Mortgage rates moved up slightly last week. Economic data from last week pointed to ongoing price increases and very tight labor markets.

Under normal circumstances, aggressive action in response from the Federal Reserve would be expected to contain inflation. But geopolitical concerns over the Russian invasion of Ukraine prevented a significant increase in rates. The Ukraine situation is resulting in expectations for higher energy prices, putting further inflationary pressure on the global economy. At the same time, sanctions imposed on Russia are likely to result in slower economic growth. Markets are now expecting the Federal Reserve to take action to fight ongoing inflation, but may not be as aggressive in raising rates as previously forecast. Markets are likely to be volatile in the near term with geopolitical developments driving much of the direction in rates.