Mortgage Rates Today, September 4, 2025: A Packed Day for Economic Data, Including Another Employment Report

The bigger picture

Here's a headscratcher. What makes mortgage rates move?

Economic reports often make a difference. And you can see those rates moving up and down as important reports (mostly employment and inflation, but retail sales and other key indicators, too) are published.

Reports that show a strong economy tend to drag mortgage rates lower. Ones that show the economy weakening tend to push them higher.

Fed rates and mortgage rates

But at least some of that effect is down to how reports affect wider interest rates. Poor economic data makes an imminent cut in general interest rates by the Federal Reserve more likely, while signs of an overheating economy often see the Fed hiking those rates.

But you'll likely have read recently that changes to Fed rates have only a limited impact on mortgage rates. Writers will have told you of occasions when the Fed has made a cut, and on the same day, mortgage rates have risen.

They're right. But it's not hard to explain why.

Mortgage rates are largely determined by the yields on a type of bond called a mortgage-backed security (MBS). But investors who buy and sell those bonds pride themselves on trading ahead of actual events.

So, assuming the Fed announces what they've been expecting, they'll have already priced in the change and have no reason to adjust their positions. It's only if the Fed surprises them that you'd expect a change in mortgage rates in response to a policy announcement.

But supposing, on a morning when an announcement is made, an economic report is published that makes a future cut more or less likely. MBS investors will likely respond to that, providing the illusion of their reacting to the Fed's rate change.

If mortgage rates are only slightly influenced by the Fed, how come they fell 10 basis points (a basis point is one-hundredth of 1%) on August 22? That's an appreciable drop. And the only interesting thing that day was Fed Chair Jerome Powell confirming that the door is firmly open for a cut when a rate announcement is next made.

Mortgage rates and the 10-year Treasury yield

Having said all that, there's an undeniable tendency for mortgage rates to shadow the yield on 10-year Treasury notes. Treasury bonds, notes and bills are regularly auctioned by the U.S. Treasury to fund government deficits and debt.

And demand at those auctions, together with investor sentiment about how the government is managing its funding, largely determine yields on these.

Often, that investor sentiment is pretty much in line with Fed rate policy. But on Tuesday, we saw a divergence.

Almost everyone expects a rate cut when the Fed next makes a policy announcement on September 17. But on Tuesday, bond investors were deeply unhappy about how governments in the United States and most other advanced economies are managing their debts.

So far, rising yields on Treasurys have proved a short-term phenomenon. And those yields fell back yesterday, taking mortgage rates with them. Indeed, the latter plumbed 11-month lows yesterday, according to Mortgage News Daily.

But what if yields rise again? Will they or Fed rate policy have the final say on mortgage rates? We're not at all sure because there are few, if any, exact precedents.

What's coming up?

Although economic reports are usually the main drivers of changes to mortgage rates, they're not the only ones. The general mood in markets and economically consequential news can also affect those rates. News items concerning tariffs, Fed independence and deficit funding are especially influential at the moment.

Here's Comerica Bank's roundup of the rest of this week:

"In a holiday-shortened week packed with data releases, the most attention will go to the August jobs report. It is expected to show modest growth of payroll employment, a little above the last few months’ average pace. Comerica forecasts a stable unemployment rate, slightly better than the consensus’ expectation for a slight uptick. Earnings growth is forecast to slow.

"In the week’s other releases, ... the ISM manufacturing and services PMIs are forecast to rise in August after July’s reports showed the private sector growing at a modest pace."

Mortgage rates today

Today's MarketWatch economic calendar lists six economic reports scheduled for release.

August's ADP employment report may take center stage. It measures only private-sector jobs and is nothing like as highly regarded as Friday's official jobs report. But investors sometimes see it as a bellwether for tomorrow's big event.

We're also due a couple of August purchasing managers' indices (PMIs) for the services sector. These gauge activity in organizations' procurement departments, so they can be a useful guide to future economic activity. Those from the Institute for Supply Management tend to be given greater weight than ones from S&P Global.

Here are today's reports, alongside market expectations for their new figures and the same data from the previous reporting period:

• August ADP employment — Markets expect 75,000 new jobs created that month, down from July's 104,000
• Initial jobless claims during the week ending Aug. 30 — Markets expect 231,000, very slightly worse than the previous week's 229,000
• Second reading of productivity in the second quarter of 2025 — Markets expect a 2.6% increase, a little better than the first reading of 2.4%
• July trade deficit — Markets expect -$77.8 billion, worse than June's -$60.2 billion
• August's final S&P Global PMI for the services sector — Markets expect 55.3, a touch worse than the previous reading's 55.4
• August's ISM PMI for the services sector — Markets expect 50.5%, better than July's 50.1%

Better-than-expected numbers tend to push mortgage rates higher, while worse-than-expected ones usually drag them lower. As-forecast figures may leave them virtually unchanged.

Stay strapped in for tomorrow's jobs report. That's often the most influential of all monthly reports, though inflation data currently rival it.