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 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.

Mortgage News for Thursday June 25th 2009

I just found out at AHK we have 3 investors who will do the IRS Down payment Assistance Program using the $8000 tax credit available to new home buyers. I will have more information on this exciting news tomorrow.
Thursday's bond market has opened up slightly despite no highly important economic data on the calendar today and a positive opening in stocks. The stock markets are showing minor gains with the Dow up 34 points and the Nasdaq up 15 points. The bond market is currently up 4/32 from yesterday's close, which should improve this morning's mortgage rates by approximately .250 of a discount point over yesterday's morning rates.

This morning's release of the final reading to the1st Quarter GDP didn't reveal any significant surprises. It showed that the economy contracted at a 5.5% annual rate during the first three months of the year. This was a small upward revision from the previous estimate of a decline of 5.7%, meaning that the economy did not shrink as much as previously thought. However, since this data is old now (second quarter initial reading comes next month), the size of the revision was not enough to influence bond trading or mortgage rates.

The Labor Department gave us last week's unemployment figures, reporting that 627,000 new claims for benefits were filed. This was an increase from the previous week's revised total of 612,000 and much higher than forecasts of 600,000. But, as with today's GDP reading, this data is not considered to be of high importance to the markets or mortgage rates.

Also worth noting is today's 7-year Treasury Note sale. Yesterday's 5-year Note sale went pretty well, but the FOMC statement took center stage during afternoon trading. If today's sale is also met with a good demand from investors, we may see bond prices rise later today and mortgage rates move lower. Results will be posted at 1:00 PM ET.

Tomorrow morning has two reports on its calendar. May's Personal Income and Outlays data will be posted early morning. This report gives us an indication of consumer ability to spend and current spending activity. Analysts are expecting to see an increase of 0.2% in income and a 0.4% rise in the spending portion of the report. Smaller than expected increases should be good news for the bond market and mortgage rates.

The second report of the day and the last relevant data of the week will come from the University of Michigan who will update their Index of Consumer Sentiment for May. An upward revision from the preliminary reading of 69.0 would be considered a negative for bonds. The earlier data is the more important of tomorrow's two releases.