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By G. Steven Bray
Mortgage rates continue to hang out in their recent range, which is close to their all-time low. Day-to-day, week-to-week they move up a little, then down a little, but there seems to be no motivation to break the range.
Chances are good that won’t change soon. Our current low interest rates are a reflection of expectations for mediocre economic growth and very low inflation. Economic data over the last week reinforced those expectations.
But it’s the inflation expectations that really caught my eye. During the first quarter of the year, I grew concerned that two of the Fed’s favorite inflation measures, the personal consumption expenditures (PCE) index and wage growth were showing sign of life. Last week, both measures were below forecast, which should ease markets’ collective mind.
The big event this week is the jobs report on Fri; however, I’m not sure markets will really care unless it badly misses or beats expectations. At this point, I think it’s going to take a big, unexpected event to move rates out of their current comfort zone.