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Market Comment
Mortgage bond prices rose last week applying downward pressure on mortgage interest rates. The bond market got a boost from the Fed announcement (read below) to buy more mortgage debt. There was some profit taking in bonds Thursday afternoon following the run-up in prices Wednesday. Higher than expected core readings of the consumer and producer price indices reignited some inflation concerns. The Fed's continued efforts to pump money into mortgage bonds helped keep mortgage interest rates favorable. For the week, interest rates on government and conventional loans fell by about 1/2 of a discount point.
The Treasury auctions will once again take center stage this week as additional debt supply hits the market. Durable goods orders and consumer sentiment data will be important.
LOOKING AHEAD
|
Economic
Indicator
|
Release
Date & Time
|
Consensus
Estimate
|
Analysis
|
| Existing Home Sales |
Monday, March 23,
10:00 am, et
|
Down 0.8% |
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates. |
| 2-year Treasury Note Auction |
Tuesday, March 24,
1:30 pm, et
|
None |
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Durable Goods Orders |
Wednesday, March 25,
8:30 am, et
|
Down 2.0% |
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates. |
| New Home Sales |
Wednesday, March 25,
10:00 am, et
|
Down 2.9% |
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| 5-year Treasury Note Auction |
Wednesday, March 25,
1:30 pm, et
|
None |
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Q4 GDP final revision |
Thursday, March 26,
8:30 am, et
|
Down 6.6% |
Important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| 7-year Treasury Note Auction |
Thursday, March 26,
1:30 pm, et
|
None |
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Personal Income and Outlays |
Friday, March 27,
8:30 am, et
|
Down 0.1%,
Outlays up 0.3%
|
Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates. |
| U of Michigan Consumer Sentiment |
Friday, March 27,
10:00 am, et
|
56.0 |
Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates. |
Additional Fed Money
Last week the Federal Reserve announced it would pump another $750 billion into purchasing more mortgage-backed securities, the bonds that directly dictate 30 year and 15 year fixed rate Government and Conventional mortgage interest rates. This is in addition to the $500 billion being used between January and June to drive mortgage interest rates lower and help stimulate the economy.
So far the Fed has been able to keep mortgage interest rates relatively low while not destroying the functioning secondary market where investors buy and sell mortgage bonds. The potential negative is that the Fed has become the primary purchaser of these bonds. In the short term take advantage of these advantageous rates. There is uncertainty how things will play out once the Fed begins to unwind those positions in the futures.
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Copyright 2009. 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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