Mortgage Rates Today, Aug. 14, 2024: Inflation Data Good for Rates

In brief

Today's consumer price index (CPI) for July will likely prove good for mortgage rates today. Read on for details.

Read on, too, for what might affect mortgage rates tomorrow. And for clues about whether volatility could return soon.

Today's CPI

The New York Times (paywall) reported this morning's consumer price index for July thus: "Inflation Falls Below 3% for First Time Since 2021. Consumer prices rose 2.9 percent in the year through July, a downtick from the previous month."

And the Financial Times suggested the report was "bolstering the case for the Federal Reserve to cut interest rates at its meeting in September."

Three of the report's four key figures were exactly what markets were expecting. And the fourth was slightly lower than anticipated. That's good news.

So, the mood in markets was celebratory first thing. And, if nothing spoils that, mortgage rates might fall today.

Tomorrow

Two economic reports that could move mortgage rates are on tomorrow's calendar.

The more important covers retail sales in July. And, according to MarketWatch, markets are expecting 0.3% growth in those following stagnation (0.0%) in June.

The second, typically less consequential report will show industrial production, also in July. Markets reckon that is likely to decline to -0.1%, down from June's 0.6%.

Remember, with a few exceptions that don't apply tomorrow, mortgage rates tend to fall when a report's data are lower than markets were expecting.

Is this round of volatility over?

Yesterday's Wall Street Journal (paywall) asked whether the recent bout of volatility has run its course. But there was no consensus among the investors and analysts it asked.

The very fact that there was such unusual volatility last week isn't a good sign. It suggests Wall Street is jittery.

Much of the Journal's analysis focused on stock markets. But you can see how it could play out for bond markets and mortgage rates:

"Wall Street is growing more skeptical about the payoffs of artificial intelligence, fueling a potentially massive rotation into other stocks and threatening to derail indexes that have become top-heavy with tech shares. A weakening U.S. labor market has rekindled economic fears. The inflation-fighting Federal Reserve in September is expected to begin interest-rate cuts that could reroute the global flow of capital."

All those are potentially good for mortgage rates. Any flight from stock markets, or economic fears and Fed rate cuts typically drive those rates lower.

But there's precious little certainty around. The Journal continues:

"While stocks have calmed somewhat after last week’s whirlwind, new
sources of potential choppiness will land on trading desks this week. An
inflation report Wednesday, followed by retail-sales data Thursday,
should provide hints about whether the Fed will slash rates by a
quarter-point next month as many investors anticipate."

To clarify that last point, the CME FedWatch tool suggests investors are roughly evenly divided between those who expect a quarter-point cut (47.5% chance) and a half-point cut (52.5% chance). The tool puts the chance of no Fed rate cut at 0%.