Mortgage Rates Essentially Flat Again, But Threatening to Rise

Mortgage rates were mostly flat again this week, but have the potential to climb after markets received encouraging news in recent days. News suggesting that Congress and the President have agreed to a budget deal to avoid another partial federal government shutdown, as well as news of progress in trade talks between the U.S. and China, awoke rates from their slumber.

Rates spent the earlier part of the week hovering near one-year lows, but began to drift higher as early reports of a tentative budget deal began to trickle in.

This week was relatively light on market-moving economic data releases, until Wednesday’s inflation announcement. Inflation has been one of the main indicators Fed officials are watching to evaluate the health of the U.S. economy, and Wednesday’s strong release – which showed 2.2 percent annual growth in core prices -- pushed up bond yields.

Looking ahead, over the coming week, markets are likely to keep an eye on incoming retail sales and consumer sentiment data, which should bring into focus how American consumers fared during January’s government shutdown.