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Mortgage Market in Review – April 21, 2014

Market Comment Mortgage bond prices finished the week lower which pushed rates higher. The market was negative most of the week as stocks rebounded and the data came in against us. The consumer price index rose 0.2%, higher than the expected 0.1% increase. The core, which excludes volatile food and energy, rose 0.2% and was expected up 0.1%. Weekly jobless claims printed at 304k versus the expected 313k. Continuing claims fell to 2.739m versus the expected 2.794m. The Philadelphia Fed business conditions index was better than expected @ 16.6 versus the expected 9.5 mark. The MBS market closed early Thursday and was closed Friday for the holiday weekend. Mortgage interest rates rose by over 1/2 a discount point for the shortened trading week.

LOOKING AHEAD

Economic Indicator

Release Date & Time

Consensus Estimate

Analysis

Leading Economic Indicators

Monday, April 21, 10:00 am, et

Up 0.2%

Important. An indication of future economic activity. A smaller increase may lead to lower rates.

2-year Treasury Note Auction

Tuesday, April 22, 1:15 pm, et

None

Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.

New Home Sales

Wednesday, April 23, 10:00 am, et

452k

Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.

5-year Treasury Note Auction

Wednesday, April 23, 1:15 pm, et

None

Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.

Weekly Jobless Claims

Thursday, April 24, 8:30 am, et

298k

Important. An indication of employment. Higher claims may result in lower rates.

Durable Goods Orders

Thursday, April 24, 8:30 am, et

Up 0.8%

Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.

7-year Treasury Note Auction

Thursday, April 24, 1:15 pm, et

None

Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.

U of Michigan Consumer Sentiment

Friday, April 25, 10:00 am, et

82.4

Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Gas Prices
Fears of energy price increases are growing with gasoline prices pushing back towards and in some areas over the $4/gallon mark. Most areas of the US have seen gas prices rise to levels not seen since last summer. This comes amid a difficult time for many people as good jobs remain scarce, the housing market struggles, and the economy remains fragile.
The recent consumer price index released by The Bureau of Labor Statistics showed higher than expected overall prices despite the fact gasoline prices in March were lower which offset price increases in food and shelter. Signs that gasoline prices are now increasing are not a welcome sight with price pressures already a concern.
The U.S. Energy Information Administration reported April 14, 2014 that the price of regular gasoline averaged $3.579 per gallon across the country. The Gulf Coast had the lowest average prices while the West Coast had the highest. Many analysts blame the price increases on global political instability especially in oil producing countries. Others point to refinery supply issues tied to a changeover from winter formulations to summer formulations. Increased demand by consumers during the holidays also plays a role. Most predict that prices will continue to escalate into the summer but there is some hope that increased domestic production can help keep prices in check.

Copyright 2014. All Rights Reserved. Mortgage Market Information Services, Inc. www.ratelink.com The information contained herein is believed to be accurate, however no representation or warranties are written or implied.