Tuesday, September 21, 2010

This week's trading action in the mortgage market will be largely driven by the message the Federal Open Market Committee sends in its post-meeting statement this afternoon (2:15 p.m. ET).


Market participants around the globe will tune-in to hear what the Fed has to say about the current level of benchmark short-term interest rates, the pace of economic recovery, the job growth outlook and what, if anything, the nation's central bankers intend to do should economic conditions worsen.



In the end the Fed is unlikely to provide anything new and substantive for credit market participants to chew-on. If this assessment proves accurate, look for investors to register their disappointment by pushing mortgage rates slightly higher.


I'll provide an update to this commentary as soon as possible following the conclusion of today's meeting.


Earlier this morning the Census Bureau released the August Housing Starts and Building Permit figures. Total housing starts increased 10.5% last month - its strongest month-over-month gain in nearly a year. Building permits did not fare nearly as well - posting a month-over-month gain of 1.8%. Even with the outsized August gain, housing starts remain below 600,000 annualized units - a benchmark that they have only breached briefly in the first quarter of the year. Until/unless the labor sector shows signs of sustained improvement - homebuilding activity will undoubtedly remain at depressed levels. Mortgage investors gave this data nothing more than a disinterested glance.