http://MikesDailyMarketReport.com: The big data point for this week was released today, which is the Personal Consumption Expenditure (PCE). This carries a lot of weight, as it is the Fed's favorite gauge for inflation. The Headline Number rose 0.6% in January, while it's YoY rose to 6.1%. It's Core PCE (excludes food & energy), which is really what the Fed watches, had increased by 0.5% and it's YoY increased to 5.2%. Personal Income remained Unchanged in January; but not Consumer Spending, which went up 1.5%. Durable Goods rose 1.6% in January; but if you exclude Transportation, then it rose only by 0.7%. It's good to review without Transportation because the larger numbers can skew the overall numbers of the whole. Meanwhile, Pending Home Sales dropped 5.7% in January. This is after a 3.8% drop in December. Something to monitor! Fortunately, Consumer Sentiment rose from 61.7 in January to 62.8 in February. There have been 2 factors affecting the Markets of late. This week, it's been the escalation of Russia and Ukraine. There are reports today that Russia is reaching out today with diplomacy, which is creating some optimism in the Markets. Stocks are Up on the news. The other factor lies with the transition in the Fed Policy change. Some were hoping the Fed may delay their rate hikes due to the Russia/Ukraine conflict; however, it doesn't appear to be deterring them. The question is now on the increment of the rate hike, 0.25% or 0.5%? This is the uncertainty that Investors dislike. Today, investors money is transitioning from the Bond Market back to the Equities; so, MBS is currently Down 8bps. This isn't enough to warrant worse pricing; so, Mortgage Rates remain Unchanged from yesterday's rate sheets. Yields are currently at 1.99% after touching 2.00% earlier this morning.
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