Mortgage Rates Impacted by Data, June 17, 2010

By:: David Coster - MortgageLoan.com

Mortgage Rates Impacted by Data, June 17, 2010

Mortgage Rate Trend Direction Down

Economic Reports/Rate Impact CPI, 8:30 AM ET, High Rate Impact

Jobless Claims, 8:30 AM ET, Moderate Rate Impact

Leading Indicators, 10:00 AM ET, Moderate Rate Impact

Philadelphia Fed Index, 10:00 AM ET, Low Rate Impact

Key News European Debt Crisis

Summary

A great deal of data is available to traders today to guide their decisions. Reports on inflation (CPI-Consumer Price Index), Jobless Claims, Leading Economic Indicators and the economic condition within the Philadelphia Federal Reserve region will provide an unusually comprehensive look at economic growth and strength within the US economy. Based on early activity in the stock and bond markets, lenders this morning are expected to price mortgage rates down slightly from their close yesterday afternoon.

Impact of economic data released today

The CPI (Consumer Price Index) which measures inflation in prices came in as expected showing little to no inflation. Jobless Claims however came in much higher than expected for both new claims and continuing claims. The unemployment situation is a major drag on our economy and will keep mortgage rates down until overall employment increases. The Leading Indicators report and the Philadelphia Fed Index are released later this morning, but are not expected to move markets significantly.

Impact of international or political events

After a successful bond auction by the Spanish government today, fears of an impending collapse in Spain were calmed for the time being. Leaders from all 27 countries that make up the European Union are meeting today to discuss financial regulatory reform. Among the items they will discuss is the possibility of imposing a “bank tax” to create a fund to pay for any bank distress. Comments and results from this meeting could certainly move rates today and tomorrow.

Elsewhere, a Chinese official was quoted as saying that the value of the Yuan, the Chinese currency, is actually too high. This is contrary to the belief of most other nations, including the US, who believe that the Yuan is undervalued. A low Yuan means that Chinese goods are cheaper than those of competitors from other nations and unfairly squeezes out their goods. This topic likely won’t move mortgage rates today, but it is an issue to watch for the future.

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