Heading into the highly anticipated speech from Fed Chair Powell on Friday, mortgage markets were essentially unchanged for the week. In contrast to the large negative reaction last year, there was little movement this time, and mortgage rates remain near their highest levels in decades.

Powell revealed no significant new information to guide investors on future monetary policy. Investors are trying to figure out whether there will be another increase in the federal funds rate later this year, but Powell continued to emphasize that decisions will be based on incoming economic data. While encouraged by the downward trend, he said that inflation still "remains too high" and that officials are prepared to raise rates further "if appropriate" until they are confident that inflation is moving down toward their target level. Since there are risks to both tightening monetary policy too much and too little, Powell said that the Fed will proceed carefully in evaluating changing economic conditions. 

Higher rates have caused mortgage application volumes to fall to the lowest levels in 28 years. According to the latest data from the Mortgage Bankers Association (MBA), purchase applications are down 30% from last year at this time, and applications to refinance are down 35% from one year ago. Of note, more buyers are turning to adjustable-rate mortgages in an effort to reduce monthly payments.

Investors will continue to watch for Fed officials to elaborate on their plans for future monetary policy. For economic reports, the JOLTS report, measuring job openings and labor turnover rates, will be released on Tuesday. Personal Income and the PCE price index, the inflation indicator favored by the Fed, will come out on Thursday. The key Employment report will be released on Friday, and these figures on the number of jobs, the unemployment rate, and wage inflation will be some of the most highly anticipated economic data of the month.