Low CPI report, rates trending lower

[Zach Wain]

We had a LOW inflation report today (7/11/24), big win!! Today's low CPI inflation report helped bring mortgage rates and bond yields lower. Headline (total) inflation for the past month was negative, -0.1%.

Core inflation (total inflation minus food and energy) was up only 0.065%, so it gets rounded to 0.1% increase. That is a great number and bond markets love it. This should open the door for the Fed to hopefully consider a couple of rate cuts this year.

We also had the lowest "shelter" reading in a long long time, of 0.3% for rents and OER. Total Shelter was 0.2% because lodging away from home dropped.

One item that is still sky rocketing, auto insurance! 19.5% increase in the past 12 months. Ouch!

This is the 3 month downtrend we have been on.  This is a 10 yr treasury chart over the past 3-4 months.  Mortgage rates do not perfectly move with the 10yr T, but its pretty dang close.  It has been slow moving trend, with ups and downs, but its encouraging to see a stable downtrend.  In mortgage rate/bond world, the next set of economic reports (Jobs, inflation, retail sales, etc) can always change the picture quickly.  But, with shelter inflation (hopefully) on the downtrend, that should help keep inflation readings low.  Hopefully, lower rates are in the near future...