Rates are slightly higher across the board this morning. Two things are working against mortgage rates.
First, as I mentioned in yesterday’s ‘rate update’ video we are in the heart of earnings season and a rally in the stock market could put upward pressure on mortgage rates. This is what is happening this morning after Johnson & Johnson (JNJ) reported better than expected first quarter earnings.
Second, the Producer Price Index (PPI), which reports on inflation at the wholesale/ manufacturing level of our economy, increased by over 1% in March. We know that inflation is the number one enemy of mortgage rates.
The good news is that mortgage backed-bonds are close to hitting tough technical trading support & the PPI report showed modest increases when you strip out volatile food and energy prices. We hope that traders will focus on these items as the day wears on. If not, we could see rates rise by another .25% before they stabilize.
Current Outlook: neutral