Friday, September 13, 2013

Waiting on the Fed

Mortgage Time
Mortgage Market News for the week ending September 13, 2013

Waiting for the Fed
Ahead of next week's highly important Fed meeting, there was little significant news this week. The US plans for Syria will take some time to decide, so it had little influence on mortgage rates. The majority of the economic data released this week fell short of expectations, which helped mortgage rates end the week a little lower.
The last major economic growth data before Wednesday's Fed meeting, the Retail Sales report, showed a modest pace of growth. As was the case with last week's Employment data, it is fortunate to have steady growth, but expectations were for greater strength. Consumer Sentiment, which measures consumer expectations for future economic growth, dropped from recent multi-year highs. Investors have been closely watching the Jobless Claims reports in recent weeks for hints about the performance of the labor market, but this week's data was rendered inaccurate by a very unusual issue. Labor Department officials announced that two states were upgrading their computer systems and were unable to collect all the claims during the week.
The Retail Sales report was essentially the last data which could significantly influence the Fed's decision next week. Investors have now set their expectations. Despite the modest pace of economic growth, investors anticipate that the Fed will begin to taper its bond purchases, but now by a relatively small amount. The consensus is that the Fed will scale back from its current pace of $85 billion per month of combined Treasury and mortgage-backed securities (MBS) purchases to $70 or $75 billion per month. Some investors expect the Fed to reduce only Treasury purchases, while others think it will be split. Investors also will be interested in hearing how the Fed will determine future changes in the bond purchase program.

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:  919.590.1767     /