John's Finance Corner: Favorable Inflation Data Brings a Positive Turn for Mortgage Rates
Greetings, homeowners and future buyers!
In this post, I delve into the recent inflation data and its positive impact on mortgage rates. December's Consumer Price Index (CPI) reading showed an increase of 0.4%, pushing the year-over-year rate from 2.7% to 2.9%. While the headline reading's rise was concerning, the Core CPI (excluding food and energy) only increased by 0.2%, which was lower than expected. This favorable Core CPI data brought the year-over-year reading down to 3.2% from 3.3%, causing bond markets to react positively, leading to a decline in the 10-year Treasury yield and mortgage rates.
Wholesale Inflation and Its Implications
Additionally, the Producer Price Index (PPI) for December rose by just 0.2%, well below the anticipated 0.4%. Core PPI remained unchanged from the previous month, with the year-over-year reading steady at 3.5%. The bond market welcomed this lack of increase, as PPI is a key component influencing the Personal Consumption Expenditure (PCE) index, the Federal Reserve's favored measure of inflation. With PCE data due on January 31st, there is optimism that it will show a more favorable reading, further aiding mortgage rates.
Market Response and Expectations
The markets were closed on Martin Luther King Day, resulting in a quieter week with limited data releases, including weekly jobless claims and December's existing home sales. With the change in Administrations on Monday, it will be intriguing to observe how bond markets respond. So far, bond improvements have positively impacted mortgage rates.
Staying Informed and Prepared
My expertise provides valuable guidance in understanding the connection between inflation data and mortgage rates. Staying informed and prepared is essential for navigating the housing market. John's Finance Corner offers the latest insights to help you make the best decisions for your homeownership journey.
John Lamberg
MORTGAGE LOAN ORIGINATOR
NMLS 189233
