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Market Comment - Week of June 20th, 2011

Mortgage bond prices fell last week pushing mortgage interest rates slightly higher. There were large swings throughout the week. Rates were pressured higher Tuesday following stronger than expected producer price index data. Retail sales showed a decline but not as bad as expected. Consumer prices rose higher than expected. The headline figure rose 0.2% and the core rate, which excludes volatile food and energy, rose 0.3%. Fortunately the Greek debt worries continued and some flight to quality buying of mortgage bonds ensued Thursday morning. Unfortunately mortgage bonds still ended the week worse by about 1/4 to 3/8 of a discount point.

The Fed meeting and the comments that follow will be very important this week. The beginning of the week is void of any significant data but the end of the week has some events that may result in mortgage interest rate volatility.

Economic Factors

Economic Indicator

Release Date Time

Consensus Estimate


Existing Home Sales

Tuesday, June 21, 2011


Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.

Fed Meeting Adjourns

Wednesday, June 22, 2011

No rate change

Important. Few expect the Fed to raise rates, but some volatility may surround the adjournment of this meeting.

Weekly Jobless Claims

Thursday, June 23, 2011


Important. An indication of employment. Higher claims may result in lower rates.

New Home Sales

Thursday, June 23, 2011


Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.

30Y TIPS Treasury Bond Auction

Thursday, June 23, 2011


Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates.

Q1 Revised GDP

Friday, June 24, 2011

Up 1.8%

Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.

Durable Goods Orders

Friday, June 24, 2011

Down 0.9%

Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.


Fed Meeting

The United States central bank, the Federal Reserve, coordinates the borrowing and lending activities of federally chartered banks. The principal reason the Federal Reserve was created was to reduce severe financial crises. One way of accomplishing this goal is to control the amount of money that flows through the economy. By manipulating the US money supply, the Fed influences inflation, unemployment, and the level of US economic activity. The Fed has a variety of tools that it uses to control the money supply, but its chief policy tool is the manipulation of short-term interest rates.

The Federal Reserve can adjust two distinct short-term interest rates. The discount rate is the interest rate which banks pay the Fed for primarily overnight loans. Despite its name, the Fed funds rate is the rate banks pay to borrow from other banks. The Federal Reserve has direct control over the level of short-term interest rates, the Fed's influence over longer-term interest rates is less certain. All eyes will be focused on the Fed meeting Wednesday. Most analysts predict no rate change.

Keep in mind that a Fed rate change does not automatically mean mortgage interest rates will change. The Federal Reserve has direct control over the level of short-term interest rates. The Fed's influence over longer-term interest rates is less certain. A cautious approach to float/lock decisions is prudent heading into the Fed meeting this week. Market volatility is likely.

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NMLSR# 2146

6025 S. Quebec Street #110
Centennial, CO 80111







Jason Keith
Senior Loan Officer

Office: 720-489-0712
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NMLSR# 288509

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Jason M. Keith
Senior Loan Officer
NMLSR # 288509
Cell: 303-263-6135

Starkey Mortgage

6025 S. Quebec Street

Suite 110

Centennial, CO 80111

To check the license status of your mortgage loan originator, visit

Comments (4)

Tim Riddle
Tim Riddle Broker Associate,Marsha Hardin Real Estate - Azle, TX
SFR,TAHS, Azle ,Fort Worth Real Estate

Jason, I sure liked your post showing the different indicators and what part of the market they affect. Its very interesting and can be helpful when talking to clients,


Jun 20, 2011 04:52 AM
Blaser Yoakum Team
Keller Williams Southlake - Southlake, TX

Great information!


Thanks for posting!


Pam Yoakum

The Blaser and Yoakum Team

Jun 20, 2011 04:54 AM
Jason M. Keith
Caliber Home Loans - Parker, CO
Equal Housing Lender

Tim, Thank you!  I post this every Monday.

Jun 20, 2011 05:56 AM
Jason M. Keith
Caliber Home Loans - Parker, CO
Equal Housing Lender

Pam - You bet and thank you for commenting!

Jun 20, 2011 05:57 AM