Mortgage bond prices rose last week pushing interest rates slightly lower. The Treasury auctions were moderately bid and did little to help mortgage bonds. However, market sentiment was positive most of the week as market analysts expect the Fed to change their continuous course of rate increases soon.
For the week, interest rates on government and conventional loans fell by about 1/8 of a discount point.
The Fed meeting will be the most important event this week. Retail sales, trade data, consumer price index, industrial production, and capacity use will also be important.
Fed Meeting:
The United States central bank, the Federal Reserve, coordinates the borrowing and lending activities of federally chartered banks. The principal reason the Federal Reserve was created was to reduce severe financial crises. One way of accomplishing this goal is to control the amount of money that flows through the economy. By manipulating the US money supply, the Fed influences inflation, unemployment, and the level of US economic activity. The Fed has a variety of tools that it uses to control the money supply, but its chief policy tool is the manipulation of short-term interest rates.
While every Fed meeting is a major event in the financial markets, this week’s meeting may carry additional weight. While another rate increase is expected, traders are eagerly hoping that the Fed revises its outlook for the future with a sign of an end to the rate hikes. A revised outlook by the Fed could result in a rally for mortgage bonds pushing rates lower. However, indications that the Fed will continue to raise rates may not bode well for mortgage bonds. The good news is that despite the consistent rate hikes mortgage interest rates remain historically favorable for homeowners. It is a great time to take advantage of rates at the current levels
No comments:
Post a Comment