Mortgage Rates Rise on Strong Retail Spending, High Inflation Reading

Mortgage rates continued a gradual increase this week. Stronger than expected retail sales data and higher than expected inflation measures fueled rate increases over the past week.

Bond yields continued to rise, yet mortgage rates offered to consumers ended only slightly higher than the prior week. Markets continue to show concern over labor market shortages and supply chain issues that could put further upward pressure on prices and prompt the Federal Reserve to take more aggressive actions to address inflation. Tapering of Federal Reserve bond purchases later this year is viewed as fairly certain and now the focus is on when and how many times the Federal Reserve raises the Fed Funds rate in 2022 and beyond.

With light economic data releases this week the focus will be on jobless claims data and fiscal policy developments in Congress, either of which could have potential implications for future rate expectations.