The Veridian Blog

Treasuries took a real hit last week as growing fears about an over-supply of government debt rattled investors.  The significant new debt that will be sold due to the anticipated Obama stimulus plan makes the current outstanding bonds less attractive to investors, leading to lower bond prices.  This reasoning, in turn, drove mortgage rates higher all week, in spite of the fact that December’s Housing Starts showed a decline that was 4 times the drop that was expected and the Labor Department reported 46,000 more claims for benefits than were originally forecasted. 

This week is locked and loaded with economic data which means the potential is high for mortgage market volatility.  In addition to Existing and New Home Sales, Consumer Confidence, Durable Goods Orders and Gross Domestic Product, the Federal Open Market Committee is holding its first meeting of the year.  No one expects them to raise rates amidst the current recession, and not many more expect them to decrease rates since there really isn’t that much to decrease anymore.  So all in all, this meeting probably won’t have the same impact on the markets that it usually has.