Rate Update for August 14, 2008
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.