Weekly Economic Review: Inflation Slows Down, Mortgage Rates Up

Posted by Laine Smith on 4/15/16 12:40 PM

Topics: Economy

Economic reports released this week were a bit weaker than consensus levels called for. Mortgage rates increased minimally following last week’s lowest rates of the year.


Image courtesy of pakorn at FreeDigitalPhotos.net

March’s Consumer Price Index (CPI) noted deceleration as the core CPI, which excludes food and energy, increased only 0.1 percent for the month following February and January’s gains of 0.3 percent.

Year-over-year, core CPI is down 0.1 percent to a 2.2 percent level following four straight months of increases. A downward inflation trend is good for mortgage rates.

Retail sales disappointed in March, falling 0.3 percent. The drop is mostly attributed to the auto sales component, which declined a steep 2.1 percent. Sales excluding gasoline slowed to a 3.3 percent gain from February’s 5.4 percent.

Retail sales excluding the volatile auto component saw an increase of 0.2 percent for the month, which is respectable but fell short for the 0.2% to 0.7% consensus range.

Last week in the economy:

  • Mortgage rates (the national average) increased 0.2% (2 basis points).
  • The purchase sector of MBA Mortgage Applications was up 8 percent in the April 8 week due to the continued decline of mortgage rates. The refinance sector was up 11 percent from the previous week. Year-over-year purchase applications are up 24 percent to the second highest level since May 2010, according to Bloomberg.
  • Initial Jobless Claims dropped heavily in the April 9 week, down 13,000 to 253,000. This matched the week of March 5, 2016, which was the lowest level seen since 1973. 
  • Consumer sentiment dropped for the month of April to a level of 89.7. The consensus range called for 90 to 94.2, but the expectations component dropped a sizable 1.9 points, possibly due to doubts about future employment and income opportunities.

What’s on economic calendar for the week of April 18, 2016:

  • Monday – Housing Market Index
  • Tuesday – Housing Starts
  • Wednesday – Existing Home Sales & MBA Mortgage Applications
  • Thursday – Jobless Claims & Bloomberg Consumer Comfort Index

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