LIVE MARKETS-Milestone mania: Import prices, mortgage demand, current account

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MILESTONE MANIA: IMPORT PRICES, MORTGAGE DEMAND, CURRENT ACCOUNT

Three bits of disparate economic data greeted investors on Wednesday, and while none of them were particularly market-moving, they all offered something in the way of milestones.

Diving right in, the cost of goods imported to the United States USIMP=ECI (excluding tariffs) waltzed past expectations by rising 1.5% in February, per Labor Department data.

The milestone: It marked the biggest monthly increase since March 2022.

Consensus called for a tamer 0.5% increase.

What's more, January's original 0.2% growth was tripled to 0.6%.

All of this appears to be driven by escalating Middle East tensions, which have since morphed into the U.S.-Israeli-led war on Iran.

Digging deeper, a 2.5% jump in imported gasoline prices and a 3.0% surge in industrial supplies provided boosts to the upside, along with a 1.3% rise in capital goods. Excluding petroleum, import prices rose 1.2%.

Year-over-year, import prices have grown 1.3%, an abrupt acceleration from the previous month's 0.3% annual growth rate.

Import/export prices differ from other major inflation indicators with things like currency exchange rates, foreign demand and geopolitical developments thrown into the mix.

Here's a chart that shows annual import/export price growth against the dollar index, which tracks the greenback against a basket of world currencies.

Turning to the housing market, the cost of financing home loans notched its own milestone by jumping to the most expensive level since October, according to the Mortgage Bankers Association (MBA).

Borrowers weren't terribly enthusiastic about it.

The average 30-year fixed contract rate USMG=ECI - which tends to rise and fall in tandem with benchmark Treasury yields - jumped 13 basis points to 6.43%.

As a result, demand for loans to purchase homes USMGPI=ECI - among the housing market's most forward-looking indicators - soured by 5.4%, and refi applications USMGR=ECI, which accounted for a diminishing 49.6% of the total, slid by 14.6%.

"The threat of higher-for-longer oil prices continued to keep Treasury yields elevated, and mortgage rates finished last week higher,” said Joel Kan, MBA’s deputy chief economist. "Higher mortgage rates, coupled with affordability constraints and economic uncertainty, pushed some potential homebuyers to the sidelines."

The 30-year fixed rate currently sits 28 basis points below where it was during the same week a year ago.

Over that same period, purchase applications have increased by 5.0%, while refi demand has risen by 52.2%.

In more ancient news, the fourth-quarter current account deficit USCURA=ECI, which combines trade, international investment and other transfers of capital, narrowed by 20.2% to $190.7 billion, according to the Commerce Department.

That was the lowest current account deficit since Q1 2021, to complete the milestone trifecta.

It was also 9.6% narrower than analysts expected.

Much of the contraction can be attributed to echo effects from Trump's global tariff tantrum, which caused a reduction in international goods trade.

Tracking goods, services and income receipts, a 2.5% increase in exports and a 1.0% dip in imports help explain the narrowing deficit.

(Stephen Culp)

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