With little fresh news from global central bankers last week, the economic data was the primary influence on mortgage rates. Some reports were positive and some were negative. The net effect was that mortgage rates ended the week slightly lower.
The Fed’s target level for inflation is an annual rate of 2.0%. Tuesday’s release of the core PCE price index (the inflation indicator favored by the Fed) revealed that inflation remains well below this level. In June, core PCE was just 1.5% higher than a year ago, which was the same annual rate as in May. Low inflation is good for mortgage rates, and rates improved on Tuesday.
Aside from the Employment data, one of the most highly anticipated reports each month covers the services sector, which represents more than 75% of the jobs in the U.S. Slower than expected growth in this sector caused mortgage rates to fall on Thursday. The July ISM Services index fell to 53.9 (well below expectations), and the lowest level since August 2016.
Mortgage rates rose on Friday following the release of modestly stronger than expected Employment data. Against a consensus forecast of 180K, the economy added 209K jobs in July. Strength was seen in health care, business services, and leisure and hospitality. The unemployment rate declined from 4.4% to 4.3%, which matched May’s reading at the lowest level since 2001.
Looking ahead, the most significant report during this week will be the Consumer Price Index (CPI), a widely followed monthly inflation report, which will come out on Friday. CPI looks at the price change for goods and services which are purchased by consumers. Aside from this, it is a light week for economic data.
Please let me know if you have any questions in regards to this, or if there is anything we can do for you and your valued clients.
Thank you for your continued support, and have a productive week.
SVP, Regional Manager
THE CRAWFORD TEAM
V.I.P. Mortgage, Inc.