Last week was a fairly quiet week with a market that continued to be confused and looking for direction as it continually traded in quick little ups and downs each day. By week's end we ended up losing 10/32nds on Fannies which equates to a slight upward move in rates. The biggest surprise number of the week was a much stronger than expected Retail sales number... Keep in mind that good news equates to bad news for interest rates.
This week has its share of Economic fun and even tosses in a Fed Meeting
Here is this week's Calendar:
- Monday March 15: Beware the Ides of March! And February's Industrial Production and Capacity Utilization numbers forecast to be +0.1% and 72.6%. There were no surprises here. So far the market has spent most of the day in negative territory and currently made the move to being flat.
- Tuesday, March 16: February Housing starts anticipated down 3.5% and Building permits expected -1.6%. Housing starts have certainly been effected by the bad weather we have seen in much of the country this winter, while building permits are most likely down due to lack of demand. This mixed bag of a report, while weak, is not likely to move interest rates.
- Tuesday: Fed Open Market Committee Meeting. What will they do? This will most likely become a non event, It is highly unlikely we will see a bump up in rates from the Fed, what will be watched closely is the post meeting statement at 2:15pm. It is important that it says that they will keep short term rates low for "an extended period", If they remove the extended period from the language it will likely signal that they will be raising rates sooner rather than later and the market will react in a bad way on that news.
- Wednesday March 17: February PPI expected -0.2% with a core of +0.1%. As forecast the CPI shows no sign of inflation at the producer level and should help calm an unsettled market, this is most likely a recipe for steady rates.
- Thursday March 18: My little girl turns 18 today, God I am getting old!
- Thursday: February CPI expected +0.1% and a core rate of +0.1%. As long as the core stays below +0.2% it should be a recipe for steady rates and inflation that is well under control.
- Thursday: Initial Jobless claims expected down 7,000 to 455k. As long as this number stays above 400,000 it will be supportive of steady to potentially lower rates.
- Thursday: February Leading Indicators expected +0.1%. LEI is very forward looking, but the Forecast for slight improvement should not worry the markets or cause a move in either direction
- Friday March 19: A no news day. In the absence of any data look to stocks for movement in the credit markets. A good day for stocks will be a bad day for interest rates, and Vice Verse....
Hands down this week's biggie will be tomorrow's FOMC meeting. While I doubt we will see any actual move by the Fed, it is always their language that moves the market more than their actions. As stated above we want to see them say they will keep rates low for an extended period as they have been saying, any deviation in that language is likely to scare the markets.
Ultimately I expect to see a fairly flat week for rates unless there are big surprises that we have not anticipated. Keep in mind that it is just about impossible to post a "real" interest rate these days since there are so many variables that will effect rates for individual clients. Between LTV and Credit score alone there are about 40 different rate options
Happy Birthday Alex!
Have a great week!
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