Federal Reserve Chair Janet Yellen had one simple truth that was like music to Stock and Bond markets: "The simple message is the economy is doing well."

When the Fed expectedly raised its benchmark Federal Funds Rate 0.25 percent at its March 14-15 meeting, Stocks and Mortgage Bonds both improved following the news.

The Fed's tame read on inflation and its decision to maintain its balance sheet of existing Mortgage Bonds helped Bonds rally. Meanwhile, Stocks responded favorably to the news that the Fed is planning two additional hikes this year, eliminating some uncertainty.

The Fed Funds Rate, with a new target rate range between 0.75 to 1.0 percent, is the rate at which banks lend money to each other overnight and is not directly tied to consumer products like purchase or refinance home loans. Instead, home loan rates are tied to Mortgage Bond market performance. Home loan rates can move lower when Mortgage Bonds improve and vice versa.

There was good news from the housing sector, as the Commerce Department reported that Housing Starts hit a four-month high, rising 3 percent from January to February to an annual rate of 1.288 million. Housing Starts measure when excavation begins on a new home. Starts on single-family homes rose to a near 10-year high. From February 2016 to February 2017, Housing Starts were up 6.2 percent. The increase is a welcome sign for those in the market for a home as limited inventory has driven home prices up in many areas, discouraging some buyers. Another welcome sign: The National Association of Home Builders reported that its Housing Market Index, a measure of home builder sentiment, jumped six points to the highest level in 12 years!

In economic news, wholesale inflation came in hotter than expected in February, with the year-over-year Producer Price Index reading reaching 2.2 percent, the highest since March 2012. The Consumer Price Index was in line with expectations, falling in February from January to 0.1 percent due in part to lower gasoline prices. Retail Sales also met expectations, though they did decline from January.

For those in the market for a new home or a refinance, home loan rates remain attractive.

If you or someone you know has any questions, please don't hesitate to contact me.

Forecast for the Week

Housing news dominates the week. Will the positive momentum continue?

Housing data kicks off on Wednesday with the release of Existing Home Sales, followed by New Home Sales on Thursday.

As usual, weekly Initial Jobless Claims will be released on Thursday.

The week rounds out with Durable Goods Orders on Friday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds experienced a nice rebound following the release of the Fed's monetary policy statement. Home loan rates remain in attractive territory.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Mar 17, 2017)