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economic news

Low Inflation Benefits Mortgage Markets

This week's economic data and comments from Fed officials painted a picture of a gradually improving economy with very low inflation. March Core CPI inflation rose at a tame 1.1% annual rate. This economic environment is favorable for bond markets, and Austin mortgage rates ended the week a little lower.

Fed To End MBS Purchase Program

The Fed statement essentially followed the expected script, demand was strong for the Treasury auctions, and much of the economic data released during the week was stronger than expected. The net effect was a small increase in mortgage rates during the week.

No Change from Fed

In a week full of major economic news, mortgage rates ended with little change. Wednesday's Fed meeting produced little reaction in mortgage markets. The PPI inflation report was higher than expected, but the more closely watched CPI report was right on target, remaining at low levels. Economic troubles in some developing nations produced a flight to safer assets, which helped mortgage markets late in the wee

Mixed Week for Mortgage Markets

This week's economic news was mixed for mortgage markets. A speech from Fed Chief Bernanke pushed mortgage rates lower early in the week, but weak results in the Treasury auctions caused them to turn higher again later in the week. In the end, mortgage rates finished with little net change.

By nature the pattern is bearish and suggests higher interest rates, worsening Austin mortgage pricing presents the higher probability

Market action, as I mentioned earlier has been a two way street. With earning season (stocks) in full swing, volatility has really picked up in both equities and bonds. Mortgage backs have been the worst performer on the day with spreads to treasuries widening as sellers continue to lean on the market. Currently, the 10 year note is off 7/32’s (yield 3.45%), MBS off 9/32’s, and stocks off only 1 point on the big board. Technically, we are trading a lower lows, lower highs type of pattern. By nature it is bearish and suggests higher interest rates, worsening Austin mortgage pricing present the higher probability. We will want to pay close attention the 10 year yield as it approaches 3.48% - 3.50%. That level is key support and “should” provide a near term bottom, followed by a rebound. If that level does not hold, MBS could feel another ½ point of pain. Play defense as the trend is not your friend!