The Latest Financial News

Yesterday’s Consumer Price Index (CPI) data came in exactly where expected.  With all the bad news lately on the inflation front the market took this as favorable and bond prices were up.  Yields which are the same as interest rates move in the opposite direction of prices, so interest rates modestly yesterday (to keep things in perspective we’re talking about less than an eighth of one percent).

The CPI showed a month-over-month increase of 0.3% at the core level.  This is still almost twice the .17% needed to meet the FED’s 2% annual inflation target.  Nonetheless the stability in prices is reassuring, especially after the recent volatility.

What’s more, Retail Sales figures, which can influence housing market trends, came in lower than expected, with a negligible 0.0% change compared to the forecasted 0.4%. Even last month’s impressive 0.7% reading was revised down slightly to 0.6%. This unexpected dip in retail activity has led to a positive response from bond traders.

By yesterday afternoon, bond yields had reached levels reminiscent of those before the April 10th CPI data release. It’s almost as if the recent market fluctuations never occurred. 

Today is back to more technical trading without big news and bond prices are flat to down, so you won’t be seeing any improvement in rates as today goes on.

Good news for homebuyers: the bond market rallied after the latest Consumer Price Index (CPI) data was released.  CPI data came in “as expected” so don’t expect any drastic improvement in rates yet, but it’s better than the alternative!  We knew today would be a volatile day, but so far the trend is toward a rally in bond prices, and the yield (i.e. the rate) moves in the opposite direction of the yield thus today’s mortgages rates might be slightly better than yesterdays.  The weaker retail sales data also contributed to this positive trend.  Remember, if you’re worried about mortgage rates you want a weaker economy.

With 10-year Treasury yields down nearly 0.08% as of 9 AM, this is turning out to be one of the least volatile reactions to the CPI data we’ve seen. This stability is good news if you’re considering buying a home or refinancing, as it means lower borrowing costs and more predictable mortgage rates.  It’ll take new reports showing a more significant drop in inflation and overall weakening of the economy before the FED is likely to act and move towards rate reductions, but we’ll take this small win today.

If you’re thinking about buying a home and keeping an eye on mortgage rates, today’s news about the Producer Price Index (PPI) is worth noting. While the PPI isn’t as influential as the Consumer Price Index (CPI), it still made waves this morning. The monthly core number came in much higher than expected, causing an immediate reaction in the bond market.  This sent bond prices down and yields up (yield is the same as rate),

Here’s what happened: 10-year Treasury yields jumped by 0.05%, and Mortgage-Backed Securities (MBS) dropped slightly. However, within 15 minutes, everything stabilized and returned to near previous levels. This volatility was due to revisions in the previous month’s data offsetting the big miss, along with variations in some internal components. Notably, several components that impact the Personal Consumption Expenditures (PCE) index, which the Federal Reserve closely watches, were weaker.

For homebuyers, this means mortgage rates might experience some fluctuations, but the immediate impact may not be as significant as it first appeared. The big news is tomorrow when the Consumer Price Index report is released.  If this shows that inflation is rampant then mortgage rates will likely go up. If inflation is under control then mortgage rates will likely drop based the the expectation that the Fed will start to ease up and even reduce the Fed funds rate in the fall. Check back tomorrow!  If you’re nervous you may want to lock your rate today, while others will want to wait and hope that the report is favorable for mortgage rates.

Big Week Ahead: Keep an Eye on CPI and Retail Sales!

This week’s reports could have big implications for mortgage rates. On Wednesday, there are two key reports you’ll want to pay attention to: Core CPI and Retail Sales.

Now, what’s Core CPI? It’s basically a measure of how prices are changing for goods and services, excluding food and energy. Why does it matter? Well, it can affect mortgage rates, which in turn can impact your home buying journey.

In the past year or so, Core CPI has been stealing the spotlight in the bond market. Traders are really tuned into it, often waiting for its release before making any big moves. If the numbers come in higher or lower than expected, it can shake things up.

For instance, back in April, Core CPI made a big splash in the market, causing some ripples in mortgage rates. And let’s not forget about Retail Sales – they play a part too. Strong retail numbers can add fuel to the fire, influencing mortgage rates even further.

Remember, high inflation and a hot economy = higher rates.  A slowing economy and little or no inflation means we will be seeing lower interest rates.

So, what’s the takeaway for you? Well, if you’re in the market for a home, keep your eyes peeled this Wednesday. These reports could give you some insight into where mortgage rates might be headed. And remember, knowledge is power when it comes to making the right move for your dream home.

In terms of economic data, this week is pretty quiet (brace yourself for the CPI Report on May 15th), but there are a few reports we always keep an eye on, especially for homebuyers like you. One of those reports is the initial jobless claims data released every Thursday. It doesn’t usually shake up the bond market too much, so even though the number of new jobless claims came in higher than expected the bond market (and in turn mortgage rates) is pretty stable…we’ve been watching throughout the day and things got a little better this afternoon but by this time in the afternoon you aren’t likely to see any noticeable change in today’s rates.  Unless something changes tomorrow morning you may see slightly better pricing on Friday.   Overall, it’s not a game-changer, but it’s a positive note to start the day on, especially for those locking in an interest rate in the next few days.

The Treasury will auction $42 billion in new ten year note this afternoon.   As a homebuyer worried about interest rates, and absent any other big economic news, this means that rates are unlikely to be better today than yesterday, and could be slightly worse.  Getting ready for an afternoon Treasury auction, there’s often a trend where interest rates tick up slightly. This happens because traders tend to sell off some bonds before the auction, which drives rates higher. While this isn’t a guaranteed pattern every time, it’s a common enough occurrence. The logic behind it is straightforward: with a large amount of bonds up for auction, there’s less demand in the market beforehand, which pushes prices down and yields up (yield is synonymous with rates).

The real action will be with the May 15th Consumer Price Index Report. Until then these changes are pretty minor.  Currently an 1/8 (0.125 in decimal form) change in mortgage rate on a 30 year fixed translates to about an upfront cost of about 3/8 (0.375) in points (sometimes a 1/2 point).  So when we say rates are up slightly, in a lot of cases with minor movements the interest rate is the same as the day before, but maybe you have to pay an extra 0.125 in points to get that rate.  For example, on a $400,000 loan that would be a cost of $500.