Weekly Mortgage Rate Commentary

Cupid's arrows might have been flying around everywhere last week - but little love came calling for the Bond market. First, Retail Sales for January were far better than expected - which was good news for Stocks, but as money flowed into Stocks, and out of Bonds. Federal Reserve Chair Ben Bernanke gave his semi-annual testimony to the Senate Banking Committee last week. While he stated that the Fed stands ready to provide further stimulus to the economy if needed, he believes the US is neither in a recession, nor will go into one this year. Some of the week's data backed his words. Retail sales data came in higher than expected, and Industrial Production numbers showed minimal change. All of this, along with the passage of the economic stimulus package, resulted in long-term mortgage rates moving upward.

We start this week off with the release of the Consumer Price Index. Given all the recent effort to stimulate the economy, a spike upwards in the CPI could easily spook the markets and drive mortgage rates upward in fear of expanding inflationary pressures. Alternatively, a drop in the CPI could give the Fed additional flexibility in cutting rates again. The minutes from the Fed's last meeting also come out this week; any hints of future rate cuts will push rates downward.