A Normal Day On The Quicken Loans Pricing Desk…

  • January 15, 2014

normaltoonAfter running from meeting to meeting this morning through afternoon, I received a little bit of time to do what I most like to do – get engaged in the markets, and figure out what happened today. The bond market continued to lose a little bit of steam this morning, as data from both the Producer Price Index and Empire Manufacturing beat expectations. Again, it is the bond market we track when we talk about rate sheet pricing and cost to the consumer. In this sense, positive data spurs speculation that the Federal Reserve will get more aggressive with their slowing of bond purchases. With this, we see investors move away from mortgage-backed securities and pricing degrade. Breaking the data down further:

  • Producer Price Index, PPI, showed a 0.4% month-over-month increase. The headline number matched expectation and was an improvement over the prior month’s report. Some of the underlying numbers of the report were better than expectation which helped fuel the market action this morning.
  • Empire Manufacturing beat expectation with their index coming through at 12.51 versus an approximate consensus reading of 3.75. A positive number indicates business activity expanded for New York manufacturers, and a more positive number than expected again boosts the speculation that the economy is doing better.
  • Our saving grace today happened to be Chicago Federal Reserve President Charles Evans who directed that the Fed would not prematurely reduce accommodation in an economy with high joblessness and low inflation. Bond investors and MBS investors rejoice.

That’s all for now, I’ll be back tomorrow.

By Jeremy VanBuskirk, Quicken Loans Capital Markets Analyst

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