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Freddie Mac is reporting that the 30 year fixed-rate mortgage average rate rose to 6.22% from 6.19% in the prior week. The recent cycle lows going back to October 2022 is at 6.09%.

Current Market Snapshot

The housing market continues to navigate a complex environment of fluctuating rates and sticky prices. While the Federal Reserve cut interest rates by 25 basis points yesterday, mortgage rates have moved in the opposite direction this week, highlighting the disconnect that often exists between Fed policy and long-term bond yields.

• Mortgage Rates: According to Freddie Mac, the average 30-year fixed mortgage rate rose to 6.22% this week, up from 6.19% the previous week.

• Inventory Levels: Housing supply is slowly recovering but remains approximately 13% below pre-pandemic levels. We are seeing regional disparities, with inventory surging in the South and West (rising above pre-pandemic norms in cities like Denver and Austin) while remaining tight in the Northeast.

• Price Trends: National median list prices are largely flat year-over-year at approximately $424,000. However, about 20% of listings are seeing price cuts, suggesting sellers are having to adjust expectations to meet stretched buyers.

The Affordability Crunch

Affordability remains the primary headwind for prospective buyers. Despite the Fed’s easing cycle, the combination of home prices near record highs and mortgage rates above 6% keeps monthly payments elevated.

• Delinquencies Outlook: Recent credit reports suggest a modest rise in mortgage delinquencies heading into 2026 as the “affordability squeeze” tests borrower resilience.

• Buyer Behavior: A new report from Zillow indicates that many buyers are skipping the “rate shopping” phase in a rush to secure homes, potentially costing them significant savings in a volatile rate environment.

Chair Powell on Housing: The “Lock-In” Effect and Supply

During yesterday’s post-meeting press conference, Federal Reserve Chair Jerome Powell addressed the housing market directly, offering a sobering view on why lower Fed rates haven’t immediately fixed the sector’s issues.

1. The “Lock-In” Effect is Stifling Supply
Powell emphasized that the housing market is effectively “frozen” because millions of Americans are holding onto mortgages with rates between 2% and 3%. Even as the Fed cuts rates, current market rates (near 6%) are too high to entice these owners to sell and move, keeping resale inventory artificially low.

2. Inflation & Housing Services
Powell noted that while the Fed has made progress on inflation, housing services inflation remains sticky. He described the current policy stance as “modestly restrictive,” which is helping to cool the economy, but he acknowledged that monetary policy alone cannot fix structural housing supply deficits.

3. The Tariff Impact
When addressing recent inflation data, Powell attributed much of the current “heat” to tariffs, describing them as a “one-time price increase.” However, he warned that if these policy shifts lead to higher costs for construction materials or labor shortages (via immigration changes), it could exacerbate the housing supply shortage further.

Realtor.com 2026 Forecast: A Steady Shift Toward Balance

Overview: “Low Gear” Recovery

Realtor.com recently outlined their projections for US housing in 2026.

They forecast that the US housing market is expected to shift into a steadier, more balanced state in 2026. While not a boom year, conditions will improve modestly for buyers as affordability pressures ease slightly. The market will remain in “low gear,” with sales rising slowly from historical lows but still constrained by high prices and rates.

Key Data Projections (2026 vs. 2025)

• Mortgage Rates: Expected to average 6.3% for the year (down from an average of 6.6% in 2025). This stability helps buyers budget but keeps the “lock-in” effect in play for existing owners.

• Home Prices: Forecast to rise by a modest 2.2% year-over-year. Crucially, inflation is expected to outpace this growth (~3%), meaning real home prices (inflation-adjusted) will actually decline slightly, slowly improving affordability.

• Existing-Home Sales: Projected to rise 1.7% to 4.13 million units. This is a small rebound from the 29-year lows seen in 2024-2025.

• Inventory: For-sale inventory will grow by 8.9%, marking the third straight year of gains, though levels will still remain ~12% below pre-pandemic norms.

• Rents: Rents are forecast to decline by 1.0% nationally as a robust supply of new multi-family units hits the market.

Market Dynamics by Group

• For Buyers: “Negotiating power tilts subtly toward buyers.” Affordability will improve as incomes grow faster than home prices, pushing the typical mortgage payment share of income below 30% for the first time since 2022.

• For Sellers: The market is moving further into “balanced territory.” Sellers will face more competition and may need to be flexible on price. Delistings (sellers walking away rather than cutting prices) may continue.

• For Renters: A “renter’s market” is emerging, particularly in the South and West (e.g., Austin, Las Vegas, Atlanta) where supply is surging.

Economic Backdrop

• Inflation & Wages: Inflation is expected to hover around 3%, but wage growth (3.6%) will outpace it, restoring some consumer purchasing power.

• Risks: The forecast highlights significant risks, including trade policy/tariffs impacting construction costs and the uncertainty of a Federal Reserve leadership transition when Jerome Powell’s term ends in May 2026.

Conclusion

2026 is framed as a year of “slow normalization.” It won’t be a dramatic return to the frenzied activity of 2020-2021, nor a crash. Instead, it offers a window of stability where inventory creeps up, rates flatten out, and buyers gradually regain some leverage.

This article was written by Greg Michalowski at investinglive.com.

U.S. Jobless Claims Rebound, but Holiday Distortions Cloud the Picture

U.S. initial jobless claims rebounded to 236K, slightly above the 220K expected by economists. The prior week was also revised higher to 192K from 191K, though that earlier reading remains unusually low. It’s important to recall that last week’s sharp drop to 191K was widely viewed as an outlier, heavily influenced by the Thanksgiving holiday, which often disrupts seasonal adjustments and temporarily suppresses claims activity.

Continuing claims provide additional context. Last week’s total was 1.939 million, but the latest report — which also covers the Thanksgiving period — fell to 1.838 million versus 1.947 million expected. On the surface, this would normally signal a stronger labor market, as fewer individuals are remaining on unemployment benefits. However, just like the initial claims figures, these numbers are distorted by holiday effects, making it difficult to draw firm conclusions about the underlying trend.

Taken together, today’s data suggest some rebound from last week’s artificially low readings, but traders and policymakers will need to wait for post-holiday, normalized data to get a clearer picture of true labor-market momentum.

US trade deficit for September -52.8 billion versus -63.3 billion estimate

U.S. trade data for September showed a notable improvement, with the overall trade deficit narrowing to –$52.8 billion, a sharp reduction from –$63.3 billion in August. The goods deficit also tightened meaningfully, coming in at –$77.69 billion compared with –$84.34 billion the prior month. The smaller gap reflects stronger export activity and a pullback in imports, signaling a firmer trade contribution to GDP heading into the fourth quarter.

This article was written by Greg Michalowski at investinglive.com.

• SNB Chairman Schlegel: SNB policy to stoke inflation slowly in the next quarters
• SNB leaves interest rates unchanged at 0.00% as expected in December
• FX option expiries for 11 December 10am New York cut
• What are the main events for today?

It’s been an empty session in terms of data releases and notable newsflow. The only highlight was the SNB monetary policy decision. The central bank kept interest rates unchanged at 0.00% as expected and slightly downgraded inflation forecasts for 2026 and 2027.

The economic outlook was upgraded due to the recent decrease of US tariffs on Swiss goods to 15%. Chairman Schlegel downplayed the disappointing inflation readings in the recent months and reiterated that the Bank expects inflation to pick up slowly in the next months due to expansionary monetary and fiscal policies.

The Swiss Franc was mostly unchanged after the decision and the press conference, but started to pick up steam on a broad USD weakness that eventually led to a break below the key support around the 0.7980 level on USDCHF.

In the markets, the US dollar remains on the backfoot following the dovish Fed Chair Powell’s press conference where he downplayed the inflation risk and put more emphasis on the labour market.

The US equities, after giving back the post-FOMC gains overnight, are now recovering the losses. US Treasury yields are trading near today’s lows, which also underpinning gold and silver.

In the American session, the main highlight will be the release of the US Jobless Claims figures. Initial Claims are expected at 220K vs 191K prior, while Continuing Claims are seen at 1947K vs 1939K prior.

The data has been pointing to a “low firing, low hiring” labour market for a very long time, and as Fed Chair Powell said yesterday, that’s an unusual situation. The Fed is trying to help the demand side and turn it more into a “low firing, higher hiring” labour market without stoking inflation.

This article was written by Giuseppe Dellamotta at investinglive.com.

• Australia November employment -21.3K vs +20.0K expected
• Mexico approves tariffs as high as 50% taiff on Chinese and Asian imports
• UK RICS house price survey -16 vs -21 expected
• New Zealand Q3 manufacturing sales +1.1% vs -2.9% prior
• Japan Q4 business survey index +4.7% vs +3.8%
• RBC forecasts gold to average $4,600 in 2026 and hit $5,100 in 2027
• Shares of Oracle fall 10% the questions about AI spending continue

Markets:

• Gold down $15 to $4212
• US 10-year yields down 4 bps to 4.12%
• WTI crude oil flat at $58.45
• S&P 500 futures down 53 points or 0.8%
• JPY leads, AUD lags

The Australian dollar struggled after a soft jobs report. The unemployment rate managed to hold steady but only because of a three-tick drop in the participation rate. AUD fell about 20 pips on the headline but that was the extent of that move.

The continued selling in AUD after that came on generalized risk aversion and an unwind of the post-Fed trade. After the decision, the US dollar sold off and stock markets rallied. The move in stock markets has been completely erased and the dollar is rebounding. The equity selling was helped along by a bad post-earnings reaction in Oracle shares, which are down 11% and nearly 50% since their prior earnings spike.

The theme around AI overspending and profitability isn’t going away and will likely nag markets throughout the year ahead.

Neither will tariffs and Mexico made an interesting move by blocking off much of its Asia imports via tariffs. That sets up a potential negotiation with the US to create a bloc and replace Chinese low-cost goods.

Other moves saw silver hit as high as $62.88 as that rally continues. But the profit taking quickly unwound the gains on the day and gold is down modestly.

This article was written by Adam Button at investinglive.com.

Mexico’s Senate has approved tariffs of 5-50% on imports from China and other parts of Asia.

The duties will hit Asian countries that don’t have trade deals with Mexico, including China, India, South Korea, Thailand and Indonesia.

• Automobiles (Light Vehicles): 50% (up from 20%)

• Textiles and Clothing generallly 35% (this was a big focus of the bill)

• Steel and Aluminum: 35% (with some at 50%)

• Footwear, Plastics, and Glass: 35%

• Electronics and Appliances: Mixed (5% – 35%) –

  • Some inputs and specific parts were “softened” to lower rates (5% to 10%) to avoid hurting Mexican assembly plants, while finished consumer appliances likely face the 35% rate.

This is starting to look like a bid to get a deal with Trump but note that the original proposal was much harsher. From the US perspective though, all I see is a shift in manufacturing to Mexico from China. If that’s the case, then maybe hurting China was the real strategy all along.

What’s starting to take shape is a US-led fortress North America strategy or perhaps all the Americas. What’s notable is South Korea getting cut out, which is/was a strong US ally. That could further fears that the US is abandoning Asia to China.

This strategy could beg for retaliation from China to Mexico. It also puts Canada in a tough place unless it can get zero tariffs from the US.

This article was written by Adam Button at investinglive.com.

In 2025, the Trump administration took on the world with its trade but 2026 will be about its neighbors.

There is a sense that the trade war has stabilized and hopefully it has but the year ahead will be all about the USMCA trade agreement. Mexico and Canada represent nearly 30% of US imports and have largely avoided tariffs so far. Meanwhile, Canada and Mexico represent about 33% of US exports.

U.S. Trade Representative Jamieson Greer said Wednesday that the Trump
administration is keeping all options on the table for the future of the trade agreement, which Trump negotiated in his first term.

It’s a big year for the agreement but there is an automatic review in 2026 and each country has the opportunity to extend it, renegotiate it or withdraw.

I strongly suspect the US will aim for bilateral agreements and Greer hinted at the same today, noting structural differences in the two countries.

“The labour situation’s different. The import-export profile is
different. The rule of law is different. So it makes sense to talk about
things separately with Canada and Mexico,” he said.

Here is a key detail that’s also critical. All three countries must indicate by July 1 about their intentions for the deal but the US must provide a report to Congress 180 days before the deadline — that’s January 2 — and it must signal the administration’s intentions.

It’s possible the deal survives, or at least the important parts but Greer appeared before a U.S. Senate subcommittee on Tuesday, telling
senators that one of his key goals is tightening CUSMA’s “rules of
origin”.

This article was written by Adam Button at investinglive.com.

• Prior was 42.2K
• Full time -56.5K vs +55.3K prior
• Unemployment rate 4.3% vs 4.4% expected (prior 4.3%)
• Participation rate 66.7% vs 67.0% prior

The RBA decision was yesterday but Bullard tipped a more-hawkish stance and the market saw a 33% chance of rate hike as soon as March but we will need to mark that down. Don’t let the lower unemployment rate fool you as it came on a sharp decline in participation. If that had held steady, it would have ticked to 4.6%.

This article was written by Adam Button at investinglive.com.

• Prior was -19

If you squint, you can start to see a turn upward.

This article was written by Adam Button at investinglive.com.

• Prior was +3.8%

The trade war isn’t hurting manufacturing and the latest yen weakness won’t hurt as well (at least on the export side, it’s not so great for importers).

This article was written by Adam Button at investinglive.com.

• Prior was -2.9%

This is a nice rebound after poor Q2 reading.

This article was written by Adam Button at investinglive.com.

The calendar is looking a bit top-heavy for the Thursday session in Asia. While we have some Japanese flow data and a check-in on the UK housing market, the main event is inarguable — the Australian labor market report.

We kick things off at 2145 GMT with New Zealand Manufacturing Sales for Q3. The prior read was a soft -2.9% and there is no consensus but I would expect a bounce.

Then, attention turns to Tokyo at 23:50. We’ll get the Business Survey Index (BSI) Large Manufacturing for Q4. Again, there is no consensus but the prior was +3.8%.

The Main Event is Australian Employment Data

At 00:30, the trading will pick up significantly as the Australian Bureau of Statistics drops the November employment numbers. Last month we saw a solid print, but the expectations are for a bit of a cooldown this time around to a still-robust +20.0K. I strongly suspect the RBA saw these numbers before yesterday’s hawkish hold.

Here is what economist are looking for:

• Employment Change: Expected to add 20.0k jobs (down from the hefty 42.2k prior).

• Unemployment Rate: Expected to tick up slightly to 4.4% (from 4.3%).

• Participation Rate: Expected to hold steady at 67.0%.

The “full time” employment component (Prior 55.3k) is always be key. If we see headline weakness but full-time jobs remain robust, the AUD should stay firm but watch Feb hike pricing data, which is currently a shade below 25%. If the unemployment rate ticks up beyond 4.4% forget about the Feb hike and AUD will slip.

Also of note at 00:01 GMT is the UK RICS Housing Survey. It’s expected to slide further to -21 from -19, signaling continued pressure in the British property market.

Here is the schedule for the session:

21:45

• NZ: Manufacturing Sales (Q3) – Prior: -2.9%

23:50

• JP: Foreign Bond Investment – Prior: -771.3B

• JP: Foreign Invest JP Stock – Prior: 655.6B

• JP: Business Survey Index (BSI) Large Manufacturing (Q4) – Prior: 3.8%

00:01

• UK: RICS Housing Survey (Nov) – Exp: -21 / Prior: -19

00:30

• AU: Employment Change (Nov) – Exp: 20.0k / Prior: 42.2k

• AU: Unemployment Rate (Nov) – Exp: 4.4% / Prior: 4.3%

• AU: Participation Rate (Nov) – Exp: 67.0% / Prior: 67.0%

There are no major speeches scheduled but we will watch out for the fallout from the Fed and the usual tirades from Trump on Truth Social.

This article was written by Adam Button at investinglive.com.

• Powell signals neutral policy stance as non tariff driven inflation fades
• Fed Powell:Layoffs, hiring remain low. Rates are now in a plausible range of neutral.
• The line-by-line comparison of the October and the December FOMC statements
• The Federal Reserve cuts rates by 25 basis points to 3.50% to 3.75%
• White House economic advisor Hassett: Fed has plenty of room to cut rates
• BOC Macklem: Markets can count on us taking decisions one at a time
• Crude oil inventories see a drawdown at -1.812 million versus -2.310 million estimate
• A line by line comparison of the October and December BOC statements.
• BOC Macklem: Given the current balance of risks, the policy rate is at the right level
• The Bank of Canada keeps rates unchanged at 2.25% at the December 2025 meeting.
• US employment cost index for Q3 0.8% versus 0.9% estimate
• investingLive European FX news wrap: Final countdown to the last Fed decision of 2025

The Federal Reserve cut rates by 25 basis points as expected to 3.5% to 3.75%. The also announced that they would be purchasing bills in what traders and analysts are calling a mini-QE. The cut was expected to be a hawkish cut. It was more neutral in that the Fed chair emphasized that the Fed is “well-positioned”.

The vote split came in at 9–3, with Fed Governors Goolsbee and Schmid dissenting in favor of keeping rates unchanged. Meanwhile, Governor Miran dissented in the opposite direction, calling for a 50-basis-point cut.

The dot plot shows that four additional Fed presidents preferred to hold rates steady, suggesting a larger bloc of hawkish resistance underneath the headline decision. While the full list of dissenters isn’t yet confirmed, it’s highly likely that Dallas Fed President Logan and Cleveland Fed President Hammack were among them—both are well-known inflation hawks and will serve on the FOMC in 2026.

The identities of the remaining two “hold” voters are still unclear, but based on the composition of the upcoming rotation, it is safe to conclude that Goolsbee and Schmid will be replaced next year by presidents who leaned toward keeping rates unchanged. That shift could be more hawkish (depending on the other two) or unchanged in 2026.

We should expect to hear more from those hawkish members in the next day or two as they explain their stance and begin shaping the narrative around the Fed’s evolving policy bias.

Looking at the projections for end of year GDP, Unemployment rate and PCE inflation (headline and core) showed:

• GDP projected higher to 2.3% from 1.8%
• Unemployment projected unchanged at 4.4%
• PCE inflation projected lower at 2.4% from 2.6%
• PCE Core projected lower at 2.5% vs 2.6%
• The year end Fed Funds target projected unchanged at 3.4%

Key Takeaways from the Powell press conference comments.

During Powell’s press conference, key takeaways were:

• Powell signaled that policy is now in the plausible range of neutral, with no preset path and decisions remaining data dependent.

• The labor market is softening gradually, with rising downside risks to employment but no signs of a sharp downturn.

• Inflation remains somewhat elevated, driven largely by tariffs, while services disinflation continues.

• Consumer spending is resilient, and AI-related business investment remains strong.

• Powell emphasized the Fed is well-positioned to wait for more data before deciding on January policy moves.

In Summary

Chair Powell framed today’s decision as part of a careful shift toward neutral policy, stressing that the Fed has no preset path and will continue to evaluate incoming data “meeting by meeting.” He noted that the labor market has softened—job gains have slowed, unemployment has edged higher, and labor demand has cooled—but he does not foresee a sharp deterioration, even as downside risks to employment have increased. On inflation, Powell said overall price pressures remain somewhat elevated, with goods inflation now entirely driven by tariffs while services disinflation continues. He also cautioned that recent shutdown-distorted inflation and labor data will require careful interpretation.

Powell highlighted that consumer spending remains solid and that business investment, especially in AI data-center capacity, continues to expand. Housing remains weak, and a quarter-point rate cut would do little to improve affordability given long-standing supply constraints. Looking ahead, Powell said the Fed is well-positioned to wait for a substantial amount of new data before the January meeting, adding that the Committee broadly supported today’s decision and remains focused on guiding inflation back to 2% while avoiding unnecessary damage to the labor market.

The markets were encouraged by the Fed chair comments and the decision from the Fed.

US stocks did move lower on the comment that the rate was now near neutral, but reversed higher as the fear of inflation seemed less a concern (with growth continuing).

• Dow industrial average rose 497.46 point or 1.05% to 48057.75. The all-time record high close reached on November 12 was at 48254.82.
• S&P index rose 46.17 points or 0.67% to 6886.68. That is just short of its record high reached on October 29 at 6890.59.
• NASDAQ index rose and 77.67 points or 0.33% at 23654.16. Its all-time high close reached on October 29 is at 23958.47.
• Russell 2000 rose 33.36 points or 1.32% at 2559.60. The index closed at a new record high.

Yields were encouraged by the comments:

• 2-year yield 3.538%, -7.5 basis points. The 2-year yield is now within the Fed funds target rate between 3.5% and 3.75%.
• 5 year yield 3.730%, -4.9 basis points
• 10 year yield 4.150%, -3.5 basis points
• 30 year yield 4.795%, -1.3 basis points.

The USD moved lower after the decision. The declines of the greenback vs the major currencies showed:

• EUR, -0.58%
• JPY -0.58%
• GBP -0.65%
• CHF -0.78%
• CAD -0.35%
• AUD -0.57%
• NZD -0.61%

This article was written by Greg Michalowski at investinglive.com.