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Monday, March 14, 2016

Mortgage Bond Market Analysis - Fed Decision Week

It's Monday and while there is no data today, this week has the potential to be interesting with lots of things to influence rates.  The FNMA benchmark bond is currently up 20 basis points ahead of a number of relatively important data points tomorrow which include Retail Sales, Producer Price Index, NY Empire Manufacturing Index, NAHB Housing Market Index and Business Inventories.  I don't think the PPI will show any real inflation and the other data points aren't likely to show strong economic progress though it probably will show some slight improvement.

Wednesday is another big day with Housing Starts and Building Permits in addition to Consumer Price Index along with Capacity Utilization and Industrial Production.  The biggie comes on Wednesday afternoon with the Fed Interest Rate Decision - expect them to stand pat - followed by the FOMC press conference.  I don't expect anything earth-shattering here either.  I think the market / traders might breath a small sigh of relief - if there's even any angst in the first place - but remember that oil is the primary driver right now when it comes to the flow of money.  China's economy is also having some influence as is Europe on occasion but until our economy shows any real signs of life which would lead to some possible action (raising interest rates and selling mortgage bonds) by the FOMC, I don't see any huge movements happening.  Assuming the price of oil recovers a bit - some experts expect it to get back to $50 or so in the coming months - interest rates will trend up as money flows from the bond market to the stock market.

With mortgage bonds higher this morning, I would lock ahead of tomorrow's and Wednesday's data (and Fed decision) just in case any of the data surprises to the upside enough to give traders the impetus to sell.  Of course, oil is down pretty good today which is why rates are a bit better and in addition to the economic data and Fed concerns, oil could be up tomorrow and / or Wednesday.  Don't forget to download my app (you can get it by clicking on the link in the upper right corner of my blog) so that you can always keep current on interest rates and real estate / financial news in addition to getting my alerts if the bond market makes a significant move.  Contact me if I can help with a client or a mortgage question - 702-812-1214, 801-853-8720 or  Make it a great day.

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