this weeks market updates

This Week’s Market Commentary

by admin on April 18, 2011

This holiday-shortened week is pretty light in terms of economic news scheduled for release. There are only three economic reports scheduled and none of them are considered to be highly important to the financial or mortgage markets.

Accordingly, there is a decent possibility of seeing a relatively calm week in the mortgage market, assuming that the stock markets do the same.

There is nothing of importance scheduled for release today. March’s Housing Starts is the first data, coming early Tuesday morning. It gives us a measurement of housing sector strength and mortgage credit demand by tracking starts of new home construction and the number of permits issued for future starts.
This data usually doesn’t cause much movement in mortgage pricing unless it varies greatly from forecasts. It is expected to show an increase in construction starts of new homes. Good news for the bond market and mortgage rates would be a decline in home starts, indicating housing sector weakness.
Wednesday’s only data is March’s Existing Homes Sales numbers from the National Association of Realtors. This report also gives us an indication of housing sector strength and mortgage credit demand. It is considered to be moderately important to the markets, but can influence mortgage pricing if it shows a sizable variance from forecasts. Ideally, the bond market would like to see a drop in home resales because a soft housing sector makes a broader economic recovery difficult. Analysts are expecting to see an increase in sales between February and March. The larger the increase, the worse the news for bonds and mortgage rates.

The third and final report of the week will be posted late Thursday morning when the Conference Board releases their Leading Economic Indicators (LEI) for March. This data attempts to measure economic activity over the next three to six months. This is considered to be a moderately important report, so we may see a slight movement in rates as a result of this report. It is expected to show an increase of 0.2%, meaning it is predicting slight growth in economic activity over the next several months. A smaller increase, or a decline would be considered good news for the bond market and could lead to slightly lower mortgage rates.

The bond market will close early Thursday and will remain closed Friday in observance of the Good Friday holiday. The stock markets will be open Thursday for a full day of trading, but will also be closed Friday. The markets will reopen for regular hours Monday morning. The early close and Friday holiday may lead to some volatility in bonds Thursday afternoon as investors protect themselves over the long weekend. I don’t believe that this volatility will necessarily impact mortgage rates, but the possibility does exist, especially if the preceding days were active.

Overall, it is difficult to label one particular day as the most important of the week with no key economic data or other events scheduled. A good part of the week will likely be heavily influenced by the stock markets. If the major stock indexes rally, bonds will likely suffer and mortgage rates will move higher. If stocks fall, we could see mortgage rates move lower the next few days. There is nothing on the agenda that is of much concern, but keep an eye on the markets and maintain contact with your mortgage professional if still floating an interest rate as conditions can change at any time.