Market Comment Mortgage bond prices finished the week higher which pushed rates lower. The data was mixed throughout the week which resulted in continued up and down rate movements. The ADP employment report was stronger than expected and showed an increase of 220k versus the expected 215k increase. Advance Q1 GDP rose 0.1%, weaker than the expected 1% increase which was very rate friendly. Q1 Employment Cost Index rose 0.3% versus the expected 0.5% increase which was also rate friendly. The Fed kept rates unchanged and continued to taper asset purchases by $10 billion. Unemployment came in lower than expected at 6.3%. Non-farm payrolls rose 288k versus the expected 205k increase and the MBS market initially sold off. Fortunately there was some flight to quality buying late Friday morning in reaction to reports of continued tension in Ukraine which helped counter the negative movements associated with the employment report. Mortgage interest rates fell by about 1/4 a discount point for the trading week despite the continued volatility. LOOKING AHEAD
Trade Data In the distant past the US economy tended to be viewed as relatively unaffected by economic activity abroad. However, increased trades with other countries and an increased reliance on foreign purchases of US debt have generated a greater awareness of trade-related issues. The exchange rate of the dollar and foreign trade flows are interrelated. One must buy dollars to purchase US exports, and sell dollars to buy imports. Likewise, foreign investment in US debt requires the purchase of US dollars, and is thus affected by exchange rates. Each month the Commerce Department gathers an enormous amount of detailed data on exports and imports. The data is broken between goods and services trade. The overall trade balance is the dollar difference between US exports and imports on a seasonally adjusted basis. The report highlights trade flows between the US and various partners. Since the mid-1970’s, US imports of consumer and capital goods have exceeded exports, so a merchandise trade deficit has existed. The US has always maintained a service trade surplus, and because this surplus is not enough to offset the merchandise trade deficit, a net export deficit has resulted. Due to the overwhelming amount of data considered, trade is difficult to forecast, and can present surprises. For a variety of reasons, the financial markets will often be unaffected by surprises in trade data. However, the data still has the ability to cause mortgage interest rate volatility in this jittery environment. 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. |
-
Recent Posts
-
Recent Comments
-
Archives
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- June 2013
- April 2013
- February 2013
-
Categories
-
Meta