Mortgage News for July 6th 2009

I hope everyone had a great Independence Day and had a safe 4th of July. Monday's bond market has closed in negative territory despite a day of ups and downs. The stock markets are starting the week with minor losses as concerns over this week's events prevent gains in the major indexes. The Dow closed up 44 points while the Nasdaq lost 9 points. The bond market closed down 28/32, which should push tomorrow morning's mortgage rates lower by approximately .125-.25 of a discount point over Monday's morning rates.

This week brings us the release of only two monthly economic reports and they both will be posted this Friday. It also is the beginning of corporate earnings season that can lead to significant volatility in the stock markets and has the potential to influence bond trading and mortgage rates. So far this year it has been a mixed bag with corporate earnings with some companies showing a higher than expected gain or a better outlook on the losses.

There are a couple of Treasury auctions that are scheduled to take place this week, with some that took place today. This sale isn't exactly the most important auction of the week, but with no relevant data being posted until later in the week it may influence bonds and possibly mortgage rates if we see a very strong or extremely poor demand from investors. So don't go burying your savings in the backyard quite yet.
President Obama has announced that he will need to reappoint Ben Bernanke the current Fed Chief or appoint a new head of the department. All the analysts predict that President Obama will keep Bernanke in place in order to keep on his plan of economic restructure.

Overall, we are expecting to see a very active week in mortgage rates. So far no day in particular will be the most important of the week. Friday is the easy candidate with two monthly reports scheduled to be posted, but neither is considered to be a major release. Wednesday is also a possibility due to the 10-year Note auction and the opening act of earnings season. I suspect that we may see some pressure in bonds the first part of the week unless the major stock indexes continue Thursday's selling.

Mortgage News for Tuesday June 30th 2009

Tuesday's bond market has opened in negative territory despite early stock losses and weaker than expected economic data. The stock markets are in selling mode after digesting this morning's economic news with the Dow down 116 points and the Nasdaq down 14 points. The bond market is currently down 7/32, which will likely push this morning's mortgage rates higher by approximately .125 - .250 of a point.

The Conference Board gave us today's only relevant economic data when they posted June's Consumer Confidence Index (CCI) late this morning. They reported a reading of 49.3 that was well below forecasts of 55.1. This means that consumers were much less optimistic about their own financial situations than many had thought. This is actually supposed to be good news for the bond market and mortgage rates since it indicates consumers are less apt to make large purchases in the near future. Unfortunately for mortgage shoppers, bond traders seem to have forgotten that this morning.

The Institute of Supply Management (ISM) will release their manufacturing index for June late tomorrow morning. This index measures manufacturer sentiment by surveying trade executives on current business conditions. A reading below 50 means that more surveyed executives felt business worsened in the month than those who felt it had improved. Analysts are expecting a reading of 44.0. That would indicate that manufacturers felt business improved slightly from the previous month. Good news for bonds and mortgage rates would be a weaker than expected reading.

Thursday brings us the release of two monthly reports, one being the extremely important Employment report. The other, May's Factory Order's data will likely have little impact on the financial markets or mortgage rates as most of the attention will be directed towards the employment figures.

The financial markets will be closed Friday in observance of the Independence Day holiday, but there will be no early close for the bond market Thursday as has been the case previous years. However, it will still probably be a light afternoon in trading as traders head home for the long weekend. This could magnify the reaction the markets will have to the morning's data.

Mortgage News for Friday June 26th 2009

Friday's bond market has opened in positive territory again despite stronger than expected results in this morning's economic data. The stock markets closed with the Dow down 34 points and the Nasdaq up 8 points. The Bond Market closed at 3.52% which is lower than it has been in the last 2 weeks. But not sure what effect it will have on mortgage rates on monday. Most of our investor have not repriced even though the market went down and Oil prices were down.

May's Personal Income and Outlays data was posted early this morning, revealing a 1.4% jump in income and a 0.3% rise in spending. The spending reading was very close to revised forecasts, but the income reading greatly exceeded forecasts. However, a good portion of that increase was due higher unemployment limits and revised payroll withholdings. Therefore, analysts are taking the spike in stride and not with fear that wage inflation is a threat.

The second report of the day also gave us a stronger than expected reading. The revised reading to the University of Michigan Index of Consumer Sentiment for June came in at 70.8. This was nearly two points higher than forecasts and indicates that consumers were more optimistic about their own financial situations than earlier thought. That is considered negative news for bonds because rising sentiment usually means consumers are more apt to make large purchases in the near future, fueling economic activity.

Yesterday's 7-year Treasury Note sale was also met with a strong demand from investors. Wednesday's 5-year sale went well, helping to set the stage for yesterday's sale. This helped boost bond prices during afternoon trading and eases some concerns about the supply of debt being sold by the Fed, at least temporarily.

Next week is likely to be a very active week for the markets and mortgage rates. There is no relevant data scheduled for release Monday and the markets are closed Friday in observance of the Independence Day holiday. But, in between are several relevant and important reports with one of them being the almighty monthly Employment report. Usually oil prices have dictated what mortgage rates will do but with oil being so volatile that hasn't been the case lately. People in the industry said oil prices will probably rebound in time for the Fourth of July holiday and mortgage rates will spike around the same time.