In a year where mortgage rate volatility has been extreme, this week made everything else look tame by comparison. While it will never show up in weekly survey numbers, the 3-day jump between last Thursday and this Tuesday was one of the biggest on record, taking the average 30yr fixed quote from 5.55% to 6.28% by yesterday afternoon. The pace of that spike is nothing short of staggering considering 5.55% was already near their highest levels in more than a decade. The drama began with last Friday’s Consumer Price Index (CPI) , a key inflation report that showed prices rising faster than expected. Inflation is biggest concern for the Fed at the moment, and the biggest reason for their increasingly aggressive efforts to push rates higher in 2022. CPI alone wouldn’t have been worth this much drama were it not for the looming Fed announcement on Wednesday afternoon. Further complicating matters was the fact that the Fed refrains from public comment on monetary policy in the 12 days leading up to a policy announcement. In other words, markets were flying blind as to what the Fed’s response might be to the CPI data, and imaginations ran wild. The best guess was that instead of hiking rates by 0.50%, the Fed would instead opt for 0.75%. Indeed they did, and shortly thereafter, mortgage rates began to fall. FALL?! How can that be?! If the Fed hiked 75bps, wouldn’t mortgage rates rise by 75bps?