It was a relatively quiet week for mortgage rates. A slightly more bullish economic outlook from the Fed and stronger than expected manufacturing data were the main influences this week. Good news for the economy is negative for mortgage rates, however, and rates ended the week a little higher.
As widely expected, there was no change in Fed policy at Wednesday's Fed meeting, but Fed officials slightly upgraded their outlook for the economy from the prior statement. Fed officials again stated that they intend to wait for signs of sustained improvement in the labor market before they reduce their bond purchases. The consensus view is that the Fed will begin to scale back its bond purchases in April. The statement left the door open for an earlier start of the taper if the economic data is strong enough.
Early in the week, there were few surprises in the economic data and little movement in rates. That changed, though, when stronger than expected manufacturing data pushed mortgage rates higher on Thursday and Friday. The October ISM national manufacturing index rose to the highest level since April 2011, and the October Chicago PMI regional manufacturing index jumped to the highest level since March 2011. The consensus forecasts had been for lower readings due to the government shutdown at the beginning of the month. Investors will be watching to see if other sectors of the economy were similarly unaffected by the shutdown.
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