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Mortgage Market in Review – April 28, 2014

Market Comment

Mortgage bond prices finished the week higher, which pushed rates lower.  The market was negative the beginning of the week. Weaker than expected housing data Tuesday and Wednesday helped us recover the losses.  Existing and new home sales data were both lower than expected which helped rates improve.  Weekly jobless claims were better than expected but the losses associated with that release were short-lived.  Triple digit stock losses Friday enabled us to post some gains for the week.  Mortgage interest rates fell by about 1/8 to 1/4 a discount point for the trading week.

LOOKING AHEAD

Economic
Indicator

Release
Date & Time

Consensus
Estimate


Analysis

Consumer Confidence

Tuesday, April 29,
10:00 am, et

82.1

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

ADP Employment

Wednesday, April 30,
8:30 am, et

203k

Important.  An indication of employment.  Weakness may bring lower rates.

Q1 Advance GDP

Wednesday, April 30,
8:30 am, et

Up 2.4%

Very important.  The aggregate measure of US economic production.  Weakness may lead to lower rates.

Q1 Employment Cost Index

Wednesday, April 30,
8:30 am, et

Up 0.4%

Very important. A measure of wage inflation.  Weakness may lead to lower rates.

Fed Meeting Adjourns

Wednesday, April 30,
2:15 pm, et

No rate changes

Important.  Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.

Weekly Jobless Claims

Thursday, May 1,
8:30 am, et

322k

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

Personal Income and Outlays

Thursday, May 1,
8:30 am, et

Up 0.2%,
Up 0.1%

Important.  A measure of consumers’ ability to spend.  Weakness may lead to lower mortgage rates.

PCE Core Inflation

Thursday, May 1,
8:30 am, et

Up 0.1%

Important.  A measure of price increases for all domestic personal consumption.  Weaker figure may help rates improve.

ISM Index

Thursday, May 1,
10:00 am, et

53.9

Important.  A measure of manufacturer sentiment.  Weakness may lead to lower mortgage rates.

Employment

Friday, May 2,
8:30 am, et

6.5%,
Payrolls +185k

Very important.  An increase in unemployment or weakness in payrolls may bring lower rates.

Factory Orders

Friday, May 2,
10:00 am, et

Up 1.3%

Important.  A measure of manufacturing sector strength.  Weakness may lead to lower rates.

Busy Week

Economic data is the number one reason mortgage interest rates move on a daily basis.  Data is compiled from numerous sources and comes in two flavors, economic growth and inflation.  Some releases are more important than others and thus are more likely to cause wider swings in mortgage rates.  Rates move in relation to the deviation from expectations.  Wednesday and Friday carry the most risk with the Fed meeting adjourning on the 30th followed by the announcement and the jobs report Friday.  

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