08/26/2016
Quiet Week
With a speech from Fed Chair Yellen set for the end of the week and few surprises in the economic data, mortgage rates barely moved during the first four days of this week. On Friday, Yellen's speech caused some volatility , but also had little net impact. Mortgage rates ended the week slightly lower.
There were few surprises in Yellen's speech. She said that the solid performance of the economy means that "the case for an increase in the federal funds rate has strengthened in recent months." However, she provided no indication of the expected timing of the next rate hike. Of note, she said that bond purchase programs would remain a primary tool for the Fed to respond to economic weakness. As an example, she suggested that the Fed could purchase an additional $2 trillion in bonds in the event of a recession. As indicated by the futures market, investor expectations for the timing of the next Fed rate hike were little changed after her speech.
