Wednesday, November 14, 2018
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Updated on November 14, 2018 10:19:04 AM EST

This morning’s important economic data was Octobers Consumer Price Index (CPI) at 8:30 AM ET. It showed that the overall reading rose 0.3% and that the more important core data that excludes volatile food and energy prices, was up 0.2%. Both readings matched forecasts. The increases mean inflationary pressures at the consumer level of the economy were stronger than in September but did not come as a surprise. Rising inflation is an issue for the bond market because it makes long-term securities less appealing to investors and causes the Fed to be more aggressive with rate hikes.

Fed Chairman Powell has a public speaking engagement this evening and again late tomorrow morning. Tonight’s event is more likely to yield something that will affect the markets and possibly mortgage rates. Since it will be after the markets close, if there is a reaction to his words it will be reflected in tomorrow morning’s mortgage rates.

The Commerce Department will give us Octobers Retail Sales data at 8:30 AM ET tomorrow. This data measures consumer level or retail spending. It is considered extremely important to the markets because consumer spending makes up over two-thirds of the U.S. economy. It is expected to show a 0.5% increase in retail-level spending, meaning consumers spent more last month than they did in September. A larger increase in spending would be considered negative news for bonds because rising spending fuels economic growth and raises inflation concerns in the bond market. If tomorrow’s report reveals that consumers spent less than thought, bonds should react favorably, pushing mortgage rates lower. If it shows a larger rise, mortgage rates could move higher.

Tomorrow’s weekly unemployment update is expected to show that 214,000 new claims for unemployment benefits were filed last week. That would be unchanged from the previous week’s total. The larger the number of new claims, the better the news it is for bonds and mortgage pricing. However, this is only a weekly report and comes at the same time as a highly important monthly report. Therefore, it is likely not to have much of an influence on tomorrow’s mortgage rates.

 ©Mortgage Commentary 2018