Mortgage Rates Manufacture Change, September 15, 2010

Data on inflation and manufacturing could move mortgage rates today.  Additionally, a move by the Bank of japan in support of their currency has the potential to impact US dollar values and mortgage rates in turn.

Mortgage Rate Trend Direction:     Up

Economic Reports/Rate Impact:    Import Prices, 8:30 AM ET, Low Rate Impact

                                                              New York State Empire Index, 8:30 AM ET, Moderate Rate Impact

                                                              Industrial Production, 9:15 AM ET, High Rate Impact

Key News:                                          Japan Intervenes in Currency Markets

Summary

Today provides good economic data to guide the markets.  Over the past few days mortgage-backed securities (MBS) have risen, resulting in lower mortgage rates.  However, the volume of trades has been low, reflecting the low volume of mortgage loans being originated.  The interesting thing however is that MBS have moved counter to their usual pattern relative to the stock market.  That trend appears to be continuing today in early trading as both investment options are moving in the same direction--down. 

Impact of economic reports

Import prices rose more than expected this month, signaling higher costs for both manufacturers and consumers of foreign goods.  The New York Empire Index, a measure of manufacturing and business activity in the New York Federal Reserve Bank region, came in at its lowest level in a year.

Industrial production figures for the past month, a measure of manufacturing activity across the US showed a modest increase that was in-line with expectations.

Impact of international or political events

Last night the Japanese government intervened in the gloabal currency market buying US dollars in an effort to bring down the value of the Japanese Yen.  The Yen has been increasing in value versus other currencies, namely the US dollar and the euro as the economies in these two regions have slowed.  Higher currency prices are good for consumers in a nation, but hurt exporters.  Moves like these by the Bank of Japan can result in reaction moves by other nations as well.