Mortgage rates are slightly better this morning on lower than expected inflation data.
The Commerce Department reported earlier this morning that GDP grew at a 3.2% annualized rate in the first quarter. This was in line with expectations. Also included in the report was a very tame read on inflation. The Personal Consumption Expenditure price index grew at a much slower pace than analysts were expecting.
In a separate report issued by the Labor Department employment costs in the first quarter came in lower than expected. Since the US primarily has a service-based economy, which is heavily reliant on labor, low employment costs lead to low inflationary pressure. Low inflation is good for mortgage rates.
This morning it looks as if Greece is closer to receiving a bailout from the EU and the IMF. I said in yesterday’s ‘rate update’ that I fully expect Greece to avoid default. When this becomes imminent I expect yields to reverse higher.
Current outlook: locking bias