Mortgage Bonds were knocked down in the latter part of January, rallied as February picked up steam, and then dropped again.

Mortgage Backed Securities, the type of Bond to which home loan rates are tied, worsened after a five-day rally. These Bonds have not been able to break above the resistance level set in November 2016.

Mixed earnings reports in the U.S. coupled with a floundering Greek economy that grabbed headlines again both contributed to the recent rally in Mortgage Bonds. Close to a decade since its first bailout, Greece is in worse shape than it was in the financial crisis. Other countries like Italy, Portugal and Spain are also struggling with debt and tepid economic growth.

As global economic uncertainty continues, we may see the return of investment dollars to the safer haven of the Bond market. Home loan rates, in turn, may benefit as home loan rates are tied to Mortgage Bonds.

Improved Bond prices and home loan rates would be a welcome sign as housing prices continue to rise. Home price gains continued through the end of 2016, surging in December. CoreLogic, a leading provider of consumer, financial and property information, reported that home prices, including distressed sales, rose 7.2 percent from December 2015 to December 2016. From November to December, prices rose 0.8 percent. The U.S. has experienced 59 consecutive months of year-over-year increases. CoreLogic forecasts a 4.7 percent increase in prices from December 2016 to December 2017.

Despite the market volatility, home loan rates remain in attractive territory.

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

Forecast for the Week

Inflation and housing news will stand out in a packed economic calendar.

Look for wholesale inflation data via the Producer Price Index on Tuesday. The Consumer Price Index follows on Wednesday.

Manufacturing data from the Empire State Index will be delivered on Wednesday, with the Philadelphia Fed Index on Thursday.

Retail Sales will be released Wednesday.

Housing news is abundant with the NAHB Housing Market Index on Wednesday, and Housing Starts and Building Permits on Thursday.

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

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 rallied for several days before getting knocked down again. Home loan rates are still in attractive territory.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Feb 10, 2017)