The May Producer Price Index beat expectations by contracting

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Published Date 6/13/2024

Today's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up.

Rates Currently Trending: Neutral

Mortgage rates are moving sideways today. The MBS market improved by +19 bps yesterday. This was not enough to decrease mortgage rates or fees. The market experienced high volatility yesterday.

Today's Rate Forecast: Neutral

Inflation: The May headline Producer Price Index (PPI) contracted by -0.2% versus estimates of +0.1% on a MOM basis. YOY it was up 2.2% versus estimates of 2.5%. Core (ex food and energy) PPI was flat at 0.0% versus estimates of 0.3% on a MOM basis. YOY, it was up 2.3% versus estimates of 2.4%.

Jobs: We got a round of weaker jobs data as Initial Weekly Jobless Claims were higher than expected, up 242K versus estimates of 225K. The four week moving average ticked up to 227K. Continuing Claims broke back above the 1.8M mark for the first time in a few months with a reading of 1.820M versus estimates of 1.800M.

The Fed: Today we will hear from NY Fed President Williams.

Treasury Auction: We will have an important 30Y Treasury Bond auction at 1 pm ET today.

Today's Potential Rate Volatility: High

This morning markets are moving sideways. Volatility has started high with lots of choppy movements.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Source: TBWS

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