Skip to content

Mortgage Market in Review – January 6, 2014

 

 

Market Comment

Mortgage bond prices finished the week near unchanged holding rates steady. Rates improved Monday amid no data and thin conditions ahead of the holiday. Consumer confidence printed at 78.1. Expectations were for confidence to increase 6.6 to 77.1. Confidence data is important because 2/3’s of the GDP comes from consumer spending and a confident consumer is more likely to spend. Weekly jobless claims came in at 339k versus the expected 333k. Stocks rebounded Friday morning and mortgage bonds were sharply negative which erased most of the gains from earlier in the week. Mortgage interest rates finished the week unchanged to better by approximately 1/8 of a discount point.

LOOKING AHEAD

Economic
Indicator

Release
Date & Time

Consensus
Estimate


Analysis

Factory Orders

Monday, Jan.6,
10:00 am, et

Up 0.1%

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

Trade Data

Tuesday, Jan 7,
8:30 am, et

$45b deficit

Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.

3-year Treasury Note Auction

Tuesday, Jan 7,
1:15 pm, et

None

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

ADP Employment

Wednesday, Jan. 8,
8:30 am, et

185k

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

10-year Treasury Note Auction

Wednesday, Jan. 8,
1:15 pm, et

None

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

Fed Minutes

Wednesday, Jan. 8,
2:00 pm, et

None

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

Consumer Credit

Wednesday, Jan. 8,
3:00 pm, et

$9.56b

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

Weekly Jobless Claims

Thursday, Jan. 9,
8:30 am, et

395k

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

30-year Treasury Bond Auction

Thursday, Jan. 9,
1:15 pm, et

None

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

Employment

Friday, Jan. 10,
8:30 am, et

7.1%,
Payrolls +195k

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

Fed Looks to Data

The Fed made it clear that asset purchases will be adjusted as needed in response to future data releases. While there are many market forces that drive mortgage interest rates the Fed remains the leader for now. If the Fed is watching the economic data it would be wise to follow their lead.

Economic data often drives trading sentiment in the short-term. A positive or negative release can cause mortgage interest rates to surge higher or lower in a very short time span. Very important releases such as the employment report can set the tone for trading for the month. An absence of data often results in very calm trading.

Data is difficult to predict. Estimates often vary wildly from economist to economist and major revisions are all too common. It isn’t difficult to know when an event that can cause market volatility is scheduled. This is crucial in making wise float and lock decisions.

To unsubscribe, please hit “reply” and include unsubscribe in the subject line.


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.