The ever changing situation in the Ukraine was the cause of most of the movement in mortgage rates over the past week, however, there was little net change to be seen.
During periods of uncertainty, there is a tendency in financial markets to move to safer assets – shifting to a defensive positions – this is known as “flight to safety”. When there is a political divide on major issues, where the outcome is unknown (think debt ceiling), investors tend to scale back on risk. Due to the troubles in the weaker euro zone countries, ones that might threaten global banking, we saw a major flight to safety.
The possibility of military conflict over the past week sparked this flight to safety. Global stock markets saw sever losses Monday – after a weekend that saw Russia moving troops to the Ukraine. However, mortgage rates seemed to show nice improvement. Tuesday brought a calming of military force by President Putin, this resonated in a reversal in the market – mortgage rates increased and stocks recovered their prior day losses.
On March 7th, the next Employment Report will be published. It is expected to show an increase of 150K jobs in February. However, the bad February weather is expected to again cause investors to question how well this number really reflects the strength of the economy. The next attention grabbing data will be when information regarding Retail Sales is released. A close eye will also be watching the situation in the Ukraine and how changes there impact mortgage rates.
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