After several weeks of increases, Mortgage rates got a much needed boost last week, driven in large part by a tough week for stocks. Negative news from Citigroup and Fed/Ex, as well as a weak manufacturing report, and weak housing report drove, drove major indices down, to the benefit of bonds and mortgage rates. The benchmark 30 year fixed rate improved by .125% to .25%.
Is Fed week. The FOMC concludes it’s two day meeting on Wednesday with a policy statement and the release of it’s decision on interest rates. Most market watchers expect the Fed to stand pat, and keep the Fed Funds Rate at it’s current 2%. The policy statement will be closely scrutinized for any clues as to future Fed action. The bond markets actually may see a boost if the Fed signals any forthcoming rate hikes, so any language suggesting the Fed is ready to go on the offensive against inflation may actually help mortgage rates improve.
All of this, of course, against the persistent backdrop of spiking oil prices, which are starting to drag on the world economy, our stock market, and your wallet.
After the dust clears from the FOMC meeting, don’t forget about Friday’s PCE (Personal Consumption Expenditures) report. As one of the preferred gauges of inflation at the consumer level, this report can be high impact.