The Mortgage Man

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Inflation Puts Pressure On Financial Markets

Stocks and bonds are both down today on worse than expected inflationary news.

Mortgage bonds are being hit today by worse than expected inflation reported in the Personal Consumption Expenditure (PCE) report.  Even though bonds are off of their lowest levels of the day, the figures show that inflation for the month of June was up 0.8% – the highest single month increase in 27 years.

As we have discussed before, what is bad for bonds is usually good for stocks, but not inflation.  Traders on both sides of the isle hate inflation, so the trend is likely to be down in both markets today.

The FED is meeting today and will be anouncing the results of its meeting at 2:15 PM EST tomorrow.  The markets are currently predicting a 93% chance that short term lending rates will not change due to current market conditions.

Based on the current state of the markets, it looks like floating your rate in the short term is the best course of action to see how the markets continue to react to today’s economic news.  If you will be closing soon, I recommend locking to avoid possible negative impacts.

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