![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week sharply higher which helped rates fall. Significant market swings occurred throughout the week with large rate changes daily. Rates improved Monday amid global economic fears. The Russian invasion of Ukraine remained the dominant focus. Oil prices shot higher, and stocks stumbled. Rates worsened Wednesday morning amid strong data. ADP employment came in at 475K vs 375K and stocks rallied that morning. Weekly jobless claims were 215K vs 230K. Productivity was 6.6% vs 6.7%. Unit labor costs rose 0.9% vs 0.2%. Unemployment came in at 3.8% vs 3.9%. Payrolls were +678K vs +400K. The market shrugged off the surge with help from Fed MBS reinvestments. Mortgage interest rates finished the week better by approximately a full discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Consumer Credit | Monday, March 7, 3:00 pm, et |
$21B | Low importance. A significantly large increase may lead to lower mortgage interest rates. |
| Trade Data | Tuesday, March 8, 8:30 am, et |
$82B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| Weekly Jobless Claims | Thursday, March 10, 8:30 am, et |
225K | Important. An indication of employment. Higher claims may result in lower rates. |
| Consumer Price Index | Thursday, March 10, 8:30 am, et |
Down 0.2%, Core down 0.1% |
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, March 11, 10:00 am, et |
60.5 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Globalization
Economic globalization is the increasing interdependence of national economies through trade, finances, and technology. While economists debate the pros and cons of globalization, the fact remains that globalization is not new and continues to expand.
As a driving force in the global economy, the US often benefits when foreign economies struggle. Investors often move funds to safe havens in what is called a “flight to quality” in uncertain times. US debt instruments saw an influx of foreign investment historically amid concerns of nations defaulting on their debt and various banking institutions struggling. Recently, investors moved into US debt instruments such as Treasuries and mortgage-backed securities amid economic sanctions on Russia after the invasion of Ukraine. Bond prices rose, which caused mortgage interest rates to fall. From a short-term perspective it was great for U.S. homebuyers and those refinancing if they took advantage of the decline in rates. However, what goes up often comes down. We have historically witnessed times when that pattern reverses.
Nobody can say with certainty how it will all play out. Fortunately, the Fed’s effort to buy mortgage bonds and keep rates low has worked. While they have stopped increasing their holdings they stated, “net additional purchases will end in early March, but monthly purchase schedules will continue to be issued to reflect reinvestment of principal payments from agency debt and agency MBS into agency MBS conducted in the secondary market. These reinvestment purchases will continue to generally be concentrated in recently produced coupons in 30-year and 15-year fixed rate agency MBS. The Fed continues to effectively keep rates low. However, they have also noted that they would like inflation to increase slowly over time. As a result, we should expect continued mortgage interest rate volatility.
