Sample Content - Mortgage Market In Review

By providing mortgage professionals with pertinent market information on a weekly basis, "Mortgage Market In Review" provides a great addition to your marketing resources. Content is provided by RateLink, a leader in providing valuable mortgage-backed securities data to mortgage professionals across the country.

MARKET COMMENT

Mortgage bond prices remained volatile last week with trading tied to both the Treasury market and stocks. The Treasury market (10 and 30-year bonds) lost significant ground early in the week as investors fled the low yields opting to purchase Mortgage Backed Securities instead. The selling pressure in Treasuries caused those rates to move higher however mortgage rate benefited. Adding support to mortgage rates were lower stocks where the DOW Jones index fell below 9,000 early in the week. For the week, interest rates on government and conventional loans fell by 3/8's of a discount point.

The consumer price index Friday will be the most important event this week. The bond market closes early Friday in advance of the Martin Luther King Holiday the following Monday.

LOOKING AHEAD

Economic Indicator	Release Date and Time	Consensus Estimate	Analysis
Retail Sales	Wednesday, Jan. 14, 8:30 am, et	Down 1.1%	Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.
Business Inventories	Wednesday, Jan. 14, 10:00 am, et	Down 0.5%	Low importance. An indication of stored-up capacity. A significantly stronger figure may lead to lower rates.
Producer Price Index	Thursday, Jan. 15, 8:30 am, et	Down 1.9%, Core up 0.1%	Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.
Philadelphia Fed Survey	Thursday, Jan. 15, 10:00 am, et	-35.0	Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Consumer Price Index	Friday, Jan. 16, 8:30 am, et	Down 1.0%, Core up 0.1%	Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates.
Industrial Production	Friday, Jan. 16, 9:15 am, et	Down 0.8%	Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Capacity Utilization	Friday, Jan. 16, 9:15 am, et	74.7%	Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment	Friday, Jan. 16, 10:00 am, et	None	Important. An indication of consumers? willingness to spend. Weakness may lead to lower mortgage rates.

TREASURIES

The 10 and 30-year Treasury bond yields are often viewed as ?benchmarks?, reflecting the overall state of interest rates in the US economy. Many people concerned about mortgage interest rates track these bonds as a barometer for mortgage interest rates. However, in reality the Treasury and mortgage markets trade independently.

The supply and demand characteristics of Treasury bonds and mortgage-backed securities (MBSs) differ significantly. Treasury securities represent money needed to fund the operations of the US government. MBSs, on the other hand, represent borrowing by homeowners. Demand for mortgage credit is seasonal and is also affected by the state of the overall economy.

In the absence of information directly related to the mortgage interest rate markets, Treasury information can be useful. However, mortgage interest rates can vary significantly. In fact, many times the Treasuries will trade wildly while MBSs only see minor price changes and vice versa. Thus, differences between Treasuries and MBSs sometimes lead to misleading price change differentials.

RATE LINK is provided by Market Information for Mortgage Professionals. 1-800-938-5193. Copyright 2007. All Rights Reserved. Mortgage Market Information Services, Inc. The information contained herein is believed to be accurate, however no representation or warranties are written or implied.