Mortgage Bonds moved lower as inflation reared it’s ugly head. Inflation is the arch enemy of Bonds and Mortgage Rates. The Consumer Price Index (CPI) jumped up to the Feds threshold of 2%. Should inflation rise, Bond friendly news will not be able to keep Mortgage Rates from rising. Simply put, Bond investors require a higher yield to offset less buying power imposed by inflation.
The 3.5% Coupon Bond ended higher Friday, bouncing off session lows and closing below the 25-day moving average for the second day in a row. If prices move below the $100.50 level, Mortgage rates could move higher.
With few economic reports due out next week, the focus will be on the The Federal Open Market Committee (FOMC) on Tuesday and Wednesday.
Economic News
Producer Price Index and Retail Sales were unchanged in August.
Philly Fed Index Shows Improvement, at 17.5 in September Vs. -20.7 in August.
Jobless Claims Rise More than Expected, Up 11,000 to 428,000.
Weekly Mortgage Applications Rise 6.3 Percent, First Rise in a Month.