Market Comment Mortgage bond prices finished the week positive which put downward pressure on rates. Trading was relatively calm as is often the case in summer. We had very few economic releases. The Treasury auctions were mixed but did not result in any extreme changes. MBS prices reacted favorably to the release of the Fed minutes which indicated that inflation projections remain low for the next few years. Weekly jobless claims came in at 304k versus the expected 310k. This was not rate friendly. However, continuing claims rose to 2.584m versus the expected 2.56m which helped rates remain steady. Stocks stumbled a bit with some triple digit losses at times. Mortgage interest rates fell by about 1/4 of a discount point for the trading week. LOOKING AHEAD
Jobs and the Economy Our economy in the US is driven by consumer spending, which accounts for almost 70% of Gross Domestic Product (GDP). Three driving forces, unemployment, high commodity costs, and a depressed housing market currently hamper consumer spending and keep economic recovery in question. It is simple; a person without a job can’t spend money because they don’t have any. High food and energy costs, items that must be purchased to keep a household running, saps money that could be used for other “luxury” items like TV’s and cars. Lastly, many households relied on home equity to enhance lifestyles, pay for college, or make major improvements to the house. The only way for the US to reduce our budget deficits and grow GDP is to get people back to work. The abundance of data this week will provide insight into the current state of the economy and most releases have the potential to result in mortgage interest rate changes. 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. |
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