Market Comment
Mortgage bond prices finished the week lower which pushed rates higher. Data was mixed throughout the week but we finished with strong growth figures Friday. Consumer confidence was 98.6 versus the expected 100.8 mark. New home sales were 593K versus the expected 600K. The European Central Bank echoed the rate hike warnings of the Fed. ECB President Draghi said that “we would certainly prefer not to have to keep interest rates at such low levels for an excessively long time, since the unwelcome side-effects may accumulate over time.” Weekly jobless claims were 258K versus the expected 259K. Gross domestic product data surprised to the upside (see article below.) Mortgage interest rates finished the week higher by approximately 3/8 to 1/2 of a discount point.
GDP Surprise The Advance Q3 gross domestic product report showed a stronger than expected increase last Friday. GDP rose 2.9% versus the expected 2.5% increase. This was important because it is one of the biggest releases heading into the Fed meeting Wednesday afternoon and a rate hike is on the table. Three members voted for a hike at the last meeting. While no rate hike is expected until possibly December the recent GDP data supports those members that want to raise rates sooner rather than later. Mortgage rates pushed higher recently as traders anticipated a future Fed rate hike. The timing is the big unknown. Rates remain historically favorable despite the recent volatility. Now is a great time to take advantage of low rates to avoid any future rate spikes. |
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