Sacramento Mortgage Rates: Inflation Talk Spooks the Market

It’s all about inflation, at least lately. An occasional positive economic report casting doubts on the weakness of the economy underscored by Fed speak suggesting that inflation is public enemy number 1 has bond traders pulling out their hair. Rates have been steadily rising for the past week or two.

Bernanke spoke last night at a conference on inflation dynamics and downplayed economic concerns, rattling his saber instead at the prospect of food and energy-fueled inflation. His Dallas counterpart this morning echoed the concern, saying he would accept a weaker economy in exchange for a muzzled inflation.

Bond traders did not like the news. The Fannie Mae 5.5% coupon ended the day down over a point. Mortgage rates rose in response.