VMG Weekly Rate Tracker – 09/16/2014

Tuesday’s bond market has opened up slightly following slightly favorable inflation news and a flat open in stocks. The Dow is currently up 5 points while the Nasdaq has gained 4 points. The bond market is currently up 3/32 (2.58%), which could push this morning’s mortgage rates slightly lower than yesterday’s early pricing.

The Labor Department posted August’s Producer Price Index (PPI) at 8:30 AM ET this morning, revealing no changes in either the overall or core data readings. The overall reading pegged forecasts but the core reading was expected to rise slightly. This means inflationary pressures at the producer level of the economy were flat last month, making the data good news for the bond and mortgage markets. 

Tomorrow is the key day of the week, not only for mortgage rates but also for the broader financial markets. It will start with the release of August’s Consumer Price Index (CPI) at 8:30 AM ET, which is one of the more important monthly reports for the bond market. It is considered to be a key indicator of inflation at the consumer level of the economy. As with today’s PPI, there are two readings in the report- the overall index and the core data reading. Current forecasts show no change in the overall reading and a 0.2% rise in the more important core reading that excludes volatile food and energy prices. The weaker the readings, the better the news it is for bonds and mortgage rates.

We also have several Fed events tomorrow afternoon that are expected to heavily influence the financial and mortgage markets. They start with the 2:00 PM ET adjournment of the FOMC meeting that began today. It is widely expected that Janet Yellen and company will not change key short-term interest rates at this meeting, but there is plenty of interest in the markets regarding when they will take the first step towards raising rates. Also worth noting is that this FOMC meeting is one that will be followed by updated economic predictions and a press conference with Fed Chair Yellen. Traders will be looking for any revisions to the Fed’s outlook on unemployment, GDP growth, inflation and their timetable for keeping key interest rates at current levels. The meeting will adjourn and the economic forecasts will be released at 2:00 PM ET while the press conference will start at 2:30 PM. All this will most likely lead to afternoon volatility in the markets and mortgage rates tomorrow.