Despite some major economic news, it was a relatively quiet week for mortgage markets. There were no significant surprises from the inflation data, the GDP report, or the Fed meeting, and mortgage rates ended the week nearly unchanged.

The reduced economic activity resulting from the pandemic caused a large decline in inflation last year, which was one of the factors responsible for record low mortgage rates. With the distribution of the vaccine and the reopening of the economy, investors are now concerned that inflation may be heading much higher, and the latest data reinforced this view.

Gross Domestic Product (GDP) is the broadest measure of economic activity. During the first quarter, GDP rose at an annualized rate of 6.4%, which was very close to the consensus forecast. This was the second best reading since 2003, behind only the third quarter of last year when the reopening of the economy provided a major lift. Particular strength was seen in consumer spending, boosted by the rollout of the vaccine and the distribution of stimulus checks. 

Wednesday's Fed meeting contained no surprises and caused little reaction. There were no policy changes and the statement released after the meeting was very similar to the prior one. Fed officials repeated that they would like to see "substantial further progress" toward their employment and inflation goals before tightening monetary policy. In short, there was no reason for investors to alter their outlook for future Fed actions.

Looking ahead, investors will continue watching Covid case counts and vaccine distribution. Beyond that, the monthly Employment report will be released on Friday, and these figures on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, the ISM national manufacturing index will come out on Monday and the ISM national services index on Wednesday.