Monday, March 31, 2014 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 -
Mortgage Rates will have a lot to contend with as we have a block buster week with a big-name economic report each and every trading session that has the weight to move the markets. We get a look into manufacturing with Chicago PMI, ISM and Factory Orders; and we get a ton of labor market data with ADP Private Payrolls, Weekly Claims, Non-Farm Payrolls and the Unemployment Rate.Of course the markets will focus the most on Friday's Non-Farm Payroll report which is expected to come in at 196K. Traders will be using the data throughout the week to try to front-run the results of this report. In prior months, this report was viewed as a gauge to determine if the Fed would continue to reduce their monthly assets purchases (aka as a "taper"). However, now the market understands that this reading is no longer likely to impact their path to lower the amount of purchases at each Fed meeting. But, this number can still impact MBS pricing dramatically as the stronger this number is, the more MBS will sell off. The weaker this reading is, the more MBS will rally.There are no major U.S. Treasury auctions this week to contend with. After 3 straight weeks where we have no economic data on a Monday, but we do have two big events. Chicago PMI came in at 55.9 which is a pretty good reading considering anything above 50 is expansion. But it is one of our weaker recent readings and the market was expecting a much higher reading of 58.5. Generally, this type of miss to the downside is positive for bond pricing. Janet Yellen is speaking in Chicago this morning and her comments can obviously have a big impact on the market and will need to be closely monitored.
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