This week, the Mexican trade deal agreement caused market volatility. However, the net effect of all the news remained minor. Thus, mortgage rates ended just slightly higher.
Officials Announce Mexican Trade Deal Agreement
Over the weekend, trade officials announced the Mexican trade deal agreement. Therefore, they indefinitely postponed the tariffs scheduled for June 10th.
On the other hand, very little news came out on the negotiations with China. Analysts expect them to resume on June 28th at the G20 summit.
Retail Sales Increase by Healthy Amount
Aside from the Mexican trade deal agreement, retail sales increased by a healthy amount. Consumer spending accounts for over two-thirds of all economic activity in the U.S.. Thus, investors closely watch the monthly retail sales data. Recent reports revealed a solid year.
In May, retail sales increased a healthy 0.5% from April. Additionally, April retail sales results revised to be significantly higher. Forecasts for second quarter GDP, the broadest measure of economic growth, rose following this report.
Core Inflation Holding Steady
While the U.S. reached a Mexican trade deal agreement, inflation held steady. Investors widely follow the monthly Consumer Price Index (CPI) monthly inflation report. Core CPI looks at the price change for U.S. goods and services.
Despite the strength in consumer spending and the labor market seen this year, the most recent data revealed that core inflation held steady. Core CPI, which excludes the volatile food and energy components, rose less than expected in May. It increased just 2.0% higher than a year ago. Thus, Core CPI dropped down from an annual rate of increase of 2.1% last month.
Looking Ahead After the Mexican Trade Deal Agreement
After the Mexican trade deal agreement, investors look Wednesday’s Fed meeting. While they don’t expect rate changes, investors watch for hints that a rate cut may take place later this year.
Overall, the coming week reveals very little economic data. Housing Starts release on Tuesday and Existing Home Sales come out on Friday. In addition, news about the trade negotiations holds influence over mortgage rates.
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