The Inflation Surprise Was Under the Headline
By Sam Alpert, President and Mortgage Loan Originator, NMLS #1961555
September's headline inflation number matched expectations. The core number underneath it did not. Here is what that means for mortgage pricing, and what it does not.
September's consumer-price report showed prices up 0.6% for the month and 3.7% from a year earlier. The monthly headline increase matched expectations. The annual headline number was above the 3.6% forecast reported ahead of the release.
What surprised the market?
Core inflation, which excludes food and energy, rose 0.3% for the month. Economists expected 0.2%. Core prices were 2.6% higher than a year earlier, also above the 2.5% forecast.
Why did MBSLive show 0.335%?
That is its more precise monthly core reading. The public report is rounded to 0.3%. It is not a yearly inflation rate or a mortgage-rate change.
What does this have to do with mortgages?
MBSLive's 8:35 AM alert reported mortgage-bond selling after the release. Bond-market changes can affect lender pricing. But a bond price is not a consumer mortgage rate, and a Treasury yield is not the rate available for your loan.
What can we say right now?
The morning report put pressure on mortgage pricing. It does not establish a particular lender's new quote, a rate-lock recommendation or where rates will finish the day.
Sources: FoxBusiness's October 14 inflation report, CNBC's forecast preview and MBSLive's 8:35 AM alert. Morning snapshot, not a closing-market report.