Mortgage Market News for the week ending April 16, 2010
Compliments of
John Girardeau
Southern Mortgage Company
PHONE:
(803) 642-6448
southernmortgage@bellsouth.net<mailto:southernmortgage@bellsouth.net>
PO Box 2676
Aiken, SC 29802
Events This Week:
Inflation Low
Retail Sales Higher
Housing Starts Rose
Manufacturing Mixed
________________________________
Events Next Week:
Mon 4/19
Leading Indicators
Thur 4/22
PPI
Existing Sales
Fri 4/23
Durable Orders
New Home Sales
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 mortgage rates ended the week a little lower.
While mortgage rates have dropped over the last two weeks, the move lower has not been a straight line down. Mortgage rates have been fluctuating sharply from day to day, and even hour to hour this month. Volatility in mortgage markets has increased significantly since the end of the Fed's MBS purchase program on March 31. With the Fed steadily in the market in just one direction (purchasing, but never selling), other investors were generally reluctant to take opposing positions. Now that the Fed is on the sidelines, the market has returned to more normal conditions, meaning that investors freely react to economic news and changing sentiment.
This week's housing sector reflected improvement. March Housing Starts exceeded expectations, rising 2% from February to the highest level since November 2008. Housing Starts were 20% higher than one year ago. Building Permits, a leading indicator, also beat the consensus forecast. The April NAHB Homebuilder confidence index jumped to the highest level since September 2009 as home buyers take advantage of tax credits set to expire soon.
Also Notable:
* The Fed Beige Book report indicated improving economic conditions in all but one of the twelve regions
* Bernanke stated that he expects the labor market to slowly recover
* Goldman Sachs was charged with fraud on subprime mortgages by the SEC
* The Dow stock index reached an 18-month high
[cid:B559FA18D79C49BFBF6F5A062132436C@johng]
Average 30 yr fixed rate:
Last week: -0.05%
This week: -0.10%
Stocks (weekly):
Dow: 11,000 +50
NASDAQ: 2,475 +25
Week Ahead
Next week, the economic data will be stacked at the end of the week. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Thursday. Existing Home Sales also will be released on Thursday. Durable Orders, an important indicator of economic activity, will come out on Friday, along with New Home Sales. Leading Indicators will round out the schedule on Monday.
To learn more about news impacting interest rates and mortgage markets, go to www.mbsquoteline.com<http://www.mbsquoteline.com>
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