Mortgage Rates Increase on Inflation Concerns

Mortgage interest rates increased this past week on inflation concerns associated with higher commodity prices and a potential trade war with China.  Economic data was mixed.  Economic data stronger than expected included the May Empire State Manufacturing Index, the May NAHB Housing Market Index, April Industrial Production, and the May Philadelphia Fed Business Index.  The new orders component of the Philadelphia Fed Business Index reached a 45 year high.  Economic data weaker than expected included March Business Inventories, April Housing Starts, April Capacity Utilization, and Weekly Jobless Claims.  April Retail Sales, April Building Permits, and April Leading Economic Indicators were in line with expectations.  The GDPNow model forecasts Q2 GDP growth at 4.1%.  The Fed is still on track to increase the Fed Funds rate two more times this year.

 

The Dow Jones Industrial Average is currently at 24,739, up slightly on the week.  The crude oil spot price is currently at $71.48 per barrel, up almost $1 per barrel on the week.  The Dollar strengthened versus the Euro and Yen on the week.

 

Next week look toward Wednesday’s PMI Composite Flash, New Home Sales, and FOMC Minutes, Thursday’s Weekly Jobless Claims, FHFA House Price Index, and Existing Home Sales, and Friday’s Durable Goods Orders and Consumer Sentiment Index as potential market moving events.