Global Economic News Pushes Up Mortgage Rates
Global economic news was the primary influence on US mortgage markets this week. While the US data released during the week was mixed, an improved economic outlook in many other countries was unfavorable for bond markets. As a result, mortgage rates ended the week a little higher. In recent weeks, mortgage rates have fallen to the lowest levels in decades. This has occurred, in part, due to the economic troubles in Europe, which reduced the willingness of investors to hold risky assets such as stocks. During periods of uncertainty, it's common for investors to seek a higher level of relatively safer assets, including US mortgage-backed securities (MBS). On Thursday, however, a series of global headlines from Europe, Asia, and Australia contained positive news for economic growth, which caused investors to move back toward riskier assets and out of bonds. The stock market rallied, and mortgage rates moved higher.  On Thursday, lawmakers introduced a proposal which, if passed, will extend the "close-by" deadline to receive the homebuyer tax credit from June 30 to September 30. The legislation doesn't affect who may qualify for the tax credit. To qualify, you still must have signed a contract by April 30, but it will relieve some of the pressure to close by June 30. Buyers who had not expected to close by June 30 may now be able to qualify.

Also Notable

• May Retail Sales fell short of expectations due to a decline in sales of building materials
• The Fed's Beige Book revealed an improvement in economic activity since the last report
• The European Central Bank (ECB) made no change in rates, as expected
• Gold prices rose to a record high during the week

Average 30 yr fixed rate:
Last week: -0.10%
This week: +0.05%
Stocks (weekly):
Dow: 10,150 +150
NASDAQ: 2,225 +25 

Week Ahead

The most significant economic data next week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Wednesday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Thursday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Industrial Production, an important indicator of economic growth, and Housing Starts are scheduled for Wednesday. Empire State, Import Prices, Leading Indicators, and Philly Fed will round out the week.

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