Market Commentary – 4/1/15

Mortgage bond interest rates remain range bound this week with a small downward bias due to weaker than expected economic data from the Institute of Supply Management (ISM) index and ADP. The ISM reported that manufacturing activity in the US fell to its slowest pace since May 2013 Furthermore, the US stock market has not had a good week which has also helped to lower bond yields. The back half of the week is filled with many economic reports with all a focus on Initial jobless Claims, Non-farm Payroll and the Unemployment Report . Rate trend remains sideways.

Market Commentary – 9/15/14

Mortgage Rates: Trending Sideways

Inflation Drives Rates

Inflation concerns were the main influence on mortgage rates last week. A surprising jump in CPI caused mortgage rates to rise on Tuesday. The Fed downplayed the threat of high inflation last Wednesday, however, causing mortgage rates to decline. The net result was that mortgage rates finished the week a little lower.

The May Consumer Price Index (CPI), one of the most widely watched inflation indicators, was 2.1% higher than one year ago. Core CPI, which excludes food and energy, was 2.0% higher, up from an annual rate of 1.6% just two months ago. Core CPI has now reached the Fed’s stated target level for core inflation of 2.0%. Another inflation indicator released last week, the Prices Paid component of the Philly Fed report, also showed a sharp increase. Since expectations for future inflation are a primary factor in setting mortgage rates, this data was unfavorable for rates.Read More