market commentary Feb. 18th

Market Commentary

At Legacy Mortgage we are constantly seeking ways to enhance our dedication to our clients and real estate partners. Our postition as an innovator in the field of real estate finance allows us to help you make informed decisions regarding your customers mortgage financing. We have scoured through the financial reports for the week and we wanted to share the information with you. Please let us know if we can be of further assistance to you and your valued clients.

There are only three economic reports worth watching this week that are likely to affect mortgage rates. Two of them are scheduled for release the same day, meaning we may see a relatively calm week for mortgage rates. The financial markets are closed today in observance of the President's Day Holiday and will re-open Tuesday morning. We are open for business today, but do not expect to see new rates issued until Tuesday.

Wednesday morning brings us the release of two of this week's relevant news and data. The Labor Department will release January's Consumer Price Index (CPI) at 8:30 AM ET, which measures inflationary pressures at the very important consumer level of the economy. With exception to maybe the Employment report, the CPI is the most important report that we see each month. It's results can have a huge impact on the financial markets, especially long-term securities such as mortgage-related bonds. It is expected to show a 0.3% increase in the overall index and a 0.2% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall.

The second report of the day is January's Housing Starts. This report gives us an indication of housing sector strength and mortgage credit demand. However, it isn't considered to be of high importance to the bond market or mortgage pricing. It likely will not affect rates unless it varies greatly from forecasts.

Also, Wednesday afternoon brings us the release of the minutes from the last FOMC meeting. Traders will be looking for any indication of the Fed's next move regarding monetary policy. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading.

The third and final relevant economic data of the week is the Leading Economic Indicators (LEI) for January late Thursday morning. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.1% decline, meaning that economic activity may slow slightly in the near future. A larger than expected drop would be good news for the bond market and mortgage rates.

Overall, the most important day of the week is obviously Wednesday with the release of the CPI and the Fed minutes. We are expecting to see a fairly quiet week for the most part, particularly Tuesday and Friday. That is unless the stock markets post significant gains or losses, which then could influence bond trading and possibly mortgage rates those days.