http://MikesDailyMarketReport.com: The CPI report came out a bit hotter for June than expected. The CPI (headline number) went up 1.3% (higher than the 1.1% forecasts); and it's YoY jumped from 8.6% in May to 9.1% in June. However, the Core CPI (excluding food & energy) rose 0.7%; but it's YoY dropped from 6.0% in May to 5.9% in June. This was considered the BIG impactful report for this week, as it sent both Markets last month into a tailspin. Stocks are still in Negative Territory; however, MBS and Treasuries have rebounded from it's initial reaction. MBS was below it's 25 DMA and down 58bps, only to rebound to currently Up 2bps (and back above the 25 DMA). This has led Lenders to reprice for the better; however, the better pricing brings us to Unchanged pricing from yesterday's close (as we had worse pricing early on this morning). Similarly, Treasuries are off of earlier highs (3.07%) to currently 2.94%. The rebound in pricing, as I'm hearing is that Investors are thinking that inflation has peaked, which the YoY drop in Core CPI may have provided this assurance. The Investors will watch for the upcoming (starting tomorrow) Q2 Corporate Earnings reports, which will have major implications with the Markets. Also, to note, that Investors raised the odds of the Fed raising the Fed Funds rate by 100 bps at it's July meeting from 6% to 42%. It's currently expected to be at 75bps, but the inflation data may have altered those plans! Another reason for the sentiment with Investors is they know the Fed will continue to raise interest rates in 2022, but they also feel that the Fed will reverse course in 2023, as the economy will slow and chances of a recession is a strong possibility.
**As Mortgage Rates spiked over 6% over past few days, ask me about our 7/6 ARM, which may be a good alternative for you or your client. Contact me today!**
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