Concerns About Syria

Increased concerns about the conflict in Syria caused investors to shift to safer assets last week. Mixed economic data was roughly neutral. As a result, mortgage rates ended the week a little lower.

Concerns about the reported use of chemical weapons by the Syrian government and the possibility of increased US involvement has resulted in greater uncertainty in financial markets. Investors reacted by shifting from riskier assets such as stocks to safer assets such as bonds, which helped mortgage rates. It also resulted in higher oil prices. When energy costs rise, economic growth slows, and this also benefits mortgage rates.

The other major focus for investors remains the timing for the Fed to begin to taper its bond purchase program. The economic data released last week was split between positive and negative surprises, however, which provided little reason for investors to change their expectations for Fed policy. The big upside news last week was that second quarter GDP was revised higher from 1.7% to 2.5%. On the downside, the Durable Orders data showed a large decline. Consumer Confidence and Consumer Sentiment increased, while Pending Home Sales fell. All in all, last week's mixed bag of data created volatility for mortgage rates, but it had little net impact.