|Focus on French Election|
|It was a volatile week for mortgage rates ahead of Sunday’s French election. The daily movements were offsetting, however, and mortgage rates ended the week with little change, remaining near the best levels of the year.|
|The first round of the French Presidential election will take place on Sunday. The two candidates who receive the most votes on Sunday will proceed to the second round of voting on May 7, and the latest polls show that the top four candidates are very close. Two of these four (Le Pen and Melenchon) favor exiting the EU. The possibility that an anti-EU candidate could win has caused investors to shift to safer assets, which has helped mortgage rates in recent weeks.|
|The French election is significant for global markets because France is a key member of the European Union (EU). If France were to exit the EU, it is very uncertain what the economic impact would be on the global economy. As a result, a strong showing by the anti-EU candidates likely would cause investors to shift additional funds into safer assets, which would be good for mortgage rates. If they do poorly, it is expected that investors would shift back into riskier assets, which would be negative for rates.|
|Looking ahead, Sunday’s French election is likely to influence U.S. markets on Monday. After that, New Home Sales will be released on Tuesday. Durable Orders and Pending Home Sales will come out on Thursday. The first reading for first quarter GDP, the broadest measure of economic activity, will be released on Friday. In addition, the next European Central Bank meeting will take place on Thursday.|
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