Mortgage note rates are unchanged for a 9th straight day thus far. Although the financial markets have been volatile over that timeframe rates have found a tight range and not deviated from it.
The Commerce Department reported earlier that retails sales grew by more than expected in October. This has analysts optimistic that consumers will generously open their wallets this holiday season. In a separate report the Labor Department reported that inflationary pressure at the wholesale level of the economy remains tame. The Producer Price Index fell from a month earlier and on a year-over-year basis prices increased by 2.8% when you strip out volatile food & energy prices. Inflation is the primary driver of mortgage rates so this is welcome news.
As has been the case for the past few weeks domestic economic news is being overshadowed by developments in Europe. Although policymakers are doing everything they can do curb contagion the markets are abandoning EU government debt in droves. The Wall Street Journal reported this morning that in addition to Italy, French, Spanish, and Belgian 10-year bond yield spreads (relative to Germany) have all hit EU-era highs. This is a sign that investors believe that the debt crisis will continue to spread.
Traditionally this has meant that investors will seek “safety” here in the US and help push rates lower. But, as we’ve seen mortgage rates have yet to break below this current level so there is no guarantee this will happen.
Current Outlook: neutral