Mortgage Rates Increase Slightly Despite Mostly Weaker Economic Data

Mortgage interest rates increased slightly despite mostly weaker than expected economic data.  Economic data weaker than expected included March Consumer Credit, the April NFIB Small Business Optimism Index, the April Producer Price Index (PPI), March Wholesale Inventories, the April Consumer Price Index (CPI), April Import Prices, and the University of Michigan Consumer Sentiment Index.  April PPI was up just 0.1% and April CPI was up just 0.2%.  Year over year, though, PPI was up 2.6% and CPI was up 2.5%.  St. Louis Fed President Jim Bullard stated that he doesn’t see a reason to increase rates any further.  Markets, though, are concerned about inflation associated with strong employment, increasing energy prices, and increasing home prices.  It’s likely that the Fed will increase the Fed Funds Rate two more times this year.  Economic data stronger than expected included the March JOLTS Job Openings report, Weekly Jobless Claims, the April Treasury Budget, and April Export Prices.  The Treasury auctioned $69 billion of 3 Year Notes, 10 Year Notes, and 30 Year Bonds which were met with somewhat soft demand. 

The Dow Jones Industrial Average is currently at 24,835, up almost 600 points on the week.  The crude oil spot price is currently at $71.13 per barrel, up over $1 per barrel on the week.  The Dollar strengthened versus the Euro and Yen on the week.

Next week look toward Tuesday’s Retail Sales, Business Inventories, and Housing Market Index, Wednesday’s Housing Starts and Industrial Production, and Thursday’s Jobless Claims and Philadelphia Fed Business Outlook Survey as potential market moving events.