3 Min. Market Summary
08/28/2026

Fed Stays Tough as Softer Jobs Point the Other Way

The job market keeps showing signs of weakness, while inflation gave us some encouraging news but is still above the Fed’s 2% goal. Normally, that combination would be good for mortgage rates. But Fed Chair Kevin Warsh threw some cold water on that this morning (Friday), saying another rate hike could still be on the table if inflation doesn’t keep improving.

We’re also dealing with a lot of government debt hitting the market, which is helping keep longer-term rates higher. The Treasury is trying to help by buying back more of that debt and is even considering using some of its nearly $1 trillion cash balance to do more.

Right now, our best shot at lower mortgage rates is more evidence that the job market is slowing. We’ve already seen some signs of that, but the Fed isn’t convinced yet. Next week’s jobs reports could go a long way toward settling that debate.

Keep reading for a full breakdown of this week’s market-moving news:

Labor Market (Jobs)

ADP Weekly Employment Data

• ADP reported an average of 11,750 jobs created per week over the previous four weeks.
• That works out to roughly 50,000 jobs for the month, which points to continued weakness in hiring.
• The prior weekly average was 9,500 jobs.

Quarterly Census of Employment and Wages (QCEW)

• The Bureau of Labor Statistics revised job growth from the first quarter of 2025 through the first quarter of 2026 lower by 79,000 jobs.
• That left average job creation at only about 16,000 per month over the year.
• Private sector employment was revised down by 178,000 jobs, while government employment was revised up by 99,000.

Ghost Jobs

• Hiring platform Greenhouse reported that nearly 1 in 5 online job postings resulted in no subsequent hiring activity.
• The report said some companies may use these postings to build candidate pipelines, test the labor pool, or appear to be growing.
• The update also noted that remote openings can sometimes be counted across multiple states, potentially making job-opening data look stronger.

Inflation

Personal Consumption Expenditures (PCE)

• July headline Personal Consumption Expenditures inflation rose 0.16% before rounding and remained at 3.7% year over year.
• Core PCE rose 0.24% for the month and remained at 3.3% year over year.
• The report said inflation was concentrated in shelter, healthcare, portfolio management, and video, audio, and photo categories.
• Portfolio management alone rose 5.6% and contributed 0.12 percentage points to monthly core inflation.
• According to the report, without portfolio management’s impact, core inflation would have risen about 0.12% for the month and would be around 2.9% year over year.
• The Bureau of Economic Analysis is expected to adjust its treatment of portfolio management beginning with the August data.

Dallas Fed Trimmed Mean Inflation

• The Dallas Fed’s Trimmed Mean measure rose 0.18% in July and remained at 2.3% year over year.
• This measure removes large price increases and decreases to get a cleaner look at underlying inflation.
• The report characterized underlying inflation as relatively well behaved after removing outliers and price shocks.

Apartment List Rental Report

• New lease rents rose 0.1% in August, marking the seventh straight monthly increase.
• Rents were still down 0.8% year over year, improving from a 1% annual decline previously.
• Vacancy rates improved from a peak of 7.3% to 7.1%.
• The report linked some of the firmer rental demand to higher mortgage rates keeping potential buyers in the rental market.

Economic Reports and Forecasts

Gross Domestic Product (GDP)

• The second estimate of second quarter Gross Domestic Product showed economic growth of 1.5%.
• The reading was unchanged from the first estimate and matched expectations.

New Home Sales

• July New Home Sales fell 10.5% to a seasonally adjusted annual rate of 607,000, below expectations of 620,000.
• Sales were down 6.3% from a year earlier.
• The median sales price was $393,800, down 2.3% from June and nearly 1% from a year ago.
• The report noted that the median was affected by the mix of homes sold, with one third of sales between $300,000 and $400,000.

Home Price Appreciation

• Case-Shiller showed home values rising 0.4% in June before seasonal adjustment and 1.5% year over year.
• The Federal Housing Finance Agency (FHFA) reported prices were flat after seasonal adjustment and up 2.3% year over year.

Federal Reserve and Monetary Policy

Fed Chair Kevin Warsh

• Warsh’s Jackson Hole speech was more hawkish than his previous messaging, but he stopped short of committing to a rate hike.
• He said the Fed still has work to do if officials aren’t confident inflation is moving toward the 2% target.
• Warsh downplayed some of the cooler summer inflation readings and said the economy is strengthening, consumer demand is healthy, and financial conditions aren’t restrictive.
• He views the 4.1% unemployment rate and low jobless claims as consistent with full employment.
• After the speech, the market-implied chance of a September hike increased from 35% to 48%.
• Markets were pricing a 100% chance of at least one 25 basis point hike by year end.

Cleveland Fed President Beth Hammack

• Hammack said she believes the Fed needs to hike rates now to bring inflation down.
• She remains concerned about inflation’s effect on household budgets despite recent signs of slowing price growth.

Former Fed Governor Stephen Miran

• Miran said he wasn’t in favor of hiking rates.
• He pointed to the 12 to 18 month lag between Fed policy changes and their full impact on markets and the economy.
• His view was that policymakers should consider whether today’s inflation pressures will still be present in the second half of 2027 before raising rates.

Other

Treasury Bond Buybacks

• Treasury Secretary Scott Bessent said the Treasury General Account (TGA) could potentially be used to fund additional Treasury buybacks.
• Longer dated Treasury buybacks had already doubled from $2.7 billion per month to $5.4 billion per month.
• The Treasury General Account had grown to almost $1 trillion, compared with levels closer to $700 billion in recent years.
• The initial Bond rally following the larger buybacks was short lived because the amount remained relatively small compared with overall Treasury issuance.

Next Week

• Tuesday brings the Job Openings and Labor Turnover Survey (JOLTS).
• Wednesday brings the ADP Employment Report and mortgage applications.
• Thursday brings jobless claims.
• Friday brings the Bureau of Labor Statistics Jobs Report.