The Fed met last Wednesday however there has been little move in the market in reaction to that meeting. Recent economic data has shown few surprises also. However, one thing that seems to have influenced the U.S. mortgage rates seems to have been the shift in expectation for European Central Bank (ECB) policy, which seems to have helped mortgage rates move a little lower this week.
The central banks in Europe and Japan seem to be moving in the opposite direction of the Fed, who is cutting its bond purchases and providing guidance for raising the Fed funds rate. However, one bank providing massive amounts of monetary stimulus, with little indication of slowing, is the Bank of Japan (BOJ). The euro zone this week produced low readings for inflation, sparking rising expectation of increase of monetary stimulus for the ECB. US mortgage-backed securities (MSB) and other bond yields around the world are impacted by the BOJ and ECB.
The recent severe winter weather has depressed the housing data results for February. Housing sales, both new and existing, decreased from January, and were well below the levels from the same time last year. However, one bright note is coming from Consumer Confidence, seems to be showing improvement – jumping to the highest level since January 2008.
On April 4th, the next Employment Report will be released – this is the most significant economic data each month. Other information investors will be interested in is Pending Home Sales, Core PCE inflation and ISM Manufacturing. Investors will also be keeping their eyes on the situation in the Ukraine along with economic data from China and Europe.
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