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Mortgage Market in Review – February 17, 2014

Market Comment

Mortgage bond prices finished the week lower, which pushed rates higher for the week.  Prices were stable Monday with no data released.  We were negative Tuesday morning heading into Fed Chairman Yellen’s testimony to Congress and that trend continued throughout the entire day.  Weaker than expected retail sales and slightly higher weekly jobless claims Thursday helped us recover some of the earlier losses.  Retail sales, an indication of consumer strength, fell 0.4% in January versus the expected unchanged reading.  Weekly jobless claims came in at 339k versus the expected 335k.  Unfortunately mortgage interest rates still finished the week worse by 1/4 to 3/8 of a discount point.



Date & Time



Presidents’ Day Holiday

Monday, Feb. 17


Important.  Shortened trading week may result in volatility Tuesday when trading resumes.

Housing Starts

Wednesday, Feb. 19,
8:30 am, et


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

Producer Price Index

Wednesday, Feb. 19,
8:30 am, et

Up 0.2%,
Core up 0.1%

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

Fed Minutes

Wednesday, Feb. 19,
2:00 pm, et


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

Weekly Jobless Claims

Thursday, Feb. 20,
8:30 am, et


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

Consumer Price Index

Thursday, Feb. 20,
8:30 am, et

Up 0.2%
Core up 0.1%

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

Philadelphia Fed Survey

Thursday, Feb. 20,
10:00 am, et


Moderately important.  A survey of business conditions in the Northeast.  Weakness may lead to lower rates.

Existing Home Sales

Friday, Feb. 21,
10:00 am, et


Low importance.  An indication of mortgage credit demand.  Significant weakness may lead to lower rates.

Janet Yellen

Janet Yellen, the new chairman of the Federal Reserve, completed her first semiannual testimony to Congress on monetary policy this week.  Yellen held steady with past policies and reaffirmed future Fed action will be data dependant.

Her predecessor, Ben Bernanke led the fight to save the banking system and the economy using every tool at his disposal and more.  It was under his reign we learned of Quantitative Easing, the practice of purchasing bonds to drive interest rates lower.   The stated goal of lowering rates was achieved and the US economy still enjoys rates near historic lows.

Quantitative Easing was reduced the past few months and the Fed narrative is that this will continue as the economy recovers.  Yellen stated, “My colleagues on the FOMC and I anticipate that economic activity and employment will expand at a moderate pace this year and next, the unemployment rate will continue to decline toward its longer-run sustainable level, and inflation will move back toward 2% over coming years.”  She also highlighted the recovering labor market citing the unemployment rate at 6.6%.  However, she said there is “much work to be done”.  Getting America back to work is a priority.   Time will tell on what the Fed can and will do on that front but they have been clear of their goal to reduce Quantitative Easing as the economy improves so we can expect there to be some rate volatility as a result.

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