Monday Market Commentary: Mortgage Rates Move Up Slightly as Inflation Worries Linger

by Alex Stenback on April 16, 2007

April_16th_2                                                                                                                    Graphic Courtesy MSNBC
Last Week:
The Fed meeting minutes (which give insight to the thought process behind the more formal Fed policy statement) showed that The *Fed remains concerned about the persistent levels of inflation, has not taken the prospect of more rate hikes off of the table, and is in a wait-and-see mode.  The general level of uncertainty thus created (markets hate this "finger-in-the-wind" stuff) caused mortgage rates to creep up slightly last week.
This Week:
A full economic calendar (posted in its entirety after the jump) this week.  The number to watch will be the CPI (Consumer Price Index – a gauge of inflation) which prints on Tuesday.  A higher-than-expected figure here could send rates up, particularly in the context of the above mentioned Fed sentiment.

 See * and Economic Calendar on the other side of the link below:

*With all this Fed talk, it is instructive to note that the Fed does not control mortgage rates, BUT, the mortgage bond market (whose activity and pricing are what determine mortgage rates) will react the the same data (economic indicators such as the above mentioned CPI, for instance) that the Fed uses to set monetary policy.  In other words: The Fed has said that inflation remains a concern, so if we see data that shows inflation getting worse, we can expect to see mortgage rates drop in anticipation of a (possible) Fed hike.  This is simply the markets way of anticipating future Fed moves and pricing mortgage rates accordingly.


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