Friday, July 27, 2018 / by Kim Bryson
U.S. and EU Take a Step Back
The main influence on mortgage rates this week was fresh news about tariffs, which was negative for mortgage rates. The major economic data came in mostly on target, and Thursday's European Central Bank meeting contained no policy changes and had just a minor impact. As a result, mortgage rates ended a little higher.
On Thursday, the Trump administration announced that the U.S. and the European Union (EU) had agreed not to escalate their trade dispute. Neither will impose further tariffs while the two sides attempt to work out their differences. If the U.S. and the EU can come to terms, it would allow them to work together to focus on improved trade agreements with other countries, most notably China. Investors reacted to the reduced chances of a trade war by shifting to riskier assets such as stocks from safer assets such as bonds, including mortgage-backed securities (MBS). The decre ...
Friday, July 20, 2018 / by Kim Bryson
Strong Retail Sales
It was a relatively quiet week for mortgage rates. The major economic data was mixed, and mortgage rates ended a bit higher.
Consumer spending accounts for about 70% of economic activity in the U.S., and the retail sales data is a key indicator of growth. Retail Sales unexpectedly turned negative for three months during the winter, causing investors to question the strength of the economy. Since then, however, sales have been very strong.
Monday's data showed a solid increase in June of 0.5% from May, and the May results were revised much higher to 1.3% from 0.8%, which was the largest monthly gain since September 2017. Given the strong retail sales data, along with other major reports, the Atlanta Fed's forecast for second quarter gross domestic product (GDP) is up to a whopping 4.5% ...
Friday, July 13, 2018 / by Kim Bryson
This week was one of the quietest of the year. The major economic data generally matched the expected levels, and mortgage rates ended nearly unchanged.
The most significant economic data released this week was the inflation data. The Consumer Price Index (CPI), the most closely watched monthly inflation report, looks at the price change for finished goods and services. Thursday's release revealed that inflation has continued to rise in recent months. Core CPI, which excludes the volatile food and energy components, was 2.3% higher in June, up from an annual rate of increase of 2.2% last month. This was the highest level since January 2017.
While it had little market impact, Fed officials took careful note of the latest JOLTS report. The data revealed that there were 6.6 million open pos ...
Friday, June 29, 2018 / by Kim Bryson
There were few surprises in the data released this week or in the other economic news. It was a quiet week, and mortgage rates ended a little lower.
One reason that the Fed has been raising the federal funds rate is that inflation has moved higher in recent months. The Fed's favored inflation indicator is the core PCE price index. After holding steady at levels close to 1.5% for nearly a year, core PCE has jumped over the last three months. Friday's release showed that core PCE in May was 2.0% higher than a year ago, the largest annual rate of increase since April 2012.
Gross domestic product (GDP) is the broadest measure of economic growth, and it gets revised multiple times as new information is collected. For the last several years, first quarter GDP has been weaker than the other three quarters for reasons upon which economists disagree ...
Saturday, June 23, 2018 / by Kim Bryson
After last week's packed economic calendar, this week there was virtually no significant news except for some housing market data. It was an extremely quiet week, and mortgage rates ended almost unchanged.
In May, sales of previously owned homes decreased slightly from April, and they were 3% lower than a year ago. The inventory of previously owned homes for sale rose 3% from April to a 4.1-month supply, but it was 6% lower than a year ago. Even with the increase, inventory levels remain very low by historical standards and are holding back sales. A 6.0-month supply is considered a healthy balance between buyers and sellers. The median home price was 5% higher than a year ago.
In an encouraging sign, home builders may be helping to address the shortage of inventory. In May, housing starts jumped a stronger than expected 5% from April,&nb ...