Tuesday, June 6, 2017

What's going on and why does it matter? Mortgage bonds are trading at their highest levels of the year as financial market investors continue to engage in the "flight to quality" trade. Investors are favoring the safety of bonds ahead of three key events on Thursday: (1) the European Central Bank is scheduled to make a decision on European interest rates and monetary policy; (2) there is a general election scheduled in the UK; and, (3) former FBI Director Comey is scheduled to give testimony in Washington. The Fed is scheduled to purchase a sizable $1.625 billion of 30-year conventional mortgage bonds later this afternoon. Later this morning we have the JOLTS report which measures job openings in the economy. What should you do about it?   Watch for mortgage bonds to continue trading above their 200-day moving average; but be prepared to lock your rate quickly if bonds fall back below that critical level. Economic reports that may impact mortgage rates this week: Date Report Period Prior Estimate Actual Mon 5 Jun Durable Goods (rev.) Apr -0.7% -1.2% -0.8% Mon 5 Jun Factory Orders Apr 0.5% -0.2% -0.2% Mon 5 Jun ISM Non-Mfg PMI May 57.5 57.0 56.9 Tue 6 Jun JOLTS Job Openings Apr 5.74M - Thu 8 Jun Initial Jobless Claims Week of May 29 248,000 240,000 Fri 9 Jun Wholesale Inventory Apr 0.2% 0.2% Fri 9 Jun Wholesale Sales Apr 0.0% -