Rate momentum stalls slightly

Momentum from last week's rate drop stalls a bit.

Happy Friday from Local Mortgage!

The momentum from last week stalled a bit this week despite some marginally positive inflation data. We will end the week still at 5.75% for our best 30-year fixed conventional scenario, but it does come with a relatively small one-eighth percent charge in discount points.  

Tuesday’s Consumer Price Index (CPI), which is a widely followed inflation indicator, was slightly better than expected, coming in a 0.2% increase vs. a 0.3% consensus forecast. However, that 0.2% was actually rounded down to 0.2% for reporting purposes, so the improvement was not quite as strong as suggested. The notion of inflation being lower but still elevated caused a tepid market reaction.

Wednesday’s Retail Sales headline number was a little better than expected, however, the control group that excludes automobiles, gas, and building materials was right in line and October’s number was revised lower.

Thursday’s Jobless Claims fell below the key 200,000 mark and below the consensus estimate of 210,000, which started a bit of a market selloff, pushing treasury yields and rates up just a bit to end the week.   

Next week investors will continue to monitor FED sentiment, as it appears that a January rate cut is almost completely off the table with the possibility of a March cut now down under 20%. For economic reports, it will be a light week with mostly delayed reports from several months ago. Markets will be closed Monday for MLK Day.

Hope everyone has a great weekend and thank you for reading.