Mortgage bond prices finished the week lower which pushed rates higher. Stock volatility dominated headlines. Higher stocks put selling pressure on mortgage bonds Tuesday when trading resumed after the extended holiday weekend. The data was generally neutral. Weekly jobless claims were 275K as expected. Producer price data caused some concern. PPI was unchanged versus the expected 0.1% decrease. The core, which excludes volatile food and energy, rose 0.3% versus the expected 0.1% increase. Mortgage interest rates finished the week worse by about 1/8 of a discount point. Fed Turning Point In 2008 as the world was quaking, the Federal Reserve came to the rescue of the global banking and financial system. Through a series of rate cuts and bond buying sprees, the governing body kept the financial system from imploding. Seven years later most of the metrics the Fed is worried about have healed and it is time to move to the next chapter. Global traders will stay awake this fall and winter guessing when the Fed will make its first move to tighten interest rates. Floating borrowers and referral sources need to understand how important the Fed meetings are in terms of potential volatility. We may not see a rate hike at the meeting this week but volatility is likely.
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