Manufacturing and housing data are sprinkled throughout what may be a less volatile week in the markets.
• Regional manufacturing data comes via the Empire State Index on Monday and the Philadelphia Fed Index on Thursday.
• Housing Starts and Building Permits will be delivered on Tuesday.
• As usual, weekly Initial Jobless Claims also will be reported on Thursday.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.
When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.
To go one step further, a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.
As you can see in the chart below, Mortgage Bonds reacted to bond-friendly inflation news, regaining some lost ground. Home loan rates remain attractive and near historic lows.
Chart: Fannie Mae 3.5% Mortgage Bond (Friday May 12, 2017)