Mortgage rates saw little change last week amidst mixed economic news. Treasury auctions held on Tuesday, Wednesday and Thursday saw weak demand; this could have been caused by the FOMC minutes that were released on Wednesday. The minutes indicated that some FOMC members supported ending the current quantitative easing (QE) program within a few months. Over the weekend more rumblings from N. Korea refusing to enter discussions with the US on ending its nuclear bomb development. Tensions between the US, S. Korea and N. Korea remain at high levels, although most intelligence reports indicate the country does not yet have enough weapons grade plutonium to develop a bomb that could reach the US, but does have a small nuke missile that could reach Guam. Meanwhile, although there is reason to be concerned about N. Korea’s belligerence, global markets are not showing much concern so far. Technically the bond and mortgage markets continue to support higher prices and lower yields. Traders continue to play the stock market against treasuries; as long as stock indexes are weaker money will flow into treasuries, higher stock indexes pressure the bond market.
What'
s Coming Up Next? This week, unlike last week markets have a number of key economic measurements. March housing starts and permits, the April NAHB housing market index, March industrial production and factory use, the Philly Fed business index and the Fed will release its Beige Book. The Book is the staff report on the economy frm each of the 12 Fed districts and is used by the FOMC when it meets on May 1
st.
We expect an increase in volatility this week, rates should continue lower however each data point this week has the potential to swing markets.
