News You'll Use

Mortgage rates moved higher this week as we had mostly weak data, and even then, rates still rose. This week we saw inflation data with CPI and PPI, with CPI the Consumer Price Index and PPI the Producer Price Index. Think of PPI as wholesale inflation, while CPI is the inflation that the consumer sees. Headline CPI and PPI came in lower than expectations, which is the direction we want to see inflation going. The one issue with the data is that the core-CPI number is still at 0.4% m/m, which is too high for the Fed and appears to be giving the Fed the greenlight to raise rates in May. The CME Fedwatch tool is pricing in a May rate hike with a probability of roughly 85% Friday morning, so the market is already pricing in that hike. The real question will be if the Fed looks to raise rates in June.

• US 10-year Treasury closed at 3.45% on Thursday afternoon

• CPI came in lower than analyst's expectations (0.1% m/m vs expectations of 0.2%)

• Core-CPI came in-line with analyst's expectations (0.4% m/m)

• PPI came in lower than analyst's expectations (-0.5% m/m vs expectations of 0.0%)

• Initial Jobless Claims came in above analyst's expectations (239k claims vs expectations of 235k claims)

• Mortgage Applications rose 5.3% this week