Florida Mortgage Rates – Evening Report

by Florida's #1 Mortgage Planner on August 4, 2008

Locking Stance:  LOCKING     Mortgage Bonds:  -44bp

Bonds continued to be beaten down by inflationary pressures as the day progressed.  While they showed a little hope around midday, they weakened and succumbed to the pressure by day’s end.

Just why were they beaten down so hard?

The PCE data, as I eluded to this morning, showed inflation growing, even at the core levels.  I have warned of this for a long time and even in recent months warned not to trust the data presented as inflation was growing even then.  Inflation at the core level for the year was at 2.3%, up from 2.1% and further outside the Fed’s comfort zone of 1.5-2.0%.  Overall PCE was considerably worse, coming in at 4.1%, the highest in 27 years.

Remember that the PCE data is the Fed’s favorite gauge on inflation, so the question will be if this new data can get them off their rearends and start raising rates.  Tomorrow will reveal the answer, but guesses are for no change and rate and simply more talk of the future.  All indications are for lower prices, meaning higher mortgage rates ahead.

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