As we continue to watch events unfold in Ukraine and rising inflation here at home, the volatility in markets and mortgage rates continues. And in addition to the already skittish markets, we’ve got an important Fed Meeting this week.
Following two weeks of declines, the latest trend in mortgage rates, as reported by Freddie Mac revealed an increase in rates as the 10-year Treasury yields increased as well. Even as this week begins, we’ve seen Treasury yields continue to march higher, bringing rates along with them.
This week we started with a tough inflation report for markets to process. The latest wholesale inflation figures revealed producer prices remain very hot, at an annual rate of 10 percent. This on the heels of last week’s consumer inflation numbers showing an annual rate of 7.9 percent, continuing to rise.
Then we also have a very important Fed Meeting adjourning on Wednesday. The Fed, since December, has been signaling a regime of rate hikes beginning in March. Forecasters are calling for an incremental 25-basis-point hike to a 0.25-to-0.50 percent target range with no expectations among the panel for either no action or a 50-point hike.
Markets are expecting the Fed to take action and have likely already priced it in; however, with so much uncertainty swirling around it’s anybody’s guess as to exactly how markets will respond to the Fed’s actions and corresponding statement and press conference.
As for the housing market, we do have some important numbers coming out to keep an eye on. The first is the Housing Market Index, a measure of the sentiment of the nation’s home builders. With mortgage rates jumping, the housing market index is expected to ease from February’s 82 but only slightly to 81 in March.
The leading indicator, New Housing Starts and Building Permits, comes out on Thursday. The housing sector remains strong with a rebound to a 1.700 million annual rate expected for February starts which would compare with January’s lower-than-expected rate of 1.638 million. Yet January’s rate for permits, at 1.899 million, was much higher than expected with slowing to 1.850 million expected for February.
Finally, on Friday we get a look at the latest figures for Existing Home Sales. Sales jumped to a surprisingly strong 6.500 million annualized rate in January. Slowing is anticipated for February, to 6.17 million given if nothing else the steep rise in mortgage rates as well as tight inventory.
