Treasury auctions held on Tuesday, Wednesday and Thursday saw weak demand; this could have been caused by the FOMC minutes that were released on Wednesday.
The minutes indicated that some FOMC members supported ending the current quantitative easing (QE) program within a few months.
The Fed is currently purchasing $85 billion monthly in bonds and Mortgage Backed Securities.
If the QE program is ended, demands for bonds and MBS will decline, which usually raises mortgage rates.
Employment Numbers Show Promise For Housing Market
Thursday’s jobless claims offered some positive news for the Crested Butte real estate market.
Jobless claims fell to 346,000, which is well below Wall Street’s estimate of 365,000 jobless claims and the prior week’s report of 385,000 jobless claims.
As more people find work, more families become able to buy homes.
Demand for homes will boost the housing market, which is already expanding in many areas.
While higher home prices are good for the economy, higher mortgage rates may be likely to follow.
This potentially presents a “double-edged sword” to home buyers with little financial flexibility.
Slower Retail Sales Largely Due To Autos
Retail Sales, which represent approximately 70 percent of the U.S. economy, moved from February’s level of 1.1 percent to -0.4 percent in March.
Expectations were for 0.0 percent change.
The Retail Sales report exclusive of the volatile automotive sector was nearly identical except for the February’s reading of 1.0 percent.
These reports suggest that while the economy is improving in some areas, it has a way to go before it has truly recovered.
What’s Coming Up Next?
This week, investors will be paying attention to the Consumer Price Index (CPI) and the closely-related Core CPI, which is nearly identical except for its excludes the more volatile food and energy sectors.
These reports will be released on Tuesday for March, with little change expected for the CPI and no change expected for the Core CPI as compared to February.
The CPI is considered an important indicator of inflation.
Unexpected changes in inflationary growth can cause rapid and volatile responses in the financial markets.
Wednesday brings the Fed’s Beige Book, which presents key economic data for each of the Fed’s 12 regions.
Investors watch the Beige Book for signs of the Fed’s position on economic policy during the upcoming FOMC meeting.
Jobless claims will be released Thursday with the expectation of 350,000 claims filed as compared to last week’s 346,000 jobless claims.