This Week: not much in the way of economic reports. Interest rate markets will continue to take their lead from how the stock market performs each day. The bellwether 10 yr note, although likely to edge higher over the next few months, has twice found near term support when its yield climbs to 3.50% and in turn is keeping mortgage interest rates from increasing. We continue our outlook that rates will increase but the level of increases won't be excessive; likely not over 4.00% for the 10 and another 40 basis points higher for mortgage rates for the rest of the year.
Tuesday the Fed will release the minutes from the FOMC meeting on March 15th; recently there has been an increase of the number of Fed officials that are wanting less easing and an end to QE 2. Global base lending rates are increasing and the Fed has to begin its moves to withdraw from easing. We do not expect the Fed will increase its base lending rate (FF) immediately, the first step will be ending QE 2, whether it ends prematurely is where the debate centers.
Two economic reports this week head up or focus; tomorrow the March ISM services sector index and on Thursday Feb consumer credit. Recent spikes in oil prices have likely caused consumers to cut back on other spending, the level of borrowing using credit cards should be watched. This week the ECB will meet with expectations that the bank will increase its base rate as inflation ion Europe has pushed up above the ECB target of 2.0%.
TBWS
