Mortgage Rates Sideways Even With a Slightly Better Than Anticipated CPI Report

Mortgage rates are moving sideways so far today.  The recent trading range that has held the bellwether 10yr generally between 2.32% and 2.40% is still intact, even though it has tested the upper end three times in the last few days.  Stock indexes continue to lead the way.  Most people know who read this usually sees that when the market improves, the rates increases, and vice versa.  Currently at 11:00AM, we see MBSs in negative territory and pressure on the 10yr at 2.36% - so I guess when you look at the indexes… sure enough, they are up.

The October Headline Consumer Prices Index YOY hit 2.0% vs est of 2.0%. So, the 2.8% PPI rate did not flow through to consumer prices. The more closely watched Core CPI YOY came in a tick higher than expected (1.8% vs est of 1.7%) but remains below the 2.0% threshold.

The Retail Sales data was better than expected. The Headline October reading came in at 0.2% vs est of 0.0%. But more importantly, the September data was revised higher from 1.6% to 1.9%.

Early this morning, we saw that Weekly Mortgage Applications saw a nice movement higher of 3.1% which was a led by a large jump of 6.0% in Refinance Applications. Purchases improved by 0.4%.

What will happen next month with the Feds? Chicago Fed President Charles Evans (voting member) said he will go into the December FOMC meeting with an "open mind" and that he is still concerned about low inflation and the number of vacant spots on the board. Eric Rosengren (non-voting member) will be giving his rhetoric this afternoon.

We are seeing oil prices lower this morning as oil inventories are thought to show an increase in inventories, and that the US crude inventories rising after a gloomy week.

Today, I am anticipating mortgage rates will likely stay in the same basic range with little volatility. Anything unexpected with tax reform could cause mortgage rates volatility.

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