Mortgage rates got slightly worse on Friday afternoon.
On the first day of the second quarter the mood of the markets has grown skeptical. During the first quarter much of the economic data was fairly upbeat causing investors to grow optimistic about the economic recovery.
However, severe austerity in Europe and possibly the looming expiration of the Bush-era tax cuts at the end of the year may have analysts rethinking their growth forecasts. Anxiety over the economy helps mortgage rates remain low.
The Institute for Supply Management’s (ISM) monthly manufacturing index showed that activity in the manufacturing sector expanded in March. Unfortunately though a similar measure in Europe showed sharp contraction which is gaining more attention. In addition, the Commerce Department reported that construction spending unexpectedly declined in February. Overall the economic news was more negative than positive today which should help mortgage rates remain low.
It’s employment week so the economic calendar heats up on Wednesday and concludes on Friday with the all-important jobs report. This month is unique in that the stock market is closed this Friday (the bond market will be open) so we may see some volatility in stocks on Wednesday & Thursday as investors position their portfolios ahead of the release. I expect rates to remain fairly neutral until then.
Current Outlook: neutral