Weekly Information 8/13

Mortgage interest rates improved slightly this past week largely driven by the FOMC policy statement. The statement indicated that the economic recovery has slowed and is likely to be “more modest in the near term than had been anticipated”. As a result the Fed said that it will reinvest principal payments from the $1.25 Trillion in Mortgage Backed Securities that it holds back into longer-term Treasury securities. This is referred to as quantitative easing, which hopefully will help keep rates low on longer term debt in the near term. Economic data of note included weekly jobless claims, which increased on expectations that they would fall. July Retail Sales were in line with expectations. The July Consumer Price Index (CPI) increased slightly more than expectations. Year over year, though, CPI is up only 1.2% indicating very little inflation. The Treasury auctioned $74 billion in debt this past week. Overall, the auctions were met with strong demand.