Mortgage Market
The financial markets are closed today in observance of the President’s Day Holiday and will reopen Tuesday morning.
Economic Data
There are five economic reports worth watching this week that are likely to affect mortgage rates in addition to the minutes from the last FOMC meeting.
January’s Industrial Production data will be released mid-morning Wednesday. It gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities and can have a moderate impact on the financial markets. Analysts are expecting to see a 0.8% increase in production from December to January. A smaller than expected rise in output would be good news and should push bond prices higher, lowering mortgage rates Wednesday.
The minutes from last FOMC meeting will be released Wednesday afternoon. Traders will be looking for any indication of the Fed’s next move regarding monetary policy. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. I suspect there was some debate amongst the FOMC members before releasing that statement. These minutes will likely clarify if there is a consensus amongst them or if there is disagreement about the Fed’s actions or inactions. A consensus likely means a sooner change to key short-term rates. Accordingly, I am expecting some volatility in the markets after the minutes are released.
Thursday morning will be the release of the Leading Economic Indicators (LEI) for January. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.5% increase, meaning that economic activity may rise in the near f uture. A smaller than expected rise would be good news for the bond market and mortgage rates.
The Labor Department will release January’s Consumer Price Index (CPI) at 8:30 AM ET Friday, which measures inflationary pressures at the very important consumer level of the economy. With exception to maybe the Employment report, the CPI is the most important report that we see each month. Its results can have a huge impact on the financial markets, especially on long-term securities such as mortgage-related bonds. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall.
Overall, the most important day of the week will likely be Friday with the CPI being released, but Wednesday and Thursday may also be active days for mortgage rates. In other words, be prepared for an active week in the markets and mortgage rates.
FLOAT or LOCK
If I was closing on a Home Mortgage in the next 0 to 15 Days - LOCK
If I was closing on a Home Mortgage in the next 15 to 30 Days - LOCK
If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK
If I was closing on a Home Mortgage in the next 60+ -LOCK
bc@SmarterBorrowing.com 617.771.5021
Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline
bc@smarterborrowing.com
617.771.5021
