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Mortgage Rates Start Lower, But Finish Higher After Inflation Data

Tuesday brought an unfriendly paradoxical reaction for rates.  Don’t worry.  We can shift gears to words that make more sense now.   Rates began the day in good shape, with most lenders just a bit lower than yesterday.  This was made possible by today’s important inflation data coming in right in line with forecasts.   When economic data is right in line with forecasts, the implication for interest rate movement is about as tame as it can be.  Contrast that to alternate extremes where a surge in inflation would have sent rates skyrocketing or where a big drop in inflation would give way to much lower rates. The initial reaction to today’s inflation data was akin to a small sigh of relief with modest benefits for rates, but it unfortunately ended up being a multi-stage affair that focused most of its efforts on pushing rates higher.  Attempts to explain “why” would end up venturing into analytical territory where someone is coming up with analysis to fit a certain outcome. There are several legitimate ways to do that, but rest assured, no one would be digging very deep into that analytical effort if rates hadn’t paradoxically reversed course in the middle of the day.  In other words, we’d all be saying “inflation was in line with forecasts and a slight sigh of relief in rates makes sense.”  The damage wakes the average lender right in line with 7% 30yr fixed rates for top tier scenarios.
Source: mortgagenewsdaily.comNew feed

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