Vital Statistics:
Stocks are higher as we kick off earnings season. Bonds and MBS are up small.
The consumer price index rose 0.4% MOM and 3.3% YOY, which was a touch above expectations. (the Street was looking for a 0.3% MOM rise). If you strip out food and energy, prices rose 0.2% MOM and 3.2% YOY, which was better than expectations. Gasoline prices were a big driver of the headline number, and shelter inflation remained at 0.3% MOM
The bond market reacted positively to the report, with the 10 year yield initially pushing down towards 4.72%.
Mortgage applications rose 33% last week as purchases rose 27% and refis increased 44%. The previous week was the New Year holiday, so that accounts for the big increase.
“Bond yields in the U.S. and abroad continued to move higher in response to concerns over a sticky inflation outlook and still too-high budget deficits, which pushed mortgage rates higher for the fifth consecutive week. The 30-year fixed rate is now at 7.09 percent – its highest level since May 2024,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “This time of the year is a particularly volatile time for application volumes, so it can be more helpful to focus on the level rather than the percent change. Purchase applications were 2 percent lower, and refinances were 22 percent higher compared to a year ago. Total applications were up by 33.3 percent, the highest level in a month, as both purchase and refinance applications saw large percentage increases over the week.”
