It was a volatile week for mortgage rates, reacting to mixed economic data and unexpected comments from Fed Chief Bernanke. The various influences roughly offset each other, though, and mortgage rates ended the week essentially unchanged, even for a mortgage in Michigan.

Testifying before Congress on Wednesday, Fed Chief Bernanke caused a swift move higher in mortgage rates. His comments lowered investor expectations for a third round of Treasury bond and MBS purchases. The possibility for additional demand from the Fed has lifted MBS markets over recent months, and those gains were partially reversed after Bernanke’s speech. As the economic data has improved in recent months, the need for additional Fed easing has seemed to decrease, but this week’s testimony was seen by many investors as one of the first signs that Fed officials share this view.

This week’s housing data was once again positive, as January Pending Home Sales rose 2% from December. They are at the highest level since April 2010, when the deadline to take advantage of home buyer tax credits spurred sales. Since Pending Home Sales are a forward-looking measure, this data suggests that home sales may improve in coming months.

The biggest economic report next week will be the important Employment data on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before the employment data, ISM Services and Factory Orders will be released on Monday. Productivity will come out on Wednesday. The Trade Balance is also scheduled for Friday.

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