Well, this is a nice surprise! I get to report that last week, average mortgage rates improved for both the 30-year fixed and 15-year fixed, according to Freddie Mac’s weekly survey of rates.
So, what gives? We saw the yield percentage on the 10-year Treasury fall and when that happens, often mortgage rates will follow suit.
As for this week…
I’m watching new inflation data being released. Many economic experts believe the higher inflation we’re now seeing could be transitory, meaning that it won’t last as workers come back to work in September when government benefits subside and more goods and services become more readily available.
Nevertheless, consumer prices exceeded expectations in the last three reports and substantially so in May and now June. Forecasters, as they did in both April and May, were looking for cooling in June’s monthly numbers, to 0.5 percent increases overall however consumer inflation rose 0.9 percent on the month and 4.5 percent on the year.
On Wednesday wholesale inflation figures – the Producer Price Index – are released. They too have been exceeding expectations noticeably including May’s 0.8 percent headline rise. Forecasters see a 0.5 percent rise for June.
Also on Wednesday the Fed Chair Jerome Powell begins two days of speeches which will attract the attention of traders for clues as to his sentiments about the Fed’s ballooning balance sheet (it’s gone from $4Trillion to $8Trillion) and what he predicts for the US economy over the short term.
On Friday we get a look at Retail Sales numbers, which have been made volatile by federal stimulus payments and the distorted monthly comparisons that result. Retail sales have been up one month then down sharply the next as in May when they declined an unexpectedly steep 1.3 percent. The consensus for June is a further 0.4 fall overall reflecting, however, weakness for autos. Sales excluding autos are seen rising 0.5 percent.
As for the direction of rates, I’m watching the 10-Year Treasury, which as of this writing is hovering between 1.33 and 1.42, levels that favor low mortgage rates. Good news for you is that there are still lots of opportunities for you if you have yet to refinance or are looking to purchase in the near term. Let’s run some scenarios for you!