As far as financial markets are concerned, a green Christmas is better than anything Bing Crosby could have crooned about. Green is the color that flashes when markets are improving or when interest rates are falling. Green, for lack of a better word, is good. For mortgage rates, it's been an especially difficult year.  They've risen at the fastest pace in 40 years to levels not seen for 20 years.  They've gotten their hopes up a few times only to have them crushed more and more convincingly.   Despite being downtrodden, market participants knew that the bad times couldn't last forever.  The higher rates went, the closer they were to the peak--even if that peak ended up being quite a bit higher than most anyone imagined earlier in the year.   To understand why rates went as high as they did and why there's renewed hope for a reversal, we need to remember that inflation has been the driving force.  Every time inflation surprised to the upside, rates ratcheted abruptly higher. Most recently though, inflation surprised to the downside when the most recent Consumer Price Index (CPI) data came out on November 10th.  The result was the single best day for mortgage rates on record (in terms of day-over-day movement).  This isn't the first time for such a surprise, but it's the most compelling.  It sets the stage for the next CPI report to confirm a big picture shift in the inflation narrative.