Overview: A decline in the stock market was positive for mortgage rates over the past week, while recent economic data caused little reaction. As a result, mortgage rates ended a little lower.
The first reading for third-quarter gross domestic product (GDP), the broadest measure of economic growth, was 3.5%, above the consensus of 3.3%. Combined with even greater growth of 4.2% during the second quarter, these were the strongest back-to-back quarters since 2014. Consumer and government spending were up, while business investment was somewhat weak. The question for investors is whether this impressive pace will continue.
The most recent inflation data revealed that it is holding steady at lower than expected levels. In September, the core Personal Consumption Expenditures (PCE) Price Index, which excludes the volatile food and energy components, was 2.0% higher than a year ago, the same annual rate of increase as last month. This is the monthly inflation indicator favored by Fed officials, and 2.0% matches their stated target level
There were no significant surprises from Thursday's European Central Bank (ECB) meeting. Despite future uncertainty related to the British exit from the European Union and Italy's contentious budget negotiations, the ECB made no change in interest rates and confirmed its plans to conclude its bond purchases at the end of 2018.
Looking ahead, the important monthly Employment Report will be released on Friday. As usual, these figures on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, the Institute for Supply Management (ISM) Manufacturing Index will come out on Thursday and the ISM national services index on November 5. The next Federal Reserve meeting will take place on November 8.