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By G. Steven Bray
Mortgage rates pulled back a little last week as markets came to terms with political realities. However, volatility remains as the path forward for Trump’s policies remains very unclear.
While we may not get political clarity this week, economic data could trump that concern and set the direction for short term rate movement. Last week’s inflation data, the Personal Consumption Expenditures index, came in slightly hotter than expected, and wage inflation seems to be building. This week is a jobs report week, which gives us another read on wage inflation this Fri.
A maybe more anticipated event this week is the release Wed of the minutes from the last Fed meeting. The Fed has indicated these minutes will include a new forecasting format. It seems the panic surrounding potential rate hikes has subsided, but I’m sure markets will scrutinize the new charts for hints that the panic was justified.
The week is full of other economic reports, and we also have the ongoing political gymnastics in Washington and overseas. I think it’s most likely this will result in push-me/pull-me action on rates this week. However, if any one of them suggests unexpected political certainty, economic strength, or inflationary pressures, it could move rates quickly higher.