Colordo Home Mortgage Loan rates will be impacted by tomorrows PPI
Colorado Home Mortgage Loan rates will be impacted by tomorrows Core PPI report. PPI measures the change in prices, paid by producers, for a fixed basket of capital and consumer goods. It also measures the change in prices received by the manufacturing, mining, agriculture and electric utility industries. The “core” PPI excludes the often-volatile food and energy sectors and gives a clearer picture of the underlying inflation trend. Colorado Home Mortgage Loan markets watch this closely because when inflation goes up the value of their bond drops. When bond values drops the market develops an inverse relationship between bond prices and interest rates. The inverse relationship causes Colorado Home Mortgage Loan rates to go up as bond prices go down. Core PPI does exclude food and energy, but oil still makes its way into the numbers. When Oil prices are high, the cost of shipping increases. When the cost of shipping is up the cost of goods naturally follows. Higher priced goods translate into higher priced products sold to the consumer. The end result is INFLATION. No way to avoid it, Colorado Home Mortgage Loan rates will always have negative reactions to inflationary pressures. We do have a little bit of hope as it relates to PPI and that is CPI. CPI which was reported a week ago came in lower then expected. These two reports have similar characteristics and normally run in the same patterns. Even though CPI came in lower then expected, I really have no guess on where Core PPI will come in at. Normally I would predict a higher then expected number, however because Consumer Price Index came in lower then expected it might be safe to assume that PPI will do the same. However I do not want to speculate, because everything else points to a higher then expected PPI number.
So Far today’s Mortgage Backed Securities market appears to be light in trading, but the price of bonds are on their way up. This is good news for Colorado Home Mortgage Loan rates. I am hoping that we are seeing some insider trading going on in anticipation of tomorrows PPI report. It could also mean that we have some investors that lack the confidence in trading stocks today. Regardless of the reason, Colorado Home Mortgage Loan rates do appear to be improving for the moment. I definitely recommend LOCKING today the risk/reward is not worth floating through tomorrow. Now if you are risk taker and PPI comes in low then you will see at least an 1/8th better on your rate going into Wednesday.
Today the only economic report we had was the Leading Indicators report which came in higher then expected. Experts predicted a -.1% growth rate when in fact we had a Positive .1% increase. This by its self had no impact on Colorado Home Mortgage Loan rates. The Leading Indicators report is composed of ten indicators designed to forecast the strength of the economy six to nine months into the future. The ten indicators are picked from different parts of the economy and are chosen because of their relevancy and accuracy. They are each given equal weight when applied to the composite index. The LEI can predict peaks and troughs in the economy but because many of the indictors are released individually before the LEI composite index is released, market rarely watch the report very closely. Some of these indicators include but are not limited to; consumer price index, Hotel Occupancy Rates, total imports, tourist arrivals, and more. These numbers give economist a basic understanding on the direction the economy is heading. You can see why Colorado Home Mortgage Loan rates can be impacted, but it is the individual reports like Consumer Pricing Index which is released before this report where the real impacts are felt.
To get a basic understanding on the direction of Colorado Home Mortgage Loan rates visit www.coloradomortgagebanking.com until then please call me direction for any of your Colorado Home Mortgage Loan questions.
Daniel
Tags: Colorado home mortgage loan, Home Mortgage, mortgage loan
