After drop yesterday, rates rise again on strong manufacturing outlook (Survey Results)

Yesterday’s inflation data helped rates drop about .25% since rising about .375% off lows set ahead of the Fed’s quantitative easing announcement. But today’s much stronger than expected Philly Fed number of 22.5 has caused a sharp 75 basis point mortgage selloff, pushing rates back up about .25%. Philly Fed went from 1 on October to 22.5 in November: results are the difference between percentage of positive and negative scores on the Philly Fed Survey, with zero as the centerline point.

Conducted by the Philadelphia Fed since 1968, the “Philly Fed” survey questioning manufacturers in the Third Federal Reserve District on general business conditions and economic outlook. Higher Philly Fed figures indicate a positive outlook from manufacturers, suggesting increased production. Higher production contributes to economic growth, which generally causes bonds to sell—and when bond prices drop on selling, rates rise.