Mortgage Market This Week

Last week, after rocking and rolling rates ended about .125% better than where they began. Which was quite welcome after the Fed's 25 bps cut in rates and inflation posting slightly higher numbers than what was expected. The week ahead, although light on economic news may still have the opportunity to move rates.

Earlier last week rates improved after the Fed's FOMC statement was released. Although rate cuts tend to drive bond prices lower and rates higher this was anything but the case as investors read through the Fed's statement after the meeting. The statement indicated that the Fed might be taking a break in the rate cuts.

The very next day, rates reversed after the Core Personal Consumption Expenditure Index showed Inflation a hair higher than the Fed's target which bond traders took as a bad sign.

On Friday, the fireworks really began as Non-Farm Payrolls posted a lower than expected loss. This drove bond prices down in a hurry and rates higher. However, as the day went on and investors had a chance to digest the news rates began to recover.

The week ahead, although light on economic news may still push rates. However, it will likely be stocks that drive the push. Many are suggesting that the stock market rally of late is unsustainable. If this proves correct, it is likely that investors will pull money out of stocks in favor of bonds which in turn may push rates lower yet.

The bottom line: Watch the stock market, if the rally stalls rates will likely benefit.