Losing Steam…

  • January 14, 2014

steamtoonYesterday I went to the gym and I realized something; there was almost no one there. Where did everyone go?  It was glorious. I think a lot of people have lost some momentum with their New Year’s resolutions—like going to the gym. You know what else lost some steam already? The mortgage bond market.

  • Rates opened lower as the rally caused by the Friday employment report. However, by midday the market had settled down.
  • Around 1 PM, two Fed speakers took the stage claiming they supported the end of Quantitative Easing despite the negative effects on interest rates and the stock market. Investors began to seek higher coupon bonds driving interest rates up.
  • Today the Retail Sales Report came in better than expected. This gives ammunition to policy makers who favor a more aggressive bond taper time line; reinforcing their arguments the economy is improving.

Tomorrow MBS Mortgage Application numbers are released this should give us an indication on the health of the housing market. Another key economic indicator, the Empire Manufacturing Index, is released at 8:30 as well. Maybe one of these will underperform and it might help the Bond Market pick up some steam.

By Lindsey Fediuk, Quicken Loans Capital Markets Analyst

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