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Mortgage rates were mostly flat this week as we saw inflation data come in as expected. The CPI data we saw is still showing that inflation in the U.S. is too high for the Fed, but inflation is moving lower. The Fed has seen the two largest data points in May with the jobs number and CPI. The market will await the jobs numbers and CPI in May, both are released before the Fed's June FOMC meeting. With the current data, the market is pricing in a Fed pause in June and we need to see extremely hot numbers in June for the Fed to raise another 25 bps in their next meeting. The Fed has been playing catchup for the past year which is why they have been raising rates at such a fast pace. An argument could be made that they have raised rates to a restrictive level and should be able to watch the data come in and see if they need to tweak their policy. If inflation continues to be stronger than expected, they can raise rates and if the economy starts to slow quickly, they can cut rates.

• U.S. 10-year Treasury closed at 3.38% on Thursday afternoon

• Headline CPI and core-CPI came in-line with analyst's expectations (+0.4% m/m and core +0.4% m/m)

• PPI came in lower than analyst's expectations (+0.2 m/m vs expectations of +0.3% m/m)

• Initial Jobless Claims came in above analyst's expectations (264k claims vs expectations of 245k claims)

• Mortgage Applications rose 6.3% this week