Interest rates are usually set by the bond market. Mortgage rates, for example, are directly linked to mortgage-backed securities known as mortgage-backed securities (MBS). Mohammed bin Salman tends to move a lot like US Treasuries despite slightly stronger or weaker performance trends, and Treasuries are the primary leader in the US bond market.
All that can be said, if it matters for the bond market, it is It will have an effect on mortgage rates.
One of the things that historically has mattered to bonds the most is inflation. Inflation is measured in many ways, but two big government reports each month stand out. One of them, the Consumer Price Index, was released today. It showed year-on-year inflation at 7.0% – the highest rate in decades.
To be sure, higher post-virus inflation has already affected interest rates, and this has been shown in a number of ways. Especially right now, it is Not Already playing in terms of economic reports causing surprises that push prices higher in the short term. In other words, inflation is 7.0% today and rates don’t care.
One of the main reasons for the indifferent price attitude is that the market is expected That number would be exactly 7.0% today. The market is also expecting that number to drop once the data cycle catches up with the bigger jumps in inflation seen in mid-2021. If we see inflation jumping by bigger amounts than expected in the coming months, rates will likely have a harder time looking at the trend the other. Even today, the bonds that underlie mortgage rates haven’t made any significant gains, but lenders have been so conservative with pricing the loans that they’ve been able to make solid improvements just because the bonds were sideways.
Compared to most of last week, rates are still Significantly higher, but many lenders are now back in line with last Friday’s levels.