Mortgage Market Update
Mortgage rates are heading higher for the time being.
Federal Reserve Chairman Ben Bernanke spoke on Capitol Hill yesterday and sent out some very mixed signals that triggered shockwaves through the markets as both stocks and bonds plunged. Big Ben’s text read that QE3 will not be halted, but when the question and answer session began, he did go on to say that if the economic environment continues to improve, the bond purchases could be tapered by the next Fed meeting in June, or July. This was unforeseen and still unlikely to happen.
The Bernanke effect was felt all around the world, as global stocks took a turn for the worse. Adding to that negative tone, China’s manufacturing fell for the first time in 7 months.
Stocks are down again this morning, despite Initial Jobless Claims coming in lower than expected. Stocks are lower for one reason and that is the continued fallout from yesterday on fears that QE3 will subside in the coming months.
The good news is that New Home Sales rose to an annual pace of 454k units, which is above the expected 452k. This knocked bond prices well off their highs and cut into some of the losses in the Stock markets.