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Mortgage Market in Review – April 7, 2014

Market Comment

Mortgage bond prices finished the week lower which pushed rates higher. The market was negative the first portion of the week as stocks surged higher and some of the early data was not rate friendly. Factory orders and ISM Index data were both a bit stronger than expected which pressured rates higher. Fortunately the all-important monthly employment figure Friday morning was rate friendly and we recovered a significant portion of the earlier losses. Unemployment came in at 6.7% versus the expected 6.6%. Non-farm payrolls rose 192k which was weaker than expected. Mortgage interest rates finished the week worse by approximately 1/8 of a discount point.

LOOKING AHEAD

Economic
Indicator

Release
Date & Time

Consensus
Estimate


Analysis

Consumer Credit

Monday, April 7,
3:00 pm, et

$12.56b

Low importance. A significantly large increase may lead to lower mortgage interest rates.

3-year Treasury Note Auction

Tuesday, April 8,
1:15 pm, et

None

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

10-year Treasury Note Auction

Wednesday, April 9,
1:15 pm, et

None

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

Fed Minutes

Wednesday, April 9,
2:00 pm, et

None

Important. Details of the last Fed meeting will be thoroughly analyzed.

Weekly Jobless Claims

Thursday, April 10,
8:30 am, et

319k

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

30-year Treasury Bond Auction

Thursday, April 10,
1:15 pm, et

None

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

Producer Price Index

Friday, April 11,
8:30 am, et

Up 0.2%,
Core up 0.1%

Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.

U of Michigan Consumer Sentiment

Friday, April 11,
10:00 am, et

80

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

Fed Minutes

The Federal Open Market Committee decided in December of 2004 to reduce the lag time between the open market committee meeting and the release of the minutes from six to eight weeks to only three weeks. The minutes from the meeting have the ability to cause mortgage interest rate volatility because they provide more policy details than the standard post meeting release. Most importantly the minutes provide the Fed’s complete economic analysis and the various opinions of individual Fed members. There is typically an overwhelming consensus among the members. However, there can also be dissension, which often causes uneasiness in the financial markets. In the past the release often came and went without much uproar. Lately the financial markets have been so uncertain that every piece of data receives some reaction. Keep in mind that if any of the text seems troubling to analysts you can see market volatility. The last Fed meeting resulted in a rate spike when investors interpreted the Fed statement and Yellen’s press conference remarks as an indication that rates would rise sooner rather than later. The Fed minutes this week could clarify things or cause more uncertainty.

Remember that mortgage interest rates remain historically favorable. Capitalizing on current rates is a sure thing amid the continued economic instability across the globe.

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.