Daily Market Update 8/15/12

Mortgage rates continued their upward trend Wednesday in spite of the release of weaker than expected economic data.  This morning, the July Consumer Price Index (CPI) was unchanged from June.  An increase of 0.2% had been forecast.  The more closely watched Core CPI, excluding food and transportation components, rose 0.1%.  The Empire State index, which measures manufacturing activity across the state of New York, fell unexpectedly to -5.9.  Readings below zero indicate contraction in the manufacturing sector.  Industrial Production rose 0.6%, slightly above forecast.  The Mortgage Bankers Association weekly purchase activity index fell 4.5%, while the refinancing activity index declined 5.1%.  Average 30-year fixed rates were unchanged last week, at 3.76%, not including fees.  Mortgage rates have now risen by about .375% since late July as the economic crisis in Europe has not worsened and investors have lowered their expectations of further Fed easing.  While the outlook for economic growth remains uncomfortably low, mortgage rates are primarily impacted by the change in expectations.  No other data will be released today.

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