Mortgage rates are priced better this morning.
Mortgage rates improved from yesterday afternoon following a well bid 10-year Treasury note auction. Today, the US Treasury will issue the final leg of it debt offerings for the week with $16 billion in 30-year bonds. Another well bid auction would help rates remain low while a weak auction could cause rates to reverse higher.
The Commerce Department reported that non-gasoline retail sales rose by much less than expected last month as consumers adjusted their budgets to account for higher prices at the pump. Bad news for economy is often good news for mortgage rates.
Speaking of gas prices, the Labor Department reported that year-over-year prices rose by 6.8% at the wholesale level of our economy. However, when you back out volatile food & energy prices that figure only rose 2.1%. Inflation is the primary driver of mortgage rates.
Oil and other commodity prices are pulling back as investors reconsider the economic outlook which supports the Fed’s view that inflationary pressures are “transitory”.
We’ll keep an eye on this afternoon’s 30-year bond auction and maintain a locking bias.
Current Outlook: locking bias