MARKET COMMENT
Mortgage bond prices finished the week lower which put upward pressure on rates. Most of the negative movement came Monday as stocks surged higher. The data gave mixed signals on the strength of the economy. Retail sales fell 0.2% versus the expected 0.2% increase. ISM Index data was near expectations. February durable goods orders were lower than expected. ADP employment was sharply lower than estimated. Weekly jobless claims countered that read of the job market with claims at 202K versus an expected 217K. Unemployment was 3.8%. Payrolls rose 196K. Mortgage interest rates finished the week worse by 1/4 to 3/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Factory Orders | Monday, April 8, 10:00 am, et | Up 0.2% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| 3-year Treasury Note Auction | Tuesday, April 9, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Consumer Price Index | Wednesday, April 10, 8:30 am, et | Up 0.2%, Core up 0.1% | Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| 10-year Treasury Note Auction | Wednesday, April 10, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Fed Minutes | Wednesday, April 10, 2:00 pm, et | None | Important. Details of the last Fed meeting will be thoroughly analyzed. |
| Producer Price Index | Thursday, April 11, 8:30 am, et | Up 0.3%, Core up 0.2% | Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| Weekly Jobless Claims | Thursday, April 11, 8:30 am, et | 212K | Important. An indication of employment. Higher claims may result in lower rates. |
| 30-year Treasury Bond Auction | Thursday, April 11, 1:15 pm, et | None | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
| U of Michigan Consumer Sentiment | Friday, April 12, 10:00 am, et | 98 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Auctions
US Treasury bonds do not directly dictate fixed mortgage interest rate pricing however they do have an indirect impact. Both Treasuries and mortgage bonds often track in the same direction, but this is not always the case. There are many times that Treasuries and mortgage bonds move inversely.
Despite the overwhelming size of the US economy, foreign investors can still influence the financial markets. When foreign economies struggle foreign investors often purchase US based investments including mortgage bonds. This demand usually causes mortgage bond prices to rise and interest rates to fall. This flight to quality buying is a factor that helped mortgage interest rates remain historically low. Watch the foreign demand component of the auctions this week.