Monday, February 5, 2018

What's going on and why does it matter? Mortgage bonds opened slightly higher this morning as the bond market tries to catch its breath after last week's wild ride. There is a sell-off taking place in the global bond market due to the prospect of rising inflation, strong economic reports, increased supply of bonds due to growing government deficits, and reduced demand for bonds due to the ongoing reduction of the massive bond-buying program of the Federal Reserve and potentially other Central Banks.  All this is causing global bond yields to rise from their multi-year lows, and it means that mortgage pricing could continue to get worse.  The economic calendar is relatively tame this week, although Congress is at again with another budget deadline this Thursday. It will be interesting to see if the correction in the bond market continues, or if bonds can stage some sort of rebound this week.  The Fed is scheduled to purchase up to $840 million of GNMA mortgage bonds today. What should you do about it? Trying to time the market in times like this is a bit like trying to catch a falling knife. So, it may be best just to play it safe and lock your rate. ..... ..... Economic reports that may impact mortgage rates this week: Date Report Period Prior Est. Actual Mon 5 Feb ISM Non-Mfg PMI Jan 55.9 56.5   Tue 6 Feb JOLTS Job Openings Dec 5.879M 5.90M   Thu 8 Feb Initial Jobless Claims Week of Jan 29 230k 238k   Fri 9 Feb Wholesale Inventories Dec 0.2% 0.2%   Fri 9 Feb Wholesale Sales Dec 1.5% 0.6%