Mortgage rates fell to their lowest levels of 2011 as commodity prices sold-off. While the killing of Osama bin Laden helped trigger the sell-off, commodity prices were already poised to fall, reflecting recent interest rate hikes in China and India, designed to cool those economies off. Oil prices closed below $100 per barrel for the first time since mid-March following a 35% increase from mid-February levels. Rising gas prices are leaving consumers with less money to spend elsewhere, and some companies are feeling less certain about the economy’s health. Applications for unemployment benefits have surged 23% over the past month, rising last week to 474,000, an eight-month high. Weekly Jobless Claims of 375,000 is the figure typically consistent with sustainable job growth. The Unemployment Rate for April moved up to 9.0% from 8.8% in March in spite of the private sector adding 268,000 jobs last month. The weaker employment picture along with the commodity sell-off sparked a rally in bonds and 10-year Treasury notes reached their lowest yields of 2011 (3.13%). The 30 Year Fixed mortgage followed the benchmark index down the lowest levels of the year.
Currently, the 30 Year Fixed is 4.250% (4.427% APR) and the 15 Year Fixed is 3.500% (3.810% APR).
This week, we will see Retail Sales and Jobless Claims along with the monthly inflation reports. The Producer Price Index (PPI) measures the change in prices from the perspective of the seller while the Consumer Price Index (CPI) measures the change in prices paid by consumers for a basket of consumer goods and services. CPI is one of the most frequently used statistics for identifying periods of inflation or deflation, and changes in the CPI are used to assess price changes associated with the cost of living. Core inflation is most often calculated by taking the CPI and excluding certain items from the index, usually energy and food products. Core inflation is thought to be an indicator of underlying long-term inflation.