Fed to Continue to Keep Rates Low; Unemployment Rate Released on Friday
May 4, 2010 - Mortgage rates remained range bound last week even as the recovery seems to be solidifying. Rates remained unchanged as an accompanying policy statement from the Federal Reserve noted that "economic activity has continued to strengthen and that the labor market is beginning to improve." GDP grew at a respectable 3.2%, the third quarter in a row of positive growth.
Despite signs of a sustained recovery the Fed is expected to keep interest rates low for an extended period of time. Contagion concerns in Europe related to Greece's debt have put a cloud over equity markets and helped Treasury prices. Unemployment also remains stubbornly high.
The ISM Manufacturing Index and the Employment Report will likely dominate this week's economic reports. If the ISM Index climbs above 60 and unemployment shrinks mortgage rates could see some volatility.