Housing Market Update

By Taff Weinstein at

Housing Market Update

What Happened to Rates Last Week?

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Mortgage backed securities (FNMA 2.500 MBS) gained +333 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move downward to their lowest levels in history.

Overview:  Fed to the Rescue!  Mortgage rates dropped to their lowest levels on record as the Federal Reserve directly purchased massive amounts of mortgage backed securities, creating demand where there was essentially none.  Each trading session they purchased $50 billion dollars worth.

 

Domestic Flavor:

Inflation Nation:  The February Headline PCE YOY matched market expectations (1.8% vs est of 1.8%).  Core (ex food and energy) YOY increased 1.8% vs est of 1.7%.  Personal Income MOM 0.6% vs est of 0.4% and Personal Spending 0.2% vs est of 0.2% Consumer Sentiment:  The preliminary March reading was revised lower from 95.9 down to 89.1

Central Bank Palooza:  The Bank of Canada cut their key interest rate by 1/2 point and will purchase 500B each week which includes corporate debt.  The Bank of England kept its key interest rate at 0.1%.  They had previously cut that from 0.75% at an emergency meeting.  They took no action at this regularly scheduled meeting.  The European Central Bank started purchasing bonds under its new emergency QE facility and so far it is helping both Spanish and Italian bond yields.

Stimulus?  The House finally passed the $2T Bill that passed the Senate by a vote of 96-0. 

The Talking Fed:  The Federal Reserve Bank of New York purchased $50B of mortgage backed securities each day

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