Market Comment Mortgage bond prices finished the week lower, which pushed rates slightly higher. Rates were under pressure from stronger than expected industrial production data Monday. This was tempered a bit Tuesday by continued downward pressure on oil prices and weaker than expected housing starts data. The headline consumer inflation reading was lower than expected but the core rate was in line with estimates. Janet Yellen set stocks on fire Wednesday afternoon and that continued into Thursday in which the DOW saw a 421-point gain. The Fed indicated they will be “patient” with any future interest rate increases. Lower than expected weekly jobless claims added fuel to the stock rally at the expense of Treasuries and mortgage-backed securities. Mortgage interest rates finished the week worse by approximately 1/8 to 1/4 of a discount point. LOOKING AHEAD
PCE The US Department of Commerce’s Bureau of Economic Analysis releases the core PCE price index. The report provides the average increase in costs for personal consumption expenditures. PCE is significant in that the Fed uses it in determining inflation as opposed to the prior use of the consumer price index. The PCE includes the price of spending for and on behalf of households. This includes health care spending paid for a household by a business. The CPI only reflects out of pocket expenses paid directly by consumers. The Fed noted recently that inflation is in check. However, data can surprise the financial markets from time to time. Mortgage interest rates will likely spike higher in the short term if the PCE core reading is higher than expected. A reading in line with expectations will likely help rates stay in check. Copyright 2014. All Rights Reserved. Mortgage Market Information Services, Inc. www.ratelink.com The information contained herein is believed to be accurate, however no representation or warranties are written or implied. |
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