Monday, August 5, 2013

What the Fed's are Saying

Mortgage Time
Mortgage Market News for the week ending August 2, 2013

Economic Data is Mixed
This week was packed with major economic reports and a Fed meeting. With investors looking for hints about when the Fed will begin to taper its bond purchases, the data caused a great deal of volatility. Because the economic news was roughly neutral overall, though, mortgage rates ended the week just slightly higher.
The economic data released on WednesdayThursday, and Friday caused large swings in mortgage rates. Positive news on economic growth was bad for mortgage rates and vice versa. Second quarter GDP increased 1.7%, above the consensus of 1.1%, and mortgage rates jumped. Then, ISM Manufacturing unexpectedly increased to the highest level since June 2011, pushing mortgage rates even higher. When Friday's highly anticipated Employment data was a little weaker than expected, though, mortgage rates reversed nearly the entire increase seen earlier in the week.
The reaction to these reports was exaggerated. A big reason for the volatility is that the Fed has indicated that future policy changes will depend on the performance of the economy. Investors had hoped that the Fed would provide more concrete guidance this week on its plans to begin to taper, but Wednesday's Fed statement provided no additional clarity. The consensus view is still that the Fed will begin to scale back its bond purchases in September, unless economic growth weakens significantly. As long as a high level of uncertainty remains about when the Fed will taper, volatility is likely to stay elevated.

Davis Orebaugh
Mortgage Consultant
NMLS #:   / NC 323545
OnQ Logo large.jpgNMLS # 5645
2501 Blue Ridge Road, Suite 370
Raleigh, NC 27607
Phone:  919.926.7554 Cell:  919.740.7049 Direct Fax:  919.400.4824     /