Mortgage rates continued to increase last week as economic data showed more persistent inflation than expected.
Price indexes for both producers (PPI) and consumers (CPI) released last week forced markets to adjust for the likelihood of further Fed actions to control inflation, now pricing in a 75 basis point rate hike at the November FOMC meeting. Markets continue to be extremely volatile in reaction to economic data and geopolitical activity, particularly in the UK. Higher mortgage rates are putting pressure on housing activity — purchase mortgage applications are down nearly 40% from this time last year, according to the Mortgage Bankers Association.
With relatively light data releases this week, investors will be evaluating comments from Federal Reserve Bank presidents to gain further insight into likely Fed actions at coming meetings.