Rates maintain streak of stability

A slew of economic reports caused volatility in the financial markets with stocks and bonds adjusting daily to more than a dozen indicators.

A report showing inflation under control was key to U.S. Treasury securities, which staged a huge rally. Traders bought on hope that the Federal Reserve would hike rates by only 25 basis points this month and Fed Chairman Alan Greenspan supported this view.

Although indicators showing continued economic growth put a damper on Treasury gains, their yields put a halt to their upward drift and allowed mortgage rates to remain steady for yet another week.

The 30-year fixed-rate mortgage (based on zero discount points) remains at 6.125 percent, while the 15-year fixed-rate is holding just below 5.5 percent. The introductory rate on the one-year adjustable-rate mortgage neared 3.875 percent.

Borrowers appear have adjusted to higher mortgage rates. According to the Mortgage Bankers Association, applications to purchase and refinance rose for the week ended June 11.

Refis soared 8.5 percent while purchase applications climbed 4 percent.

The biggest market mover this week was the May consumer price index, which showed inflation at the retail level to be weaker than thought.

The delayed producer price index suggested more aggressive signs of inflation at the wholesale level.

Housing starts edged down in May, but single-family homes remained strong and building permits hit their highest level in 31 years.

Retail sales reversed April's loss, rising by 1.2 percent -- twice analysts' expectations.

Industrial production in May reached a six-year high, further proof that manufacturing is on the rebound, and first-time jobless claims fell.

Consumer sentiment rose significantly, but on the downside, the U.S. international trade gap widened to $48.3 billion, a new record.

Upcoming economic news will not be as plentiful this week, but reports on durable goods orders, new and existing home sales, the final first-quarter gross domestic product and a final reading on consumer sentiment from the University of Michigan could impact the markets. Ongoing hostilities in the Middle East continue to keep the markets on edge and will lead to caution before the Fed meeting on June 29-30.

Interest.com is a national publisher of mortgage rates and information.

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