Brief Note from the desk
of MIGUEL VELAZCO, MBA
Week of: Monday, May 12, 2014
Present Market Conditions
bond market has opened in negative territory as stocks start the week off with
noticeable gains. The bond market is currently down in price ( higher in yield
and higher mortgage rates), which will likely push this morning's mortgage
rates higher compare to Friday's morning pricing.
There is nothing of importance scheduled for
release today. We are seeing stocks move higher (pushing bonds prides lower,
yields and mortgage rates higher) this morning due to economic and geopolitical
news from overseas. The rest of the week brings us the release of six economic
reports that may have the potential to influence mortgage rates. Several of
these reports are considered to be of elevated importance to the bond market
and therefore mortgage rates. This raises the possibility of multiple days with
fairly sizable changes to rates.
The first piece of data is April's Retail Sales at 8:30 AM ET
tomorrow morning. This is an extremely important report for the financial
markets since it measures consumer spending. Consumer spending makes up over
two-thirds of the U.S. economy, so this data can have a pretty significant
impact on the markets. Current forecasts are calling for a 0.3% increase in
sales from March to April. A weaker than expected level of sales should push
bond prices higher and mortgage rates lower tomorrow as it would signal that
economic activity may not be as strong as thought. However, an unexpected
increase could renew theories of economic growth that would lead to more stock
buying and bond selling, pushing mortgage rates higher.
Overall, the most active day for mortgage rates will likely be either tomorrow
or Thursday. Both
have key economic data being posted that will attract plenty of attention in
the bond market. We also need to watch stocks for mortgage rate movement.
Generally speaking, stock weakness makes bonds more attractive while stock
gains tend to draw funds from bonds, leading to higher mortgage rates (as we
have seen this morning).
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