Forecast for the Week

A cornucopia of economic data will be released this week.

• Monday kicks off with manufacturing numbers from the Empire State Index, followed by more manufacturing news Thursday with the Philadelphia Fed Index.
• Tuesday brings along the closely watched Consumer Price Index, which will give us a read on inflation at the consumer level.
• Several key housing reports will be released, including the National Association of Home Builders Housing Market Index on Monday, Housing Starts and Building Permits on Tuesday, and Existing Home Sales on Thursday.
• Also on Thursday, Weekly Initial Jobless Claims will be released.

In addition, the regularly scheduled two-day Federal Open Market Committee meeting will begin on Tuesday. The last two meetings in December and January ended with the Fed tapering its Bond and Treasury purchases by $5 billion each. Will more tapering follow?

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, Bonds were able to improve at the expense of Stocks last week. With the Fed meeting and a slew of economic data this week, I’ll be watching the markets closely for the latest developments.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday March 14, 2014)

The Mortgage Market Guide View…

Date	ET	Economic Report	For	Estimate	Actual	Prior	Impact
Mon. March 17	08:30	Empire State Index	Mar	5.4		4.5	HIGH
Mon. March 17	10:00	Housing Market Index	Mar	50		46	Moderate
Tue. March 18	08:30	Core Consumer Price Index (CPI)	Feb	0.1%		0.2%	HIGH
Tue. March 18	08:30	Consumer Price Index (CPI)	Feb	0.2%		0.2%	HIGH
Tue. March 18	08:30	Building Permits	Feb	955K		937K	Moderate
Tue. March 18	08:30	Housing Starts	Feb	915K		888K	Moderate
Wed. March 19	02:00	FOMC Meeting	Mar	NA		0.25%	HIGH
Thu. March 20	08:30	Jobless Claims (Initial)	3/15	330K		315K	Moderate
Thu. March 20	10:00	Existing Home Sales	Feb	4.60M		4.62M	Moderate
Thu. March 20	10:00	Philadelphia Fed Index	Mar	2.0		-6.3	HIGH

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

Mortgage Market Guide, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Market Guide, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.