Weekly Economic Review: Mortgage Rates Up, Oil Prices Keeping Import & Export Prices Down

Posted by Laine Smith on 3/11/16 12:24 PM

Topics: Economy

No major U.S. economic reports were released this week with the largest financial news coming from the European Central Bank (ECB), who added to its stimulus plan to help nurture economic growth and boost inflation. Mortgage rates ended the week a little higher for the second week in a row.

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Image courtesy of hywards at FreeDigitalPhotos.net

In the U.S., the most influential report was Friday’s Imports and Exports Prices, which have continued to contract for the eighth month in a row despite other reports suggesting that the inflation rate is increasing. Import prices fell 0.3 percent in February while export prices were down 0.4 percent. Both were better than expected.

While oil prices have been the major factor in pulling import prices lower, February’s drop is less so than previous months. Regardless, import prices excluding food & fuels inched 0.1 percent higher, which is the first positive reading since May 2015. Lower import prices reduce inflation which helps keep mortgage rates low.

The Fed meeting announcement is next Wednesday, and no change to the federal funds rate is expected.

Last week in the economy:

  • Mortgage rates (the national average) increased 0.07% (7 basis points).
  • The purchase sector of MBA Mortgage Applications rose 4.0 percent in the March 4 week with a year-over-year gain of 30 percent. The refinance index, while strong, fell 2 percent in the latest week.
  • Initial Jobless Claims remain low but did increase in the February 27 week by 6,000 to 278,000.
  • The February Labor Market Conditions Index fell back to minus 2.4 with a downward revised minus 0.8 percent in January. The index is composed of 19 separate indicators, but February’s drop in average hourly earnings and decline in temp payrolls were two of the major contributing factors to the month’s decline.
  • Bloomberg’s Consumer Comfort Index inched 2-tenths higher in the week of March 6 to 43.8.

What's on the economic calendar for the week of March 14, 2016:

Tuesday: FOMC Meeting Begins, Retail Sales, Housing Market Index

Wednesday: MBA Mortgage Applications, Consumer Price Index, Housing Starts, FOMC Meeting Announcement

Thursday: Jobless Claims & Bloomberg Consumer Comfort Index, JOLTS

Friday: Consumer Sentiment

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