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Euro Area CPI and MBA Mortgage Applications

6/17/2015
By Jennifer Coombs

While the market did its metaphorical thumb twiddling ahead of the Fed minutes, there were a couple minor reports on Wednesday, June 17th worth noting. Firstly, the Mortgage Bankers Association (MBA) noted a week-over-week reversal in the volume of mortgage applications. The volatility in interest rates led to volatility among mortgage applications as overall applications declined by 5.5% in the week ended June 12th. Purchase applications declined by 4.0% for the week while refinancing applications dropped by 7.0%. Mortgage rates continued to move sharply higher for the week, jumping by 5 basis points; the rate for the average 30-year conforming loan ($417,000 or less) now stands at 4.22%. However, rates have been coming down this week, after the 10-year Treasury note fell back near 2.3% after spiking close to 2.5% last week. Ultimately, housing data has been strong going into the summer months and we chalk this report up to a near-term fluctuation.

 

 

Additionally, the consumer price index (CPI) in the Eurozone is back in positive territory over last year. Inflation increased by 0.3% in May over last year for the first increase in six months. There was no change year-over-year in April and inflation was in-line with consensus expectations. The largest upward impacts came from vegetables (+0.09%), restaurants & cafés (+0.08%) and tobacco (+0.07%), while fuels for transport (-0.34%), heating oil (-0.15%) and gas (-0.08%) had the biggest downward impacts. On a monthly basis, inflation increased by 0.2% in May, which was in line with market expectations. On an individual country basis, negative annual rates were observed among eight member states, with the lowest rates in Cyprus (-1.7%), Greece (-1.4%) and Slovenia (-0.8%) and the highest annual rates were recorded in Romania and Malta (both at +1.3%) and Latvia (+1.2%). Rising inflation in Europe won’t necessarily be reflected in US markets; however this still provides a small forecast of what may come.

 

Jennifer Coombs
Wall Street Strategies

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