Market News

Mortgage bond prices rose last week pushing mortgage interest rates lower. Trading was volatile the entire week. The producer price index showed inflationary pressures, which hurt bonds earlier in the week. The Fed worked with Fannie Mae to restructure capital requirements. In effect, this added additional capacity helping to alleviate some of the liquidity concerns plaguing the mortgage bond market.

For the week, interest rates on government and conventional loans fell by about a half of a discount point.

The consumer confidence data Tuesday will likely set the tone for trading. The potential for market volatility is high surrounding durable goods, new home sales, GDP, income, and outlays data. Core PCE, the inflation component of the income and outlays release, will be carefully watched.

LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis

Existing Home Sales
Monday, March 24,
10:00 am, et
Down 0.6%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.

Consumer Confidence
Tuesday, March 25,
10:00 am, et
75.0
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower rates.

Durable Goods Orders
Wednesday, March 26,
8:30 am, et
Up 1.0%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.

New Home Sales
Wednesday, March 26,
10:00 am, et
Down 1.4%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.

Q4 GDP final revision
Thursday, March 27,
8:30 am, et
Up 0.6%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.

Personal Income and Outlays
Friday, March 28,
8:30 am, et
Income up 0.3%,
Outlays up 0.2%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower rates.

U of Michigan Consumer Sentiment
Friday, March 28,
10:00 am, et
71.0
Moderately important. An indication of consumers’ willingness to spend. Weakness may lead to lower rates.


Why Data is Important

One of the easiest and most important things to do when making a decision whether to float or lock a loan is knowing what data is going to be released. Economic releases are important because they provide a snapshot of a portion of the economy. Data is even more important in that it is often the cause of market volatility. Upcoming data events are readily available and there is no excuse not knowing what data will be released in the week ahead.

While an in depth understanding of an economic event can help a person make informed decisions, it is more important to have a rudimentary understanding of when an important piece of data will be released and what basic effect that data can have on the market. Understanding the nuances of a release does very little for a person if they are blindsided by not knowing when the release will occur. Accurately predicting how each and every release will come in is impossible. Take a look at the recent consumer price index report for evidence of that. Analysts were certain consumer prices would rise considering the recent run-up in oil and commodity prices. Consumer prices came in unchanged along with the core rate.

Floating into important economic data can be very risky and can expose a person to huge market swings. Keep that in mind this week, as there is an abundance of significant data heading our way.