Bond yields drop this week- Federal Reserve chairwoman Janet Yellen spoke earlier in the week. In her comments it appeared that the Fed plans to slow down the pace of interest rate increases. The Fed has raised its benchmark rates three times since December. She also stated that the economy was healthy, but reiterated that inflation was well below the Fed’s target level. The 10-year Treasury bond closed the week at 2.33%, down from 2.39% last week. The 30-year treasury yield ended the week at 2.91%, down from 2.93% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.
Mortgage Rates higher this week – The July 13, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.03%, up from 3.96% last week. The 15-year fixed was 3.29%, up from 3.22% last week. The 5-year ARM was 3.27%, up from 3.31% last week. Unfortunately, rates rose late in the week so next weeks rates will be higher.
Consumer prices flat in June – U.S. Consumer prices slowed to a 1.6% growth rate for the 12 months ending June 30. This was down from an already stubborn inflation rate of 1.9% in May. The core inflation rate, which excludes food and energy was unchanged at 1.7%. Analysts expect that this low inflation rate will prompt the Fed to hold off on any interest rate hikes, at least for now.