Market Comment
Mortgage bond prices finished the week near unchanged to slightly lower despite some large swings early in the week. Rates started higher Monday morning tied to reports of strength in the Chinese economy and rising oil prices. Some of the losses were erased Tuesday as productivity was weaker than expected. Stock strength was a factor throughout the week as the DOW hit record levels. Weekly jobless claims rose 258K as expected. The figure stayed below the 300K mark for another month and signaled the job market remained solid. Stronger than expected consumer sentiment data Friday pressured rates a little higher. Sentiment came in at 98 versus the expected 94.8 mark. Mortgage interest rates finished the week higher by approximately 1/8 of a discount point.
Fed Rate Hike The Fed is expected to raise rates at the meeting this week. The good news is most analysts see the move as already priced into trading. We saw rates push higher the past month as a result. The Fed will likely make the case that the employment situation remains on solid footing. Over 180,000 jobs continued to be added each month. New York Fed President Dudley stated, “Assuming the economy stays on this trajectory, I would favor making monetary policy somewhat less accommodative over time by gradually pushing up the level of short-term interest rates.”The big unknown now is how fiscal policy will work within the president-elect’s goals of reducing taxes and regulations while increasing spending on infrastructure. There is much uncertainty about the future of the economy. A cautious approach to lock decisions is wise.
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