‚Äč Bond Market Update

Bond Market Update

Bond Market Update

Market Update

Friday, February 26, 2021

What's going on and why does it matter?
Mortgage bonds opened higher this morning as they attempt to rebound from yesterday's massive sell-off in the bond market. Despite multiple assurances from the Fed this week, the bond market remains concerned about the potential for high inflation and increased bond supply due to government stimulus. The increased rollout of COVID vaccinations is also leading to hopes of a quick economic recovery which would also create inflationary pressure. Indeed, the core PCE report issued this morning is the Fed's favorite measure of inflation, and it came out higher than expected. Even so, the market may attempt to rebound from these levels. The Fed is scheduled to purchase up to $5.302 billion of mortgage bonds today.

What should you do about it?
Watch for mortgage bonds to rebound, but be prepared to lock your rate quickly if mortgage bond prices resume their decline.

Economic Calendar

Economic reports that may impact mortgage rates this week:

Date Report Period Prior Est. Actual
Tue 23 Feb Consumer Confidence Feb 89.3 90.0 91.3
Wed 24 Feb New Home Sales Units Jan 842k 855k 923k
Thu 25 Feb Durable Goods Jan 0.5% 1.1% 3.4%
Thu 25 Feb GDP 2nd est. Q4 2020 4.0% 4.2% 4.1%
Thu 25 Feb Core PCE Prices Q4 2020 1.4% 1.4% 1.4%
Thu 25 Feb Initial Jobless Claims Week of Feb 15 861k 838k 730k
Thu 25 Feb Pending Home Sales Change Jan -0.3% -0.2% -2.8%
Fri 26 Feb Personal Income Jan 0.6% 9.6% 10.0%
Fri 26 Feb Core PCE Price Index Jan 0.3% 0.2% 0.3%
Fri 26 Feb Chicago PMI Feb 63.8 61.2 59.5
Fri 26 Feb U of Mich Consumer Sent. Feb 76.2 76.5 76.8