Housing News Blog

Several news items this week could determine whether Bonds and home loan rates continue to make any improving progress. And the main event will be the Fed's Rate Decision and Policy Statement, due for release on Tuesday afternoon at 2:15pm ET, following their regularly-scheduled meeting. While it is widely believed that the Fed will keep the Fed Funds Rate at 2%, there is speculation that the Fed will hike rates later this year to help fight inflation. A hike in the Fed Funds Rate could actually be good news for Bonds and home loan rates, as it should serve to fight inflation, so I will be reading the statement closely for any hints in direction it may give us.

And with good timing for the Fed's discussions, their favorite gauge of inflation will be released on Monday, via the Core PCE (Personal Consumption Expenditure) Report. Core PCE essentially measures price changes in goods and services targeted toward and consumed by individuals, and the Fed does watch this report closely as a key measure of inflation. Last month's PCE showed a core reading of 2.1%, which is just a whisker higher than the range the Fed likes to see - so this month's data will definitely be under scrutiny.

Remember when Bond prices move higher, home loan rates move lower...and vice versa. And since inflation is the arch enemy of Bonds, it will be important to see what the week's news says about inflation. A jump higher in the Core PCE or a Fed Policy Statement that doesn't contain a strong stance against inflation could prevent Bonds and home loan rates from making further improvements.