All the week's news affecting mortgage rates!

The last week and a half has been difficult for economic data. Let’s face it, the inflation indicators came in too hot. We were expecting that numbers would deteriorate slightly, but they over-did. This brings to mind the Benjamin Disraeli quote, "There are three types of lies: Lies, Damn Lies, and Statistics." Job creation is up. The consumer price index is up. Initial Jobless claims are down. The unemployment rate is down. The top line numbers, however, ignore the fact that the new jobs are more of the lower wage, part-time, and entry-level variety. This is leading to less disposable income.

This all leads to the FED delaying any sort of cut to the Fed Funds (or Discount) rate for the foreseeable future. So long as the data keeps coming in like this, we will see the FED maintain a more hawkish position in maintaining higher rates.

There is a bit of light at the end of the tunnel, however. The FED built up a huge portfolio of debt in the last few years in its effort to maintain liquidity during the onset and early stages of the COVID-19 Pandemic. They have been letting this debt portfolio lose principal by not replacing paid-off securities. They were speaking of decreasing the runoff rate by about 50%. This would increase the supply of money in the market–causing a risk of further inflation - but would also relieve some of the pressure that we are currently feeling at the Treasury auctions, which have been seeing weaker than desired results (causing higher interest rates.)

This week, we will be paying attention or Retail Sales, the Housing Market Index, jobless claims, and home sales. After last week's bond market disappointment (if you want to borrow money,) let's hope for some much-needed relief, but be prepared for more unfavorable numbers to head our way.