POST TAGSMarket Updates
Blog posted On September 18, 2023
Mortgage rates trended slightly higher last week, but not for reasons you might expect. As we know, hotter inflation and stronger economic data generally lead to higher rates. But last week, rates had near opposite reactions. Inflation data was hotter than expected. However, rates inched lower. The next day, retail sales were much higher than expected, which typically would have sent rates much higher as well. But rates only had slightly higher movement. Why? Read the full explanation, plus big rate movement factors coming up this week, below.
Why did rates go against the grain last week?
The most popular inflation gauge, the consumer price index (CPI), revealed that August’s inflation levels were higher than expected. So why did rates move lower? It’s possible that the markets were actually predicting that inflation would be even higher, and were slightly relieved at the numbers that came in. Retail sales are a big indicator of the economy’s strength. Last week’s retail sales data from August was 3x higher than expected. But rates didn’t move much higher, thanks to some European Central Bank (ECB) drama.
This week’s BIG news could finally give rates some relief (or do the exact opposite)
It’s a jam-packed week for housing news. Here’s the lineup:
Housing starts and building permits are expected to cool slightly. The Fed is expected to ‘skip’ this month’s rate hike. Existing home sales are expected to increase. In other words, economists expect the Fed will leave the benchmark interest rate as it is, but toy with the idea of one more rate hike later this year, depending on how economic data comes in.
Stay tuned for all the economic and rate-related updates.