‘That Could Result in a Rate Hike as Soon as Next Week’: Schwab Strategist on Friday’s CPI

D.R. Horton (DHI) and Lennar (LEN) have fallen 22% and 41% over the past year as surging mortgage rates crush homebuilder demand.

Colin Martin warns a hotter-than-expected Friday CPI print could force the Fed to hike rates from 3.75% as soon as next week.

Lennar's gross margin compressed to 16% while buyer incentives surged to 13%, more than double the normalized range, signaling deepening operational stress.

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Colin Martin, a fixed-income strategist at Charles Schwab, told listeners on a podcast recorded ahead of Friday's Consumer Price Index release that a hotter-than-expected reading "could result in a rate hike as soon as next week." He pointed to a hotter-than-expected jobs report and Kevin Warsh's hawkish Jackson Hole speech as reasons the bar had shifted. The Federal Open Market Committee meets Wednesday. The last recorded move in the federal funds target series was a cut to a 3.75% upper bound, effective December 11, 2025. Martin is describing a policy pivot in reverse gear.

The bond market is halfway there already. The 10-year Treasury yield closed at 4.83% on September 9, its highest reading of the past year and near the top of the trailing-year range. Freddie Mac's 30-year fixed mortgage average rose to 6.76% on September 10, a fresh 52-week high and near the top of its trailing-year range. A month ago the same series stood at 6.69%. In February it printed 5.98%.

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That backdrop is showing up first in the rate-sensitive part of the economy. D.R. Horton ( NYSE:DHI ), the nation's largest homebuilder by volume, is down 10% over the past month and 22% over the past year, at $135.90. Lennar ( NYSE:LEN ), the second-largest, is down 10% over the past month and 41% over the past year. The Lennar Class B ( NYSE:LEN-B ) shares carry the same underlying financials and are down 40% over the year.