Mortgage Rates Rescued by Unlikely Heroes

Headed into the start of last week, all mortgage eyes were focused on the big inflation report known as the Consumer Price Index (CPI). The CPI has become one of the main inflation gauges for the markets. Home loan rates were already on the defensive due to recent hot employment data, so the hopes were pinned on a cool reading for the CPI. Bond yields and mortgage rates popped when the CPI came out hotter than expected on Wednesday, showing inflation rearing its head yet again.

Just as lenders and bond traders were ready to write the week off as a loss, some unlikely heroes came to the rescue. The sister report to the CPI is the Producer Price Index (PPI). The PPI comes out the day after the CPI and normally doesn’t carry much of a punch. But in the case of last week, it made a big impact. Inside the PPI numbers, there were some significant cost reductions which helped the market quickly recover from the CPI hit.  The good news didn’t stop with the PPI, as the Retail Sales report on Friday also showed a larger than expected reduction, soothing fears of economic overheating.  Amazingly, mortgage rates and bond yields ended the week slightly lower thanks to the PPI and Retail sales data.  

Home Loan Rate Volatility: MODERATE
Home Loan Rate Trend: FLAT