Mortgage rates have improved since last Thursday’s ‘rate update’.
On Friday the Bureau of Labor Statistics released it’s latest reading of the Employment Cost Index (ECI). I haven’t covered the ECI much in the past and that is because it hasn’t been much of a driver in the interest rate markets. As analysts continue to speculate on when the Fed will begin to raise short-term interest rates wage pressure is getting a lot of attention because it is viewed as being the missing component for inflationary pressure. Friday’s reading of the ECI was lower than expectations which is interest rate friendly.
Speaking of inflation, earlier today the Commerce Department released it’s personal consumption and savings report. It showed that inflation, according to the Fed’s favorite gauge, remains low at +1.3% year-over-year. This is well below the Fed’s target of 2.0% and leaves the door open for the Fed to delay rate increases for now.
Looking ahead, it is jobs week so we’ll get the ADP report on Wednesday followed by weekly jobless claims on Thursday and the all-important monthly jobs report on Friday.
From a technical perspective interest rates look vulnerable to a reversal. I am going to continue recommending a locking position.
Current Outlook: locking bias