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Bond Market Update

Market Update

Friday, April 28, 2017

What's going on and why does it matter?
Mortgage bonds are continuing to drift sideways as April trading comes to a close today. The first estimate for economic growth this year (Q1 GDP numbers) came out this morning weaker than market expectations. However, employment costs were elevated and inflation numbers came out right at the Fed's target 2% level. This may provide some justification for the Fed to increase rates when they meet next week, or at the very least when they meet in June. Speaking of next week, we'll have the final results from the French Presidential elections on Monday, the Fed's interest rate decision on Wednesday, and the closely watched non-farm payrolls report on Friday.  Over this weekend, we have escalating tensions with North Korea and the uncertainty of whether Congress will pass a budget to avert a government shutdown. Needless to say, financial markets may be choppy as investors position themselves ahead of all these events. The Fed is scheduled to purchase up to $1.6 billion of 30-year conventional mortgages bonds today. This may help mortgage bonds remain above their 30-day moving average, which has been operating as a technical level of support.

What should you do about it?
Watch for mortgage bond prices to remain above their 30-day moving average, but be prepared to lock quickly if bonds break below that level.


Economic Calendar

Economic reports that may impact mortgage rates this week:

Date Report Period Prior Estimate Actual
Tue
25 Apr
Consumer
Confidence
Apr 124.9 122.5 120.3
Tue
25 Apr
New Home
Sales
Mar 590,000 580,000 620,000
Thu
27 Apr
Durable
Goods
Mar 2.3% 1.2% 0.7%
Thu
27 Apr
Initial Jobless
Claims
Week of
Apr 17
243,000 245,000 257,000
Thu
27 Apr
Pending
Home Sales
Mar 5.5% -1.0% -0.8%
Fri
28 Apr
GDP Q1
2017
1.9% 1.2% 0.7%
Fri
28 Apr
Core PCE
Prices
Q1
2017
1.3% 2.0% 2.0%
Fri
28 Apr
Chicago
PMI
Apr 57.7 56.5 58.3 
Fri
28 Apr
U of Mich
Consumer
Sentiment
Apr 96.9 98.0  97.0

Matt Chao

Matt Chao
NMLS Number: 1428557
VIP Independend Mortgage, Inc.
Corporate NMLS Number: 145502
matt.chao@vipmtginc.com
http://mattchao.vipmtginc.com
(858) 216-2368
3919 30th St, Suite 7
San Diego, California 92104

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