Sacramento Mortgage Rate Update

The benchmark 30 year fixed rate rose slightly to 6.00% with 1 point.

Behind the Changes

It’s been an active week in the bond market, with a number of significant economic reports.  All pointed toward a stronger economy, eroding hope for a Fed Rate cut this Spring.  The closely watched 10 year Note ended the week at 4.773%.  

December PPI, CPI, Housing Starts, and Housing Permits were all higher, and this morning’s University of Michigan Consumer Sentiment leaped to a 3 year high. 

Here are the actuals vs. the expected:

Producer Price Index (PPI)

• 0.5%     Expected: 
• 0.9%     Actual: 

Core PPI:

• 0.1%     Expected
• 0.2%     Actual

Consumer Price Index (CPI)

• 0.4%     Expected
• 0.5%     Actual

Core CPI

• 0.2%     Expected
• 0.2%     Actual.

Dec Housing Starts

• 1570K     Expected
• 1642K     Actual

Dec Building Permits

• 1505K     Expected
• 1596K     Actual

University of Michigan Consumer Sentiment

• 92.4     Expected
• 98.0     Actual

The University of Michigan released their index of Consumer Sentiment late this morning, showing a surprising jump in confidence. January’s preliminary reading came in at 98.0, which was well above forecasts of 92.4. This means that surveyed consumers were much more optimistic about their own financial situations than thought. This is bad news for bonds because rising confidence usually indicates that consumers are more apt to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, related strength raises inflation concerns in the markets.

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