 11, 2025

[Andrew Postell]

The last FOMC meeting concluded with the Federal Reserve holding its benchmark interest rate steady at 4.25% to 4.5%, continuing its cautious stance amid mixed economic signals. The decision came despite growing market expectations for a rate cut in September, fueled by a weaker-than-expected July jobs report. In a notable development, Governor Adriana Kugler submitted her resignation effective August 8, 2025, creating a vacancy that has intensified speculation around Fed leadership.

According to Bloomberg and Investing.com, Governor Christopher Waller has emerged as the leading candidate to replace Jerome Powell when his term ends in May 2026. Waller’s policy style—favoring forecasts over lagging indicators—has reportedly impressed President Trump’s advisers. His dissent in the July FOMC meeting, advocating for a 25bps rate cut, further distinguishes him from Powell’s more cautious approach.

Big Data Week

This week is packed with key economic releases that could sway both Fed policy and market sentiment. On Tuesday, July CPI will be released; July core inflation is expected to rise 3.0%, up from 2.9% one month ago, driven by tariff-related price pressures in durable goods. However, cooling rents and used car prices may temper the upside

PPI on Thursday. Producer prices will offer insight into upstream cost pressures, especially relevant for housing and construction sectors. On Friday, markets will get the release of July Retail Sales where consumer spending is projected to remain steady, supported by wage growth despite employment softness. These indicators will be closely watched by traders, policymakers, and mortgage professionals alike, especially as the odds of a September rate cut hover near 90%.

GSEs Preparing to Hit the Trading Floor?

The discussion around ending the conservatorship of Fannie Mae and Freddie Mac continues to gain momentum. There is growing interest in transitioning the GSEs toward a more independent structure.

FHFA Director William Pulte recently characterized the enterprises as “obese,” suggesting that operational reform is needed . One proposal under consideration is a public offering within conservatorship, which could generate revenue while maintaining federal oversight. While this hybrid model may preserve liquidity in the TBA and UMBS markets, it could also introduce regulatory uncertainty.

From a market perspective, encouraging competition between Fannie and Freddie may offer meaningful benefits. The shift from an explicit to an implicit guarantee raises valid concerns, but the potential for improved efficiency and innovation could result in lower borrowing costs for consumers.

The GSEs have repaid their Treasury support multiple times. A structured transition to private ownership—with clear capital standards and accountability—could help balance affordability goals with long-term financial stability.

Key Economic Data Releases this Week:

• Tuesday, August 12: CPI Report, Real Avg Hourly Earnings
• Thursday, August 14: PPI Report, Weekly Jobless Claims
• Friday, August 15: Retail Sales, Import Price Index, Empire Manufacturing

WEEKLY INTEREST RATE SNAPSHOT (this is for primary homes)