Increased concerns about Greece had the greatest influence on U.S. mortgage rates over the past week. The Fed statement and stronger-than-expected U.S. retail sales data caused some volatility, but had little net impact. Mortgage rates ended a little lower.
The bailout negotiations between Greece and its creditors took a turn for the worse over the last several days. Officials on both sides walked out on the talks on different occasions due to a lack of progress. Neither side seems willing to bridge the gap over required reforms. Without additional aid, Greece likely will default on debt payments due June 30. The uncertainty about the impact of a default caused investors to shift to relatively safer assets, which had a favorable effect on mortgage rates.
Wednesday’s Fed statement contained no major surprises. As expected, Fed officials noted that the performance of the economy improved over the last couple of months after the winter slowdown. The statement provided no direct indication about the timing of a federal funds rate hike.
The most significant economic data released over the past week, Retail Sales, exceeded expectations. May retail sales, excluding autos, rose 1%, which was more than double the highest reading over the past year. This month’s strong figures provide additional evidence that the weakness in spending seen over the winter was due to temporary factors.
Looking ahead, the Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on June 18. CPI looks at the price change for those finished goods which are sold to consumers. Early next week, Existing Home Sales and New Home Sales will be released. Durable Orders, an important indicator of economic activity, will come out on June 23. Outside the U.S., an important meeting between Greek officials and eurozone finance ministers will take place on June 18.