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Market Commentary

Updated on March 27, 2020 10:16:52 AM EDT

Yesterday’s 7-year Treasury Note auction went even better than Wednesday’s 5-year Note sale. Investor demand was strong enough to see a positive move in bonds after results were posted at 1:00 PM ET. The auction itself wasn’t to source of yesterday’s late strength but did contribute to the afternoon gains in bonds.

February’s Personal Income and Outlays report was posted at 8:30 AM ET this morning, revealing a 0.6% rise in the income reading while spending rose 0.2%. The rise in income exceeded expectations and the spending increase pegged forecasts. The report indicates consumers had more money to spend than thought but didn’t spend more. Results of the report are neutral-slightly negative for mortgage rates. However, since it covered February, we have seen no reaction to the news.

The second report of the day was the revised University of Michigan Index of Consumer Sentiment for March. It came in at 89.1, down greatly from the preliminary reading of 95.9 just two weeks ago. This was widely expected due to concerns about the coronavirus and its impact on future income. The large decline is good news because it means consumers are less likely to spend since they are worried about their jobs during this crisis. But the reading fell within the large range of forecasts. Since it did not come as a surprise, we are seeing little reaction to the release.

Next week brings us the release of a good number of economic reports that traditionally influence mortgage rates, including a couple of extremely important releases. More importantly, those highly relevant releases will cover March, giving us insight into how bad the early stages of the coronavirus shutdown were affecting the economy. Over the past couple of weeks, the markets have ignored the monthly and quarterly reports because they covered periods that predated the full-blown virus reaction in the U.S. The upcoming reports will start to reflect how bad the economy is being hit during the crisis.

The most important releases will come mid and late week and there is nothing of relevance set for Monday. We can also expect to see the same influences carry into next week (stock volatility, Fed buying of Treasuries and mortgage bonds, lender pipeline control, etc) that have heavily impacted rates recently. We are set up for the same scenario as recent weeks, only with economic data also coming into play. Look for details on next week’s calendar in Sunday evening’s weekly preview.

 ©Mortgage Commentary 2020

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PRMI NMLS No. 3094. Branch NMLS 252910. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification. This office is licensed and examined by the Office of Consumer Credit Commissioner of the State of Texas. Alabama Banking Department Bureau of Banking MC 20316. Arkansas Securities Department 11558. Florida Office of Financial Regulation MLD646. Department of Banking and Finance 6521. Office of Financial Institutions #771. Missouri Division of Finance. Mississippi Department of Banking and Consumer Finance, 3094. Oklahoma Department of Consumer Credit ML010027. Department of Financial Institutions 109282.a.  KY-Department of Public Protection the Office of Financial Institutions, #MC23741.  LA-Office of Financial Institutions #771.  Maryland Department of Labor, Licensing and Regulation Commissioner of Financial Regulation #5511. NE-Department of Banking and Finance, #350.  Ohio Department of Commerce Division of Financial Institutions, #MB.802748.000. OH MLO RM 802748.061.  South Carolina Department of Consumer Affairs MLS3094, As Element Funding MLS-3094 OTN#1.  TN-Department of Financial Institutions 109282.  VA-Bureau of Financial Institutions: MC-2248 Broker MC-2248 NMLS # 3094 (http://nmlsconsumeraccess.org).  West Virginia Division of Financial Institutions ML-30751.

PRMI NMLS No. 3094. Branch NMLS 252910. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification. This office is licensed and examined by the Office of Consumer Credit Commissioner of the State of Texas. Alabama Banking Department Bureau of Banking MC 20316. Arkansas Securities Department 11558. Florida Office of Financial Regulation MLD646. Department of Banking and Finance 6521. Office of Financial Institutions #771. Missouri Division of Finance. Mississippi Department of Banking and Consumer Finance, 3094. Oklahoma Department of Consumer Credit ML010027. Department of Financial Institutions 109282.a.  KY-Department of Public Protection the Office of Financial Institutions, #MC23741.  LA-Office of Financial Institutions #771.  Maryland Department of Labor, Licensing and Regulation Commissioner of Financial Regulation #5511. NE-Department of Banking and Finance, #350.  Ohio Department of Commerce Division of Financial Institutions, #MB.802748.000. OH MLO RM 802748.061.  South Carolina Department of Consumer Affairs MLS3094, As Element Funding MLS-3094 OTN#1.  TN-Department of Financial Institutions 109282.  VA-Bureau of Financial Institutions: MC-2248 Broker MC-2248 NMLS # 3094 (http://nmlsconsumeraccess.org).  West Virginia Division of Financial Institutions ML-30751.