Interest rates fall following latest economic report
Interest rates fall following discouraging economic report
Interest rates are falling this morning after a round of bad economic numbers. Retail Sales unexpectedly plummeted in December by -1.2% MoM, making it the largest drop since the financial crisis. This certainly wasn’t helped by the recent stock market turbulence and the government shutdown. The bad reading on Retail Sales suggests a huge decline in Personal Consumption last quarter and a negative trend heading into 2019.
Initial Jobless Claims rise surprisingly
Initial Jobless Claims unexpectedly rose to 239,000 versus the expected reading of 234,000; not a terrible number, but another negative one, nonetheless. Finally, PPI ex Food and Energy showed prices fell by -.1%, showing a negative trend on inflation.
Federal Reserve’s economic optimism could be misplaced
With every Federal Reserve speaker in recent days stressing that the economy is “in a good place” or “solid,” we’re left thinking that Fed optimism is somewhat misplaced and concerned that the problems surrounding the global economic slowdown is now creeping into the U.S. markets. Also, with Fed Chair Powell saying the Fed is in “pause” mode until inflation begins to move higher, the week reading on PPI suggests that there is no major move higher in sight.
What this all means for stocks and rates
Rates are mostly trading off of equities right now. So with this round of bad economic data, both stocks and interest rates are decreasing. The 10-year yield is down to 2.65% and mortgages are up five points, making it a good time to lock in rates.
Jeremy Collett is Guaranteed Rate’s Executive Director of Capital Markets. Market Updates are designed to provide readers with a high-level yet insightful view of how economic news, events and trends affect mortgage rates and the homebuying process.