Mortgage rates fell for the third straight week of 2017, according to data from Freddie Mac's Primary Mortgage Market Survey. The Treasury yield, on the other hand, rose following the release of the Bureau of Labor Statistics' Consumer Price Index report.
For the week ending Thursday, Jan. 19:
Information gathered by Bankrate told a different story. Two closely watched rates rose while a third remained unchanged over the past week.
The index report, which came out on Wednesday, Jan. 18, showed that the CPI increased 0.3% during the final month of 2016. For the year as a whole, the index increased 2.1%.
"Treasury yields reached their highest point in two weeks."
These numbers represent some of the biggest increases in about two years, CNBC reported. This points to strong economic growth and continued inflation, two trends the Federal Reserve likes to see when making the decision to increase the Federal funds rate. If economic growth continues in this pattern, there's the possibility that the Fed will vote for another rate hike in the coming months.
"Further momentum in consumer prices could add to the perception of a more hawkish Fed and the potential for more aggressive tightening," Jim Baird, chief investment officer at Kalamazoo, Michigan-based Plante Moran Financial Advisors, noted, according to CNBC.
Treasury yields reached their highest point in two weeks on Thursday, Jan. 19, according to Reuters. One factor contributing the increase is Fed Chair Janet Yellen's comments about the likelihood of continued rate hikes.
Yellen explained the U.S. Central Bank's goal is to reach an inflation rate of 2% this year. Along with the positive CPI report, several other factors indicate an economy that is continuing to gain strength, such as:
Additionally, a decrease in unemployment filings surprised and pleased economists, Reuters reported.
President-elect Donald Trump's inauguration on Friday, Jan. 20, also likely influenced Treasury yields and residential mortgage rates. Trump's talk of increased jobs and an improved economy have led many to believe rates will increase soon.
However, Reuters noted that the days before the inauguration contrasted with Yellen's indications of future rate increases.
"All eyes will be on the content and style of Trump's inauguration speech," Morgan Stanley strategists wrote, according to Reuters. "The more 'presidential' this speech comes across, the better the outcome for markets."
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