Mortgage rates were little changed Friday, although 30-year fixed rates rose about 1/2% for the week. Investors shrugged off new economic data and focused instead on the rising budget deficit and increased borrowing needs of the Federal Government. The risk of higher inflation in coming years threatens to limit the Fed’s ability to hold down long term interest rates to stimulate the economy. In economic news, the Chicago Purchasing Managers Index fell unexpectedly last month, showing a continued decline in business activity. First quarter GDP was revised to -5.7%, a bit worse than forecast. Consumer Sentiment increased slightly. Crude oil prices hit a six month high at $66 per barrel. The closely watched Non-farm Payrolls report for May will be released next Friday. Mortgage-backed securities may remain volatile through the week.