Daily Market Update 9/23/13

Rates were little changed Monday in quiet trading.  No key economic data will be released today.

Daily Market Update 9/20/13

Mortgage rates held steady Friday in quiet trading.  No economic data will be released today, although several Fed officials will be speaking this afternoon.

Daily Market Update 9/19/13

Rates moved lower Thursday as mortgage-backed securities rallied following yesterday's Fed announcement.  The Official Statement indicated the Fed would delay reducing the volume of monthly asset purchases, known as "quantitative easing" until it sees more evidence of economic growth, noting that the "tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market."  Investors had expected the Fed to begin scaling back its monthly purchases of $85 billion in Treasuries and mortgage-backed securities by about $15 billion.  In today's economic news, weekly Jobless Claims rose to 309,000, but for the second week in a row the figures were distorted by an upgrade to the computer systems in California and Nevada.  August Existing Home Sales increased unexpectedly to 5.48 million annual units, the highest level in over six years.  National Association of Realtors officials noted that August closings mostly represent contracts written in June and July, as mortgage rates began rising.  The Philly Fed Index, a survey of manufacturers in the mid-Atlantic region, jumped to 22.3, far exceeding expectations.  Leading Indicators rose by 0.7%, close to forecast.  No other key data will be released today.

Daily Market Update 9/18/13

Rates faced upward pressure Wednesday as investors eagerly awaited this afternoon's Fed policy statement.  In economic news, Housing Starts rose by 1% in August to an annual rate of 891,000, below the consensus forecast of 910,000.  A decline in multi-family units accounted for the shortfall.  No other key economic data will be released today.  The Fed statement will come out at 2:00 PM, followed by a press conference by Fed Chairman Bernanke at 2:30.  It is expected that we will learn additional details about the timing and scale of Fed tapering of bond purchases, how it will be divided between Treasuries and mortgage-backed securities, and how future purchase reductions will be determined.  The Fed will also release its economic forecast for 2016.  Extreme rate volatility is possible.

Daily Market Update 9/17/13

Mortgage rates were little changed Tuesday as the Federal Open Market Committee of the Federal Reserve began its two-day meeting to discuss monetary policy.  In economic news, the August Consumer Price Index (CPI) rose 0.1%, a bit less than expected, and was 1.5% higher than one year ago.  Core CPI, which excludes volatile food and energy components, also increased 0.1%, and was a tame 1.8% higher year-over-year.  There was little market reaction to the data, as investors await tomorrow's Fed statement, expected around 2:15 PM.  No other key data will be released today.

Daily Market Update 9/16/13

Rates inched lower Monday following the withdrawal of Lawrence Summers as a leading candidate to replace Ben Bernanke as Fed Chairman next year.  Summers would have faced confirmation difficulty among Senate Democrats who object to his ties to the banking industry.  His withdrawal leaves Janet Yellen, the current Fed Vice-Chair, as the clear favorite to replace Bernanke.  Yellen is seen as the more "dovish" of the two regarding inflation, and is more likely to maintain the Fed's loose monetary policy.  Today's economic data was over-shadowed by the news, and had little impact on rates.  August Industrial Production rose 0.4%, a bit below expectations.  The Empire State index, a survey of manufacturers in the region, came in at 6.3, well below forecast.  Readings above zero indicate expansion in the manufacturing sector.  Stocks moved higher.  No other key data will be released today.

Daily Market Update 9/13/13

Rates moved lower Friday following the release of weaker than expected economic data.  August Retail Sales rose 0.2%, below the consensus forecast of 0.5%.  The Producer Price Index (PPI) jumped 0.3%, above expectations, but the "Core" PPI, which excludes volatile food and energy components, was unchanged.  An increase of 0.1% had been expected.  Consumer Sentiment fell to 76.8, far below expectations.  The big news next week will be the two-day Fed meeting beginning on Tuesday.  No rate changes are expected, but investors will be watching closely for clues about the timing of a planned tapering of bond purchases by the Fed, known as "quantitative easing".  Most economists believe the Fed will begin scaling back its volume of purchases beginning this month, but recent data suggests that economic growth may be slowing.  Expect rates to be unusually volatile in the coming days.