Mortgage Time

Julie C. Nichols General

Retail Sales Rebound
After an increase in mortgage rates last week, this week saw little net change in rates. There were no surprises in the Fed minutes or from other central banks. The major economic data mostly matched expectations and had little impact.
The minutes from the September 17 Fed meeting released on Wednesday revealed little new information. The minutes reflected the split among Fed officials about the appropriate timing to raise the federal funds rate. According to the minutes, some officials were ready to hike rates "relatively soon," while others preferred to wait for "more convincing evidence" that inflation was rising to the Fed’s target level of 2%. The minutes caused little movement in mortgage rates.

The most significant economic data released over the past week was the retail sales report. After two months of declines, retail sales rebounded nicely in September. Excluding the volatile auto component, retail sales increased 0.5% from August, matching the consensus. Consumer spending accounts for about 70% of U.S. economic activity, and the retail sales data is a key indicator.
The latest data on weekly jobless claims also was encouraging. The number of people applying for unemployment benefits matched the lowest level since 1973. While the pace of new hiring has slowed a little from elevated levels over the summer, the jobless claims data suggests that employers are trying to retain their existing workers. As the labor market tightens, employers typically become more reluctant to lay off workers. In the past, this generally has resulted in larger wage gains.
Looking ahead, the next European Central Bank (ECB) meeting will take place on Thursday. Any guidance on future monetary policy could have an impact on global markets. In the U.S., Industrial Production will be released on Monday. The Consumer Price Index (CPI), a widely followed monthly inflation report, will come out on Tuesday. CPI looks at the price change for goods and services which are sold to consumers. Housing Starts will be released on Wednesday, and Existing Home Sales will come out on Thursday.

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