Overview: Over the past week, a trade deal with China reached on Friday was negative for mortgage rates, while the domestic economic data had little impact. As a result, rates ended the week higher.

The latest round of trade talks between the U.S. and China produced a limited trade deal in which China agreed to purchase $40 to $50 billion of American farm products. In return, the U.S. will not implement tariff increases that had been scheduled for next week. Difficult issues such as the protection of intellectual property rights will be discussed at later meetings. This positive step in the trade talks raised the outlook for future global economic activity and inflation, which was unfavorable for mortgage rates.

In September, retail sales fell far short of the expected levels with a decline of 0.3% from August. However, the results for August were revised higher, and it appears likely that the weakness in September was just a pause in spending after two unusually strong months. The retail sales data is a closely watched indicator of U.S. economic growth each month. The 3-month average is now right on track with the solid pace of gains seen for most of this year, and the reaction to the report was minor.

The other major data released over the past week revealed that core inflation held steady. The Consumer Price Index (CPI) is a widely followed monthly inflation report that looks at the price change for goods and services. In September, core CPI, which excludes the volatile food and energy components, was 2.4% higher than a year ago, the same annual rate of increase as last month.

Week Ahead

October 17 — New Residential Construction report (Housing Starts)

October 22 — Existing Home Sales report

October 24 — New Home Sales report

October 24 — European Central Bank meeting