What’s Ahead For Mortgage Rates This Week – October 16, 2023

Last week’s economic report schedule included notable reports with the CPI & Core CPI in addition to PPI and Core PPI. Many markets are keeping a close eye on the inflation numbers for the U.S. as well as many other parts of the world to help guide their policies.

Other notable reports were MBA Mortgage Applications Index and the University of Michigan Consumer Sentiment Report (Prelim.)

Consumer Price Index
With current inflation data, the Federal Reserve has hinted that they are close to ending their rate-hiking cycle for the future. This reflects a greater optimism for a soft landing in many markets.

• Cost of goods rose 0.9% in September after a 2% gain in the prior month.
• The cost of services rose 0.3% last month, up slightly from 0.2% in August.
• Energy prices rose 3.3% in September, down from a 10.3% gain in the previous month.
• Wholesale food prices have moved up 0.9% after a 0.5% fall in the previous month

Product Price Index
Over the last year, the mainline PPI is up 2.2% in September, up from 2% in the prior month. This is the highest rate since April.

• Core PPI has had an increase of 0.3% over the previous month.
• PPI has had an increase of 0.5% over the previous month.

Key point: This is the second month in a row that goods prices have outpaced service costs.

Mortgage Applications Increased for the Month of October
MBA Mortgage Applications Increase, a measure of mortgage loan application volume, increased 0.6% percent compared to the previous month which had seen a -6.0% reduction.

University of Michigan Consumer Sentiment Report
The University of Michigan reported that the preliminary index for Consumer Sentiment in October came in at 63, missing the consensus estimate of 67.4. The final reading of the index for September was 68.1. Expectations for the one-year inflation rate rose to 3.8% in October from 3.2% in September, marking its highest reading since May.

What’s Ahead
This week’s scheduled economic reports include readings on inflation, U.S. retail sales, and the preliminary monthly report on consumer sentiment. Weekly readings on mortgage rates and initial jobless claims will also be released.