Rate Watch
Mortgage Rates Move Up on Fed Member comments
With no economic data of note, Federal Reserve Board members took the opportunity to place their opinions into the economic picture. As expected, these speeches by the powers that be had the biggest impact on last week’s mortgage rates. Investors were all ears as they looked for clues into the likelihood of future interest rate cuts. The clues that the Fed members gave were not very promising.
On Thursday, Dallas Federal Reserve President Richard Fisher expressed concerns about further slashing of the Federal Funds Rate. Fisher, the lone dissenter in the previous decision to cut rates, believes no further cuts should be made and the threat of inflation is more ominous than the threats to economic growth. Fisher’s views appear to be gaining support with other voting members of the Federal Reserve FOMC board. Philadelphia Fed President Charles Plosser and Richmond Fed chief Jeffrey Lacker voiced similar concerns regarding inflation and rate cuts. The views of these Fed Members suggest a bloc of resistance to future rate cuts.
In response to these speeches, investors sent bond prices lower and mortgage rates higher. Bankrate.com’s overnight average on the 30-year fixed rate mortgage rose to 5.55 percent, up from last week’s 5.47 percent. The 15-year fixed rate mortgage came in at 5.04 percent, up from 5.47 percent. Adjustable Rate mortgages appear to be more resilient at the moment. The 5-year Adjustable Rate mortgage (ARM) rose only 1 basis point to 4.98 percent.
This week will have a bit more economic data, however, the Fed Members will still take the spotlight. Fed Reserve Presidents will give speeches on Monday, Tuesday, Thursday, and Friday, and Fed Chairman Ben Bernanke will handle questions from the Senate Banking Committee on Thursday. Investors will be looking for further clues into the policy preferences of these Fed members.
On Wednesday, the very important Retail Sales report will be released covering the month of January. Since, consumers make-up two-thirds of economic activity, this report on the total receipts at the nation’s cash registers is a key indicator of economic health. The only other economic report of significance will be the Industrial Production report to be released on Friday. The Industrial Production report measures the physical output of the nation's factories, mines and utilities, and provides a good indication of economic health as well. If either of these reports present a picture of a rebounding economy, then rates could continue to move up.
With no economic data of note, Federal Reserve Board members took the opportunity to place their opinions into the economic picture. As expected, these speeches by the powers that be had the biggest impact on last week’s mortgage rates. Investors were all ears as they looked for clues into the likelihood of future interest rate cuts. The clues that the Fed members gave were not very promising.
On Thursday, Dallas Federal Reserve President Richard Fisher expressed concerns about further slashing of the Federal Funds Rate. Fisher, the lone dissenter in the previous decision to cut rates, believes no further cuts should be made and the threat of inflation is more ominous than the threats to economic growth. Fisher’s views appear to be gaining support with other voting members of the Federal Reserve FOMC board. Philadelphia Fed President Charles Plosser and Richmond Fed chief Jeffrey Lacker voiced similar concerns regarding inflation and rate cuts. The views of these Fed Members suggest a bloc of resistance to future rate cuts.
In response to these speeches, investors sent bond prices lower and mortgage rates higher. Bankrate.com’s overnight average on the 30-year fixed rate mortgage rose to 5.55 percent, up from last week’s 5.47 percent. The 15-year fixed rate mortgage came in at 5.04 percent, up from 5.47 percent. Adjustable Rate mortgages appear to be more resilient at the moment. The 5-year Adjustable Rate mortgage (ARM) rose only 1 basis point to 4.98 percent.
This week will have a bit more economic data, however, the Fed Members will still take the spotlight. Fed Reserve Presidents will give speeches on Monday, Tuesday, Thursday, and Friday, and Fed Chairman Ben Bernanke will handle questions from the Senate Banking Committee on Thursday. Investors will be looking for further clues into the policy preferences of these Fed members.
On Wednesday, the very important Retail Sales report will be released covering the month of January. Since, consumers make-up two-thirds of economic activity, this report on the total receipts at the nation’s cash registers is a key indicator of economic health. The only other economic report of significance will be the Industrial Production report to be released on Friday. The Industrial Production report measures the physical output of the nation's factories, mines and utilities, and provides a good indication of economic health as well. If either of these reports present a picture of a rebounding economy, then rates could continue to move up.
posted by Vincent Biondillo @ 4:14 PM
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