Market Comment Mortgage bond prices finished the week negative which put upward pressure on rates. We started the week on a bad note and never could recover. There was no data early but the first two Treasury auctions showed weaker than normal foreign demand. That trend reversed with the solid 30Y auction Thursday afternoon but it wasn’t enough. Weekly jobless claims were 317k compared to estimates of 315k. This figure was near expectations and did not move the MBS market. Retail sales rose 0.3% versus the expected 0.6% increase which was rate friendly. The producer price index fell 0.2% versus the expected 0.2% increase. The core fell 0.1% versus the expected 0.1% increase. Unfortunately, the rate friendly PPI data was countered by escalating geopolitical concerns with unrest in Iraq. Mortgage interest rates rose by about 3/8 to 1/2 of a discount point for the trading week. LOOKING AHEAD
Fed Focus The United States central bank, the Federal Reserve, coordinates the borrowing and lending activities of federally chartered banks. The principal reason the Federal Reserve was created was to reduce severe financial crises. One way of accomplishing this goal is to control the amount of money that flows through the economy. By manipulating the US money supply, the Fed influences inflation, unemployment, and the level of US economic activity. The Fed has a variety of tools that it uses to control the money supply, but its chief policy tool is the manipulation of short-term interest rates. No rate changes are expected at the Wednesday meeting but there is concern about the future. The Fed has announced MBS purchase reductions at recent meetings but also indicated they would be ready to make changes to that as warranted. Their post meeting remarks will be carefully analyzed. 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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