Present Market Conditions
Mortgage Bonds start the week near unchanged as Stocks looks to move higher in anticipation of a resolution in Greece,Here in the States, economic data was mixed, while consumer inflation data remains subdued. April Personal Incomes rose by 0.4% versus the 0.3% expected, while Spending was unchanged, below the 0.2% expected, it worth noting that almost 70% of the US economy growth is based on Consumer Spending so when Consumers aren’t spending that will put the pressure on US Economic Growth. The Core PCE ( Personal Consumption Expenditure or Inflation ) rose by 0.1% in April from March, below the 0.2% expected. Year-over-year, Core PCE 1.2%, below the 1.3% recorded in March on an annual basis. When the Fed says they want inflation target to be at 2% - they are talking about the Core PCE…seeing that number presently at 1.2% year-over-year, puts the Fed in a tough spot to raise interest rates.
On Wednesday Fed Beige Book will be released, this is economic and business condition report or survey prepared by FED, if the report contains positive information regarding the economic condition it might have Moderate impact on the bond market and as result on Mortgage interest rate toward the upside.Week's big report will come on Friday with the government May Jobs Report.The biggest and most important day of this week is Friday’s May Job report which is going to have significant impact on the mortgage rate, current estimate is 225K jobs has been created in month of May, if the report come in lower than the estimate it willBe very positive for mortgage rates and vide versa.
We are recommending carefully floating for today, but in this fast moving market, sentiment can quickly reverse.