|
Market Comment
Mortgage bond prices were lower last week, which pushed mortgage interest rates higher. Inflation fears were reignited when the core producer price index came in higher than expected. Germany had a successful 2Y debt auction, which alleviated some of the short-term Euro debt concerns. Germany has been one of the few bright spots for the Euro and is credited with keeping other Euro nations afloat. Spain and France also had decent debt auctions later in the week, which also reversed some of the flight to quality buying of US debt we saw recently. The weekly jobs data wasn’t as bad as expected which also added to MBS losses for the week. Mortgage bonds ended the week worse by approximately 1/2 of a discount point.
LOOKING AHEAD
|
Economic
Indicator |
Release
Date & Time |
Consensus
Estimate |
Analysis
|
| 2-year Treasury Note Auction |
Tuesday, Jan. 24,
1:15 pm, et |
None |
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Fed Meeting Adjourns |
Wednesday, Jan. 25,
2:15 pm, et |
No rate changes |
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting. |
| 5-year Treasury Note Auction |
Wednesday, Jan. 25,
1:15 pm, et |
None |
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Weekly Jobless Claims |
Thursday, Jan. 26,
8:30 am, et |
355k |
Important. An indication of employment. Higher claims may result in lower rates. |
| Durable Goods Orders |
Thursday, Jan. 26,
8:30 am, et |
Up 0.8% |
Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| New Home Sales |
Thursday, Jan. 26,
10:00 am, et |
320k |
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Leading Economic Indicators |
Thursday, Jan. 26,
10:00 am, et |
Up 0.3% |
Important. An indication of future economic activity. A smaller increase may lead to lower rates. |
| 7-year Treasury Note Auction |
Thursday, Jan. 26,
1:15 pm, et |
None |
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Q3 Advance GDP |
Friday, Jan. 27,
8:30 am, et |
Up 1.7% |
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment |
Friday, Jan. 27,
10:00 am, et |
62 |
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Fed Focus
The United States central bank, the Federal Reserve, coordinates the borrowing and lending activities of federally chartered banks. The principal reason the Federal Reserve was created was to reduce severe financial crises. One way of accomplishing this goal is to control the amount of money that flows through the economy. By manipulating the US money supply, the Fed influences inflation, unemployment, and the level of US economic activity. The Fed has a variety of tools that it uses to control the money supply, but its chief policy tool is the manipulation of short-term interest rates.
No rate changes are expected at the Wednesday meeting but there is concern about the future. The Fed indicated they hope to keep rates low into 2013 but also indicated they would be ready to make changes to that policy as warranted. Their post meeting remarks will be carefully analyzed.
|
