![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week lower which put additional upward pressure on rates. Rates were negative throughout most of the week but really shot higher in response to higher consumer inflation readings. The year over year consumer price index rose 7.5% which was the highest level since 1982. Consumer prices rose 0.6% vs 0.5% in January. The core, which excludes volatile food and energy, rose 0.6% vs 0.5%. Most of the other data was tame. Consumer credit was $18.9B vs $22B. The trade deficit stood at 80.7B vs 82B. Consumer sentiment was 61.7 vs 67. Weekly jobless claims were 223K vs 230K. Mortgage interest rates finished the week worse by approximately a full discount point or more.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Producer Price Index | Tuesday, Feb. 15, 8:30 am, et |
Up 0.4%, Core up 0.4% |
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| Retail Sales | Wednesday, Feb. 16, 8:30 am, et |
Up 1.7% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| Industrial Production | Wednesday, Feb. 16, 9:15 am, et |
Up 0.4% | Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates. |
| Capacity Utilization | Wednesday, Feb. 16, 9:15 am, et |
76.7% | Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates. |
| NAHB Housing Index | Wednesday, Feb. 16, 10:00 am, et |
82 | Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates. |
| Weekly Jobless Claims | Thursday, Feb. 17, 8:30 am, et |
225K | Important. An indication of employment. Higher claims may result in lower rates. |
| Housing Starts | Thursday, Feb. 17, 8:30 am, et |
1.7M | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Philadelphia Fed Survey | Thursday, Feb. 17, 10:00 am, et |
28 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Leading Economic Indicators | Friday, Feb. 18, 10:00 am, et |
Up 0.4% | Important. An indication of future economic activity. A smaller increase may lead to lower rates. |
Inflation Higher
Mortgage interest rates are higher lately as inflation is significantly above the Fed’s 2% goal and rising. The Fed is expected to raise rates in March and the odds of a hike currently exceed 99%. The last Fed statement indicated, “With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate.” Fed Official Bullard indicated last week that he is ready for a 100-basis point rate hike by July. With only 3 Fed meetings between now and then that means at least a 50-basis point hike at one of those meetings and most see that coming sooner rather than later.
Be cautious in these volatile times. It could take some time for inflation fears to settle.
