Guest Post – Tradition Mortgage’s Weekly Update – March 16, 2015
Housing and manufacturing reports are front and center this week. Plus, the Fed meets.
- Manufacturing data from the Empire State Index will be released on Monday, followed by the Philadelphia Fed Index on Thursday.
- In housing news, Monday brings the NAHB Housing Market Index for March. On Tuesday, look for February’s Housing Starts and Building Permits.
- As usual, Weekly Initial Jobless Claims will be delivered on Thursday.
In addition, the two-day Federal Open Market Committee meeting will begin on Tuesday and end on Wednesday with the 2:00 p.m. EDT release of the monetary policy statement. Investors will be listening closely for any rhetoric regarding future rate hikes, and this news always has the potential to be a market mover.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.
When you see these Bond prices moving higher, it means home loan rates are improving—and when they are moving lower, home loan rates are getting worse.
To go one step further—a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.
As you can see in the chart below, Mortgage Bonds rebounded in recent days due to weaker than expected economic data and weak wholesale inflation. Home loan rates remain near historic lows.
Chart: Fannie Mae 3.0% Mortgage Bond (Friday Mar 13, 2015)
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