Some good news here about mortgage rates…according to the latest survey of average rates released by Freddie Mac, both the 30-year and 15-year continued to drift lower last week to levels not seen since October 2016.
Even with Friday’s stinker of a Jobs Report, unemployment remains low and housing affordability continues to improve as does homebuyer demand and home price appreciation.
This week is rather quiet in terms of high-impact economic reports; however we will get two important inflation numbers, which will attract a great deal of attention, especially following Friday’s Jobs Report showing increasing inflation in wages. As we know, inflation is the enemy of the bond market and when rising can cause rates to rise as well.
On Wednesday,the Producer Price Index (PPI), the first of two important inflation reports, is released. Prices were soft in July and for August the headline consensus is a monthly 0.1 percent increase. Modest inflation will help rates to remain low.
Following the heels of the PPI is the CPI (Consumer Price Index) on Thursday. Forecasters see only an incremental increase in pricing pressure for August, at a consensus 0.1 percent overall.
As for what rates will do this week, we’ll be watching the movement of the 10-year Treasury yield as it flirts with 1.60 percent, an important threshold. At this level we may see rates rise slightly.