Central Bank Statements Help Rates
Statements by the heads of the International Monetary Fund (IMF), the European Central Bank (ECB), and the U.S. Fed shared the same sentiment, the global economy needs support. IMF Managing Director Lagarde described economic growth in Europe as “too slow, too fragile”. ECB President Draghi said the ECB will do whatever it takes to stimulate growth and raise inflation. Inflation in the Eurozone is now -0.1%. The target is 2.0%. The minutes from the U.S. Fed meeting on March 16th supported recent comments that the Fed will take a gradual approach to raising the federal funds rate. These dovish central banker comments were well received by the bond markets, including U.S. mortgage-backed securities, helping mortgage rates remain at historical lows.
The JOLTS and ISM reports released last week shows that the U.S. economy is on far better footing than the overall global economy. The JOLTS report, which measures job openings and labor turnover rates, showed that job openings rose and voluntary quits increased. Both are signs of an improving labor market. The ISM Services index measures expansion or contraction in the services sector of the economy. Readings above 50 indicate expansion, and at 54.5, the March reading shows that the service sector expanded again at a better pace than the previous two months.
Factors: The Retail Sales report will be released on Wednesday. Consumer spending accounts for about 70% of economic output in the U.S., and the retail sales data is a key indicator. The consumer price index (CPI) will come out on Thursday. CPI is a widely followed monthly inflation report that looks at the price change for goods and services which are sold to consumers.
Check back next week for another mortgage industry update. For specific rates, contact a Tradition Mortgage loan officer.