The core CPI, which excludes food and energy, was unchanged in April. The overall CPI showed prices falling 0.1 percent because of substantial declines in the prices of gasoline and natural gas. Falling energy prices were balanced out by rising prices for meat, poultry, fish and eggs. I guess my low-carb breakfasts have become pricier.
Mortgage markets will look kindly upon the news of low inflation in April, even as pessimists complain that high inflation is right around the corner because of deficit spending from governments.
That brings us to the most important development of this week so far: capital flight from Europe. The euro fell to a four-year low against the dollar yesterday, after Germany banned short-selling of stocks and bonds. It appears that investors moved their money across the Atlantic to our shores. As a result, yields on mortgage bonds and Treasury notes fell. Mortgage rates felt downward pressure, too.
I'm about to cast my vote for this week's Rate Trend Index, and I'm torn. It's hard to believe that, with rates this low, they won't rise soon. On the other hand, there's low inflation here and there's fear in Europe. I guess rates are likely to remain about the same over the coming week, or even drop further. But I probably would lock my rate, anyway, if I were in the position of pondering whether to lock or float. Just to be safe and ensure getting a low rate.