July 30, 2021

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Mortgage News

Highest Core Inflation in Decades? No Big Deal

Similar to the CPI data 2 weeks ago, today’s PCE data showed the highest core inflation in decades. In fact, we would have to go back nearly three decades when inflation still returned to earth after its unusual spike in the 1980s to see something higher.

20210625 st.png

And similar to two weeks ago, the bond market is yawning with disinterest. If there is any reason for this, it is because insanely high inflation rates are currently the norm and today’s result was exactly in line with projections. Markets expect Covid-related supply chain disruptions that have less of an impact on prices. Then we’ll see how much of that spike in inflation is really temporary.

Until then, markets will be more keen to focus on other big economic data, like next week’s job report. That’s not to say that inflation data doesn’t matter. In fact, it can still have a huge impact – even before supply chain disruptions break out. But it’s less likely to have that big impact if it’s perfectly in line with projections. Conclusion: This insanely high number didn’t matter because the market is already expecting insanely high numbers.

Bonds will try to calmly find their way out for the rest of the day and flee into the weekend without questioning the current range limits at 1.44 or 1.53% on 10-year returns.

MBS pricing overview

The price shown below is delayed, please refer to the timestamp below. Real-time prices is available through MBS Live.


UMBS 2.5

103-08: + 0-01

Government bonds

ten years

1.4950: +0.0080

Prices from 06/25/21 10:08 am

Tomorrow’s economic calendar

time event Period forecast Before
Friday June 25th
8:30 Core PCE inflation (Y / Y) (%) * Can 3.4 3.1
10:00 Sentiment: 5 years of inflation (%) June 2.8
10:00 Sentiment: 1 year inflation (%) June 4.0
10:00 Consumer sentiment (ip) June 86.5 86.4