The good news is that rates begin the May 16 trading week near 2011 lows. The bad news is that it’s because of a frail economy. Rates drop when bond prices rise, and mortgage bonds have rallied the last four weeks on lower home prices, weak GDP, and low core inflation.

Bonds sold initially, pushing rates up, after today’s 244k new April jobs figure beat 185k expectations for non-farm jobs. But bonds and rates have stabilized as traders study a different aspect of the jobs report: unemployment rose from 8.8% to 9% and the jobs component of the unemployment survey showed that 190k jobs were LOST [...]

Rates ended last week up .125%, which is the smallest increment consumer rates can move. So if you call that a roughly flat week, then it’s the sixth week of flat rates. But this rise is the result of an inflationary tone building in markets, and the latest business and consumer inflation data are released [...]

Rates typically rise when inflation is a threat. This happens because rates are tied to bonds. Investors pay a certain price for a bond, and based on that price, they get a certain percentage of that bond’s value paid to them each year. That percentage is called a yield (or a rate) and it has [...]

Like most economic stats, inflation seems simple: it’s a measure of how consumer or business prices are rising in an economy. But how inflation is measured then interpreted by markets is less simple. Most inflation reports in the press—often referred to as ‘headline inflation’—are total consumer or business inflation numbers. But lots of effort goes [...]

Stocks are rallying and bonds are selling off on three events today that signal improving economic conditions and inflation pressure. Rates rise when bond prices drop in a selloff. Stocks are way up (Dow +228) and bonds are way down (3.5% 30yr FNMA -72 basis points) on better than expected jobs growth numbers from payroll [...]

One can write several volumes about how movements in the dollar impact mortgage lending, and our economy in general. The value of the dollar is widely tracked. For example, the New York Federal Reserve reported that the U.S. monetary authorities did not intervene in the foreign exchange markets during the July-September quarter. But during that [...]

Which Bonds Are Mortgage Rates Tied To? Every investor in fixed-income securities has choices to make: U.S. Treasury debt, foreign bonds, corporate notes, etc. And each investor has limited capital, the supply of each of those is carefully monitored, and a large amount of one type can drive prices down and rates higher and compete [...]

Quantitative Easing is one of the most used financial phrases of 2010 so homeowners and buyers need to know what it means. The core definition is simple: it’s when the Fed buys bonds to lower rates. More explanation is needed to understand rate and housing market implications, so below is a Q&A addressing this technical [...]

Quantitative Easing 101 (Part 3) The bond markets are consumed with Quantitative Easing, so here’s a third primer on the topic (and here’s part 1 with a full timeline and part 2 with currency impacts). “Quantitative” refers to the fact that a specific quantity of money is being created; “easing” refers to reducing the pressure [...]