With the market closed on Monday in observance of Veteran’s Day – the rest of the week will roar into action with a packed economic calendar, including a look at retail sales numbers, consumer and producer inflation, and the manufacturing sector too.
Remember that when Bond prices move higher, home loan rates improve – and you can see in the chart below that despite some ups and downs, Bond prices have overall been trending higher over the last few months, meaning home loan rates on conforming loans have improved in general. Any weak or negative economic news arriving this week should help money flow into the safe haven of Bonds, helping Bond pricing move higher and home loan rates move lower. And the chart also shows some nice technical “floors of support” that may help Bonds continue their overall trend of improvement.
But lingering concerns on the credit quality of Mortgage Bonds could hamper their road higher – so this week could be volatile, depending on the flavor of the headlines on this topic. And in this week’s planned economic releases, any scent of inflation in the reports will be very bad news for Bonds – which deliver a fixed return that is eroded by the effects of inflation – so that would spell bad news for home loan rates as well.
Patrick Dunn, Westwood Mortgage Inc. & MMG Weekly
patrick@westwoodmortgage.com / http://www.certifiedplanning.com/