Monday Market Commentary

by Alex Stenback on March 14, 2005

Photo ‘Mickey’s Diner’ (St. Paul) by Andy Cosgrove

Last Week – Rates Went Up
Mortgage bond prices continued to fall last week pushing interest rates higher. Bonds were under pressure throughout the week as the market absorbed about $24 billion in Treasury bond auctions. For the week, interest rates on most loans rose about 1 full discount point.
The Week Ahead
The most important economic release this week will be retail sales data on Tuesday. Housing starts, industrial production, capacity use, leading economic indicators, and consumer sentiment will also be factors this week.

Why economic data releases are important – after the jump. [click below]

One of the more important things to know when making a decision whether to float or lock a loan is knowing what economic data is going to be released. Economic releases are important to mortgage bond markets because
they provide a snapshot of a portion of the economy – these "snapshots" drive most of the market activity/rate movement.

While an in-depth understanding of an economic event can be helpful, it is more important to know when an important piece of data will be released and what basic effect that data may have on the market. The most movement/volatility often occurs when the data released was something unexpected by the market.  Locking or floating are both calculated risks – knowing what data releases are upcoming can help you to gauge this. Economic data releases can cause wild swings in interest rates as the market reacts – floating into any major data release is always a risk.  For a list of each weeks important releases, click the economic calendar link under client resources. [on the left sidebar]

{ 1 comment… read it below or add one }

antonio hicks March 14, 2005 at 10:56 am

i guess i expected the world to have this trait

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