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    Market Analysis Week of 3-04-2024

    Inflation Data Hits Target

    It was another quiet week for mortgage markets last week. The latest inflation data was right on target and caused little reaction. Similarly, the other major economic reports had just a minor impact, and mortgage rates ended last week nearly unchanged.

    Inflation Numbers in Right Direction

    Fed officials keep a close eye on inflation, and the PCE price index is their favored indicator. In January, core PCE, which excludes food and energy to reduce short-term volatility, was up 2.8% from a year ago, matching the consensus forecast. This was down from an annual rate of 2.9% last month and the lowest level since March 2021. While still moving in the right direction, it remains above the Fed’s target of 2.0%.

    Manufacturing Showing Weakness

    Another significant economic report released last week from the Institute of Supply Management revealed unexpected weakness, highlighting the recent struggles in the manufacturing sector. The ISM national manufacturing index fell to 47.8, well below the consensus forecast. Readings under 50 indicate a contraction in the sector, and this was the sixteenth straight month below 50, the longest streak in about 15 years.

    Lack of Inventory Shows Increase Interest in Newly Built Homes

    After shooting higher to start the year, mortgage applications have stalled in the face of rising rates, according to the latest data from the Mortgage Bankers Association (MBA). Applications to refinance dropped 7% from last week and were slightly lower than one year ago. Purchase applications fell 5% from the prior week and were down 12% from last year at this time. One interesting note was that mortgage demand from buyers looking at newly built homes was 19% higher than a year ago, emphasizing the increased interest in new homes due to the lack of inventory of existing homes on the market.

    Major Economic News Due This Week

    Investors will continue to watch for Fed officials to elaborate on their plans for future monetary policy. For economic reports, the ISM national services sector index will come out on Tuesday and the JOLTS data on job openings on Wednesday. The key Employment report will be released on Friday, and these figures on the number of jobs, the unemployment rate, and wage inflation will be some of the most highly anticipated economic data of the month. In addition, the next European Central Bank meeting will take place on Thursday.

    Mortgage Rates for the week of 3-04-2024

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