Market Comment Mortgage bond prices finished the week higher, which pushed rates lower. Flight to quality buying of U.S. debt resulted in the improvements. News out of China and Europe signaled economic challenges remain. The minutes from the last Fed meeting published Wednesday afternoon had a strong influence on global financial markets, which caused volatility in mortgage rates. The debate over the Fed’s next move intensified because Fed officials were more “dovish” (more inclined to keep rates lower longer) than expected. MBS prices quickly reversed a negative position with a positive move of almost 1/2 of a discount point. Some of the gains from earlier in the week were erased Thursday afternoon and Friday morning. Mortgage interest rates still finished the week better by approximately 7/8 of a discount point despite the volatility. LOOKING AHEAD
Industrial Production The Federal Reserve releases the Industrial Production report each month. It is a real measure of output from manufacturing, mining, electric, and gas utilities. The data is significant in that it provides an indicator of the state of the economy. Analysts use the data to attempt to determine market direction. The Fed uses the data to help set the course for monetary policy. Generally the Fed likes to see steady growth in the economy with little price pressures. Mortgage interest rates generally react favorably to weaker than expected industrial production data. In times of economic weakness investors often move out of stocks and into mortgage bonds. When things look good investors often move out of bonds and back into stocks. We have seen these patterns frequently in recent months. Floating into significant economic data always has some risk involved. Now is a great time to take advantage of mortgage interest rates at these historically favorable levels. 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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