Market Comment
Mortgage bond prices finished the week slightly lower which pushed rates higher. Rates seesawed back and forth throughout the week within a very narrow range. The Treasury auctions gained more attention early in the week amid no data. The auctions were generally solid except for some mixed demand for the 30 year offering. Stocks were volatile throughout the week. The DOW closed up over 200 points Tuesday only to close down over 200 points Wednesday. Weekly jobless claims were higher than expected at 294K versus 270K. Unfortunately we saw no rate decreases in response. Producer prices rose 0.2% versus the expected 0.3% increase. The core rose 0.1% as expected. Mortgage interest rates finished the week worse by approximately 1/8 to 1/4 of a discount point.
Fed Minutes The Federal Open Market Committee decided in December of 2004 to reduce the lag time between the open market committee meeting and the release of the minutes from six to eight weeks to only three weeks. The minutes from the meeting have the ability to cause mortgage interest rate volatility because they provide more policy details than the standard post meeting release. Most importantly the minutes provide the Fed’s complete economic analysis and the various opinions of individual Fed members. There is typically an overwhelming consensus among the members. However, there can also be dissension, which often causes uneasiness in the financial markets. In the past the release often came and went without much uproar. Lately the financial markets have been so uncertain that every piece of data receives some reaction. Keep in mind that if any of the text seems troubling to analysts you can see market volatility. Remember that mortgage interest rates remain historically favorable. Capitalizing on current rates is a sure thing. |
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