Rates are effectively unchanged this morning despite worse than expected inflation data.
The Labor Department reported earlier this morning that the Consumer Price Index (CPI) rose by .8% in July alone. On a year-over-year basis CPI rose by 5.6% which is the biggest rise in consumer prices since 1991. Core CPI, which strips out volatile food and energy prices, rose by .3% in July and 2.50% year-over-year.
As we know inflation is the enemy of mortgage rates. Today’s report is not likely to help mortgage rates move lower anytime soon. However, the markets were bracing for a poor report so the bond market is not reacting too terribly bad yet.
From a technical standpoint a negative trend line has developed since mid-July. If you look at the chart below you’ll see a blue line which is acting as a ceiling of resistance. This resistance level will make it hard for rates to move lower.