Monday Market Comment

Post date: Feb 13, 2012 8:4:46 PM

Week of February 13,2012 

Mortgage bond prices were only slightly higher last week which kept mortgage interest rates in check.  The Greek debt restructuring talks dominated trading.  Greece was pushed to enact austerity measures in an effort to restructure their current debt and avoid default but those talks stalled without any action and default fears continued as of late Friday.  Lower than expected weekly jobless claims resulted in a spike in rates Thursday morning.  Weaker than expected consumer sentiment data, considerably weaker stocks, and news that the S&P downgraded several Italian banks Friday helped bond prices recover. Mortgage bonds ended the week unchanged to better by 1/8 of a discount point. 

Fundamental Week

The abundance of fundamental data this week provides a good opportunity for mortgages to improve. If the data shows weakness in the economy with little or no inflationary pressures then it is possible for mortgage bonds to rally resulting in mortgage interest rate decreases. However, if the data shows that the economy continues to rebound or any significant signs of inflation, mortgage bonds may fall pushing mortgage interest rates higher. Mortgage interest rates remain historically favorable despite some recent increases.  Now is a great time to avoid the uncertainty surrounding continued market volatility.  Remember, the future is uncertain with so much global economic instability. Euro troubles have helped rates here at home.  Any signs of stability in that region could reverse the flight to quality buying of US debt that has helped rates stay low.  Caution is key.