![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week sharply lower which put upward pressure on rates. Rates worsened throughout most of the week as inflation fears continued. Higher than expected inflation readings resulted in MBS selling pressure. Consumer prices rose 0.5% as expected. The core rose 0.4% as expected. Year over year CPI rose 6.4% vs 6.2%. YOY Core rose 5.6% vs 5.4%. Producer prices rose 0.7% vs 0.4%. The core rose 0.5% vs 0.3%. Yearly PPI prices rose 6% vs 5.4%. YOY Core rose 5.4% vs 4.9%. Housing starts were 1.309M vs 1.36M. Retail sales rose 3% vs 1.2%. Weekly jobless claims were 194K vs 203K. Mortgage interest rates finished the week worse by approximately 1/2 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| 2-year Treasury Note Auction | Tuesday, Feb. 21, 1:15 pm, et |
None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| 5Y Treasury Note Auction | Wednesday, Feb. 22, 1:15 pm, et |
None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Fed Minutes | Wednesday, Feb. 22, 2:00 pm, et |
None | Important. Details of the last Fed meeting will be thoroughly analyzed. |
| Weekly Jobless Claims | Thursday, Feb. 23, 8:30 am, et |
195K | Important. An indication of employment. Higher claims may result in lower rates. |
| 7Y Treasury Note Auction | Thursday, Feb. 23, 1:15 pm, et |
None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Personal Income and Outlays | Thursday, Feb. 16, 8:30 am, et |
Up 0.2%, Down 0.1% |
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, Feb. 24, 8:30 am, et |
Up 0.2% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| New Home Sales | Friday, Feb. 24, 10:00 am, et |
616K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, Feb. 24, 10:00 am, et |
64.9 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Higher Inflation
Mortgage interest rates are higher lately as inflation is significantly above the Fed’s 2% goal and recent inflation readings have traders concerned about the magnitude of future Fed rate hikes. Higher than expected producer and consumer inflation readings sent MBS prices lower and rates upward last week. Comments from Fed officials added fuel to the selling pressure. Richmond Fed President Barkin, Cleveland Fed President Mester, and St. Louis Fed President Bullard all signaled last week that inflation remains high and that additional rate increases are needed. Mester and Bullard even went as far as stating they wanted a larger hike at the most recent meeting.
Now is a good time to take advantage of rates at these levels to avoid exposure to volatility in the weeks ahead.
