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Market
Comment
Mortgage bond prices finished the week lower, pushing rates higher
in volatile trading. The
economic data released during the week was mixed.
Housing starts, weekly jobless claims, and the Philadelphia
Fed Survey were much lower than expected and rate friendly, however,
better than expected leading economic indicators and consumer
confidence data released Friday took a toll on bond prices.
For the week, interest rates rose by 5/8s of a discount
point.
The minutes from the last Fed meeting will be released
Wednesday and may cause volatility.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
| Existing Home Sales |
Wednesday,
May 22,
10:00 am, et
|
4.93m
|
Low importance.
An indication of mortgage credit demand.
Significant weakness may lead to lower rates.
|
| Fed Minutes |
Wednesday,
May 22,
2:00 pm, et
|
None
|
Important.
Details of the last Fed meeting will be thoroughly
analyzed.
|
| Weekly Jobless Claims |
Thursday,
May 23,
8:30 am, et
|
354k
|
Important.
An indication of employment.
Higher claims may result in lower rates.
|
| New Home Sales |
Thursday, May 23,
10:00 am, et
|
423k
|
Important.
An indication of economic strength and credit demand.
Weakness may lead to lower rates.
|
| 10-year Treasury TIPS
Auction |
Thursday,
May 23,
1:15 pm, et
|
None
|
Important.
TIPS will be auctioned.
Strong demand may lead to lower mortgage rates.
|
| Durable Goods Orders |
Friday, May 24,
8:30
am, et
|
Up 0.1%
|
Important.
An indication of the demand for “big ticket” items.
Weakness may lead to lower rates.
|
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.
The prior release mentioned tame inflation. The March meeting
noted, “inflation had been running below the Committee's 2 percent
objective for some time, and nearly all of the participants
anticipated that it would run at or below 2 percent over the medium
term.” The Fed went
on to state, “Participants generally saw conditions in the housing
market as having improved further over the inter-meeting period.
Rising house prices were strengthening household balance sheets by
raising wealth and by increasing the ability of some homeowners to
refinance their mortgages at lower rates. Such a dynamic was seen as
potentially leading to a virtuous cycle that could help support
household spending and financial market conditions over time.
Reports from homebuilders in many parts of the country were
encouraging.” A major concern for rates in the short term was the note that
some members were interested in “curtailing the (MBS) purchase
program.”
Remember that mortgage interest rates remain historically
favorable. Capitalizing
on current rates is a sure thing amid the continued economic
instability across the globe.
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2013. 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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