Market Comment Mortgage bond prices finished the week higher, which pushed rates lower. Rates were stable the first portion of the week with no data. Greek economic turmoil dominated newswires as eurozone officials debated what to do next. Weaker than expected data Thursday morning helped rates fall. Retail sales fell 0.6% versus the expected 0.4% increase, which was very rate friendly. The producer price index fell 0.5% versus the expected 0.3% increase. The core, which excludes volatile food and energy prices, fell 0.5% versus the expected 0.1% increase. Consumer sentiment came in at 91.2 versus the expected 95.8 reading. The European Central Bank began their bond-buying program, which caused some unusual volatility across the global financial markets. Mortgage interest rates finished the week better by approximately 1/4 to 3/8 of a discount point. LOOKING AHEAD
“Patient” The most significant event in the financial markets this week will likely swing on one simple word or the lack thereof. Fed Chair Yellen clearly indicated in February that the Fed will consider rate hikes on a “meeting-by-meeting basis” but not prior to removing the word “patient” from the forward guidance. The door is open to a Fed rate hike in the next few months if the Fed removes the “patient” wording this week. The MBS market has priced in a lot of uncertainty as mortgage interest rates have risen the past few months in preparation of a Fed policy change. If the Fed fails to revise their guidance we could see a short-term relief rally. The Fed has a difficult challenge ahead. The housing market is not their only focus. However, it is a vital component of our economy and a higher interest rate environment could dampen the housing recovery. Be cautious heading into the Fed meeting this week as volatility is likely.
Copyright 2015. 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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