Mortgage Rates Impacted by Japan, March 15, 2011

By David Coster, Published: March 15, 2011
Mortgage rates will plunge today as the stock market sells off dramatically following a worsening crisis in Japan.  The danger of a major radiation leak from the damaged nuclear reactors seems to have increased.  The potential impact of such an event on the global economy is very difficult to predict.
Mortgage Rate Trend Direction:     Down
Economic Reports/Rate Impact:    New York Empire Index, 8:30 AM ET, Moderate Rate Impact
                                                                Import Prices, 8:30 AM ET, Moderate Rate Impact
Key News:                                           Japan, Saudi Military in Bahrain
SummaryAll eyes and ears are focused on news out of Japan this morning as evidence of a worsening nuclear crisis emerges to place further stress on a nation still searching for survivors or victims of the earthquake and tsunami. The impact on the Japanese economy will be severe.  How this translates into an impact on the global economy and the US economy is a huge unknown.  Today, traders are playing it safe and moving into assets like bonds, including mortgage-backed securities.  Consequently, mortgage rates are moving lower today.
Impact of economic reportsThe economic data released today, while generally positive is being completely drowned out by the events in Japan.  A statement by the US Federal Open Market Committee of the Federal Reserve will be watched closely for its analysis of the economic impact of the events in Japan.
Impact of international or political eventsContainment of the nuclear reactors that were compromised is the biggest challenge, among many, facing the Japanese government and people.  It will likely be several days more before the full extent of the tragedy is known, keeping markets in a similar posture as today.
In Bahrain, where unrest is intensifying, reports that Saudi Arabia has sent 1000 troops and that one of those troops may have been killed, demonstrate how precarious this situation is as well.  Should the unrest move across a short bridge into Saudi Arabia and then threaten the flow of oil its impact on the world economy could be catastrophic.