Wednesday, March 20, 2019


Updated on March 19, 2019 10:10:51 AM EDT

Januarys Factory Orders report was posted by the Commerce Department late this morning, revealing a 0.1% rise in new orders at U.S. factories. This was a little softer than the 0.2% that was expected, making the data favorable news for bonds. However, this is only a moderately important release because a good portion of the data was already included in last week’s Durable Goods Orders report. Therefore, the minor variance in a moderately relevant piece of data was not enough to affect mortgage rates.

There are no relevant economic releases scheduled for tomorrow. Instead, we will be looking at an afternoon of Federal Reserve events for mortgage rates direction. They start with the 2:00 PM ET adjournment of the two-day FOMC meeting that began today. There is a pretty wide consensus that Fed Chairman Jerome Powell and friends will leave key short-term rates unchanged at this meeting. Since the non-move wont come as a surprise, market participants will be focused on the Feds timetable for future rate hikes and balance sheet plans. If the post-meeting statement gives any hints of a rate hike coming soon, expect the bond market to react negatively and mortgage rates to spike higher. Reassurances from them that current economic conditions call for a patient approach and no timetable is set for the next rate hike, we should see bonds and mortgage rates improve.

The FOMC meeting will adjourn at 2:00 PM ET, which is when the statement will be released. That is also when we will get the Feds updated economic projections. Those events will be followed by a press conference with Chairman Powell at 2:30 PM. It is likely going to be a pretty active afternoon in the financial and mortgage markets, especially if the meeting yields any surprises regarding rate hikes and/or balance sheet reduction plans.

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