Overview: Following last Wednesday’s Fed meeting and ahead of Friday’s big labor market data, there has been very little market-moving economic news over the past week. The economic data contained few surprises. Mortgage rates ended the week slightly lower.

According to market indicators, investors think that there is just a 50% chance that the Fed will raise the federal funds rate again this year. One big reason that the Fed may hesitate to hike rates anytime soon is that inflation has remained well below the Fed’s target level in recent months. Monday’s release of the Fed’s favored inflation indicator, the core Personal Consumption Expenditures (PCE) Price Index, revealed that inflation in June was just 1.5% higher than a year ago, which was the same annual rate of increase as in May. Fed officials want inflation to rise to an annual rate of 2.0%. Several Fed officials have stated that they think current inflation levels are low due to temporary factors and expect them to rise. Investors will be watching closely for signs that this outlook is accurate.

The first reading for second quarter gross domestic product (GDP) released on Friday contained good news for the economy. During the second quarter, GDP grew 2.6%, which was very close to the consensus forecast. First quarter GDP was revised lower to just 1.2% from 1.4%. During the second quarter, strength was seen in the key areas of consumer spending and business investment. Since the results were in line with the expected levels, there was little impact on mortgage rates.. Week Ahead

Looking ahead, the Institute for Supply Management (ISM) Services Index will come out on Thursday. The next Employment Report will be released on Friday. This data on the number of jobs, the unemployment rate, and wage inflation is generally the most highly anticipated economic data of the month. The Consumer Price Index (CPI), a widely followed monthly inflation report, will come out on August 11.