Princeton Capital Blog

This Week’s Market Commentary

April 4th, 2011

This week brings us the release of little relevant economic data for the markets to digest. We will, however, see the minutes from the last FOMC meeting.

There are no important monthly economic reports scheduled for release this week, so look for the stock markets to heavily influence bond trading and mortgage rates.

There is nothing of relevance scheduled for today or Tuesday morning, but Fed Chairman Bernanke will be speaking at a financial conference in Georgia tomorrow evening. Whenever he speaks, the markets pay attention and this one will be no different.

However, since the speech is at 7:15 PM ET, we won’t see its impact on the financial and mortgage markets until Tuesday morning. I don’t believe that his words will cause too much movement this time, but the potential does exist, especially since it is an extremely light week in terms of economic releases and other relevant events. Therefore, we should be attentive to what he says.

The first important event comes Tuesday afternoon when the Fed releases the minutes of their last FOMC meeting. Market participants will be looking at them closely. They give us insight to the Fed’s current thought process and individual Fed member opinions.

Any surprises in the 2:00 PM ET release, particularly about inflation or when the Fed may start raising key interest rates, could cause afternoon volatility in the markets Tuesday and possible changes in mortgage pricing.

The only other data worth mentioning is the weekly release of unemployment figures Thursday morning. This data usually does not impact mortgage rates much, but due to the lack of other data on the calendar this week’s update could influence rates. Analysts are expecting the Labor Department to announce that 385,000 new claims for unemployment benefits were filed last week. This would be a small decline from the previous week. The larger the number, the better the news for the bond market and mortgage rates.

Overall, there are several variables that could make this week very quiet or quite rocky for mortgage shoppers. Tuesday’s FOMC minutes could very well be a major market mover or a complete non-factor. In other words, we may have a very calm week ahead of us, or we may see rates move noticeably several days. With no important economic data to drive trading and mortgage rates, bonds may move with stocks. This means large stock gains could lead to bond selling and higher mortgage rates. But stock weakness could lead to mortgage pricing improving for the week.

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