POST TAGSMarket Updates
Blog posted On March 13, 2023
Last Friday was an eventful one for the bond market and rates. There was a lot of commotion going on in banking news that positively impacted bonds. Other news that affected bonds positively on Friday was the release of the employment situation reports. These reports include data on payrolls, earnings, workweek duration, unemployment, and participation in the workforce. Overall, the reports fell short of expectations, save a couple of exceptions. So what does the bond market and employment data have to do with mortgage rates? In the current environment, both of these factors have a strong impact on rates. Luckily, last week’s events had positive impact on rates – a very positive impact (at least for now).
While the bond market doesn’t directly dictate rate movement, it’s often correlated. Recently, good news for bonds has indicated good news for rates. On Friday, bonds were in the midst of the largest rally in four months. Consequently, rates trended back towards mid-February levels. Even better, they have the potential to continue this momentum with tomorrow’s inflation data from the consumer price index (CPI) for February. If the data meets or is below expectations, rates could continue their downward trend. Right now, the monthly CPI is expected to come in at 0.4% while the annual CPI is projected to be 6%. Core CPI, stripping out food and energy, is expected to be at monthly and annual levels of 0.4% and 5.5% respectively.
In addition to the important market-moving CPI report, we have some big builder reports coming out this week as well. The National Association of Home Builders (NAHB) is releasing its housing market sentiment index for March this week. Over the past couple months, builder sentiment has improved. Housing starts and building permits for February are also coming out later this week, which are expected to increase slightly. Stay tuned next week for all the important market updates!
If you have any questions about rate movement in meantime, don’t hesitate to reach out.
Sources: Bloomberg, Mortgage News Daily