The summit in Brussels yesterday is being considered a success this morning; US stock indexes rallying and US interest rates increasing on news that Europe’s leaders have actually come with a plan that is supposed to isolate Greece from defaulting and taking some pressure off for the moment. Last-ditch talks with bank representatives led to the debt-relief accord,

bondholders will take 50% losses on Greek debt and boosted the firepower of the rescue fund. Measures include recapitalization of European banks, a potentially bigger role for the International Monetary Fund, a commitment from Italy to do more to reduce its debt and a signal from leaders that the European Central Bank will maintain bond purchases in the secondary market. The rescue fund (EFSF) is to be increased to 1 trillion euros ($1.4T). There are a lot of details yet to be worked out so while this is a breakthrough the problems are still not completely out of the woods; expect Europe to continue to drive global markets as more details must be resolved. It helped yesterday when China said it may be interested in buying some of the debt through the EFSF.

 

The reaction to European developments this morning is a huge rally in Europe’s equity markets and in the US; at 9:00 this morning the DJIA was trading up 246 points, the 10 yr note testing important technical support level at 2.30% and mortgage prices at 9:00 -14/32 (.44 bp).

 

This morning weekly jobless claims were about as expected, down 2K to 402K, last week claims were revised to 404K frm 403K. Continuing claims were 3.645 mil down from 3.741 mil last week. Q3 GDP expected at +2.2% to +2.5% was on target at +2.5% after Q1 growth grew at 1.3%; final sales in Q3 were up 3.6%. The combination of Europe and Q3 GDP drove the DJIA to open +145 points, NASDAQ +72 and the S&P +23; by 9:35 the DJIA traded up 260 points.

 

Treasury rates increasing this morning driving mortgage prices lower and rates up. The 10 yr note is sitting right on what we consider key support at 2.30%, it hasn’t been above 2.30% since mid-August. Strong GDP, strong auto sales, a slightly better new home sales in Sept and a better outlook in Europe are increasing optimism momentarily. The Europe relief rally began yesterday and is running hot again in early activity. Investors sighing relief but Europe still has a huge problem with Italy and Spain; Italy’s debt is well over 1T euros more than the EFSF has in the present fund.

 

At 10:00 NAR reported August pending home sales were expected to be down 1.0%, sales fell 4.6%; yr/yr up 6.4%. Contracts signed not yet closed, the third month in a row pending sales have declined from the previous month. There has been no immediate reaction to the report.

 

At 1:00 Treasury will auction $29B of 7 yr notes; yesterday the 5 yr went off well but y the end of the day and this morning those notes are already underwater.

 

Today is critical for the bond market; the 10 yr note is at 2.28% at 10:00, it has tested 2.30% where we have support that must hold, a move above 2.30% would add additional technical weakness for the bond and mortgage markets.

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Prior to 8:30 mortgage prices traded down 6/32 (.18 bp) and the 10 yr -8/32 to 2.20%. At 8:30 Sept CPI increased 0.3% overall and when food and energy are removed up 0.1%; yr/yr CPI +3.9%, the core yr/yr up 2.0%. Yesterday’s PPI was stronger than expected increasing concerns that inflation may be increasing, today the CPI takes a little worry away but not totally. Also at 8:30 Sept housing starts and permits; starts were expected up 4.0% as reported starts increased 15.0%; permits were expected down 1.5% but declined 5.0%. Starts are a surprise, so much so that we question the data. Starts totaled 658K annually frm 572K in August; permits at 594K down from 625K in August. Single family starts were up 1.7% the rest was in multi-family starts (+50%). The initial reaction the the 8:30 data took the 10 yr down in price a little, mortgage prices at 8:45 -5/32 (.15 bp).

 

In Europe this morning, riots in Greece; protestors being gassed as it escalates. Yesterday’s maniacal reaction to a headline in a British newspaper that a deal was in the offing to increase the EFSF to re-capitalize the banks in the region sent markets into another round of excessive volatility. One hour after the news it became apparent that the news was woefully lacking in fact and substance. There is no plan that has been resolved. Markets, as noted yesterday, don’t wait for facts these days; it is all about headlines and in turn creates huge volatile swings.

 

Europe continues to drive global markets, every word out of the region is taken as the last word. There is still nothing of substance after over a year of discussions; Europe’s banks do not want to take the haircut that will likely be necessary. Most of the sovereign debt has to be taken as losses at least by 50% or more, banks will continue to fight it. Politicians here and there remain convinced a plan will be worked out that will stabilize Italy, Spain and Portugal as well as keeping Greece from default. The problem with that is, so far after all this time there is nothing. On Oct 23rd finance ministers from the G-20 countries will meet in a summit, at the moment its in the hands of Germany and France, the only two EU countries that are not in some way impaired. German Finance Minister Schaeuble hasn’t specified how much additional strength the European bailout fund may have and negotiators are still in “intensive discussions.” What’s new about that?

 

Early this morning the weekly MBA mortgage applications; the composite index declined 14.9%, purchase applications down 8.8% while re-finances declined 16.6%. Higher interest rates dropped the re-finance markets, purchases remain soft. There is an anomaly though, the week included Columbus Day, the few that are optimistic about the housing sector are making a lot out of the holiday, we don’t hold much to that. Any even small increase in mortgage rates shuts of the flow, mortgage rates and treasuries were higher last week.

 

At 9:30 this morning the DJIA opened -22, NASDAQ-12, S&P -3; the 10 yr note -6/32 to 2.19% +2 bp and mortgages unchanged. Until 9:30 mtg prices were generally off 4/32 (.12 bp).

 

The only other scheduled information today is at 2:00 when the Fed releases its Beige Book, the Fed’s detailed report on the economy in the 12 Fed districts. Always some meat in it but generally nothing shocking and new markets are not already thinking about—–that of course is if anyone is actually thinking these days rather than reacting.

 

Treasury and mortgage markets remain bearish; until the 10 yr can decline below 2.0% the bearish technicals will continue. That said, we remain confident that the 10 yr will find support at 2.30%, the recent high was 2.27% five sessions ago. The Fed’s Operation Twist is still out there and the Fed has increased MBS purchases. Interday and intraday volatility will continue following the paranoid equity markets. Already this morning 30 yr MBSs have traded in a .34 basis point range. The treasury market is being stretched between better equity markets and the need for safety as Europe is still in play; equity markets a little weaker early today keeping rate markets generally unchanged so far.

Apply for a Purchase or Refinance Mortgage

 

 

 

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Wednesday, September 28, 2011
 

A slightly weaker open this morning for bonds and mortgages with the key stock indexes pointing to a higher open at 9:30. Europe still holds markets by the throat; will Greece meet the terms outlined to avoid default? Experts from the European Commission, European Central Bank and International Monetary Fund will return to Athens tomorrow as officials race to put in place a package of measures that will save Greece. Euro-area finance ministers will hold an extra meeting on Greece in October amid international concerns that a default could plunge the global economy into recession.

There is reason to believe that Greece will avoid default, at least based on the rallies in equity markets around the world in the last few days. It isn’t official and there are still a lot of hurdles to leap; German banks continue to object to further write downs on their Greek debt, banks and insurance companies might have to increase their contribution to the rescue package as Greece’s economy has deteriorated, Greek bonds have tumbled in recent weeks and credit insurance has soared, putting the chance of default at more than 90%. Meanwhile the European Commission refuted reports that euro-area nations are pushing for private Greek bondholders to accept larger writedowns. And the beat goes on, in over a year now the EU and ECB have been unable to create a plan to avoid sovereign debt defaults in Greece and other struggling economies. There is increasing comments from various experts that Greece will eventually default, while European officials and the IMF stand by their work that will avoid default. At the moment markets are believing a deal will get done soon.

August durable goods orders were about what was expected, down 0.1% overall and -0.1% when transportation orders are extracted. Not strong but about what was thought after durables jumped 4.1% in July.

At 9:30 the DJIA opened +65, the 10 yr note -4/32 at 1.99% and mortgage prices were down 4/32 (.12 bp).

The MBA weekly mortgage applications were strong last week; the composite index jumped 9.3% driven by re-financing as interest rates fell on the FOMC policy statement that the Fed would increase buying of MBSs and buy more treasuries at the long end of the curve while selling shorter maturities. The refinancing index jumped 11.2% in the September 23 week while the purchase index rose 2.1%. The rise in purchase applications was due to a 4.9% rise in conventional purchase applications that offset a 0.6% decline in applications for government loans which MBA tied to the pending decline in FHA loan limits. The purchase index has been on the rise in recent weeks and the gains hint at welcome strength in tomorrow’s pending home sales report. The average rate for 30-year mortgages with conforming loans ($417,500 or less) fell four basis points in the week to 4.25% with the jumbo loans ($417,500 or more) also falling four basis points to 4.51%. FHA 30-year loans fell two basis points to 4.05%.

At 1:00 Treasury will auction $35B of 5 yr notes; yesterday’s 2 yr note auction met with very good demand, expectations are that the 5 yr will also see strong demand.

The bellwether 10 yr note is working on 2.00%, it held yesterday on the close and so far this morning sits at 1.99%. 2.00% is our first support, if it falls a number of our technical models will change to a more negative outlook. If that were to occur, given the Fed’s support for the long end, rates are not likely to increase much. That said, the uncertainty of the outlook is high; the economic outlook, Europe’s debt mess—neither is given in the outlook.

 

www.PaulCantor.info

 

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FOMC meeting on TuesdayMortgage markets were especially volatile last week, taking rate shoppers in Virginia on a roller-coaster ride. The week’s news schedule was full. It included debt ceiling debates, jobs figures, and ongoing maneuverings within the Eurozone.

Each story a material impact on mortgage rates and, as a result, rates varied wildly from day-to-day.

Throughout the early part of the week, mortgage rates fell.

Monday, bond markets improved as leaks of the congressional debt ceiling agreement surfaced. Investors approved of the accord’s general terms and bought U.S.-backed debt to prove it. Tuesday, when the final agreement was reached and the terms were made public, mortgage rates dropped again.

This is because the debt ceiling agreement is based on spending cuts and tax increases. In response, analysts revised lower their respective growth estimates for the United States, benefitting bonds.

By Thursday, markets were in full rally mode.

On the eve of the July jobs report, traders flocked to the ultra-safe bond market; “whispers” put the net jobs created figure at a negative. Wall Street feared the worst. By Thursday’s close, mortgage pricing was at its best levels since November 2010.

Friday morning, though, markets recoiled. When the Non-Farm Payrolls report showed much-better-than-expected growth, it triggered a bond market sell-off and rates reversed higher. Rates rose more Friday than on any single day since November 30, 2010.

If you were quoted a mortgage rate on Thursday, on Friday, the same mortgage rate cost 1 discount point more.

This week, rates may rise or fall — it’s too soon to tell.

Date

Time (ET)

Statistic For

Market Expects

Prior

08/09/11

08:30:00 AM

Productivity-Prel Q2

-0.60%

1.80%

08/09/11

02:15:00 PM

FOMC Rate Decision Aug

0.25%

0.25%

08/10/11

10:00:00 AM

Wholesale Inventories Jun

1.00%

1.80%

08/10/11

02:00:00 PM

Treasury Budget Jul

-$132.0B

-$165.0B

08/11/11

08:30:00 AM

Initial Claims

08/06/11

409K

400K

08/11/11

08:30:00 AM

Trade Balance Jun

-$48.0B

-$50.2B

08/12/11

08:30:00 AM

Retail Sales Jul

0.50%

0.10%

08/12/11

08:30:00 AM

Retail Sales ex-auto Jul

0.20%

0.00%

08/12/11

09:55:00 AM

Mich Sentiment Aug

62.5

63.7

08/12/11

10:00:00 AM

Business Inventories Jun

0.50%

1.00%

 

Friday afternoon, after markets closed, S&P downgraded the long-term debt of the U.S. government a notch. Typically, lower credit ratings means higher borrowing costs which leads to higher mortgage rates, among other things. However, it’s unclear how markets will react to the S&P decision.

Plus, the Federal Open Market Committee meets Tuesday and that, too, can affect markets.

As always, the prudent move is to lock your mortgage rate if its payment and terms are sensible. There’s too much volatility to know what markets might do tomorrow.

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Two economic reports this week head up or focus; tomorrow the March ISM services sector index and on Thursday Feb consumer credit. Recent spikes in oil prices have likely caused consumers to cut back on other spending, the level of borrowing using credit cards should be watched. This week the ECB will meet with expectations that the bank will increase its base rate as inflation ion Europe has pushed up above

Date Time (ET) Statistic For Market Expects Prior
04/05/11 10:00:00 AM ISM Services Mar 59.5 59.7
04/05/11 02:00:00 PM Fed Minutes 03/15/11
04/07/11 08:30:00 AM Initial Claims 04/02/11 386K 388K
04/07/11 08:30:00 AM Continuing Claims 03/26/11 3700K 3714K
04/07/11 03:00:00 PM Consumer Credit Feb $2.5B $5.0B
04/08/11 10:00:00 AM Wholesale Inventories Feb 1.00% 1.10%

Thinking about buying or refinancing a home?  Click Here.

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Existing and new home sales are the main focus but unlikely to show any change in the trend of weak sales that has been the situation for two years. Japan’s problems with their nuclear reactors remain but the latest reports imply some progress on a couple of reactors while  another reactor is weakening. In Libya the UN forces clobbered Libyan positions with heavy use of missiles but Qaddafi remains defiant. Treasuries and mortgage rates are likely to stay within a tight range as long as there is no change in the situations in Japan and in the Mideast.

 

Date Time (ET) Statistic For Market Expects Prior
03/21/11 10:00:00 AM Existing Home Sales Feb 5.05M 5.36M
03/22/11 10:00:00 AM FHFA Housing Price Index Jan NA -0.30%
03/23/11 10:00:00 AM New Home Sales Feb 287K 284K
03/24/11 08:30:00 AM Initial Claims 03/19/11 384K 385K
03/24/11 08:30:00 AM Durable Orders Feb 1.10% 3.20%
03/24/11 08:30:00 AM Durable Orders ex Transportation Feb 1.80% -3.00%
03/25/11 08:30:00 AM GDP – Third Estimate Q4 2.90% 2.80%
03/25/11 08:30:00 AM GDP Deflator – Third Estimate Q4 0.40% 0.40%
03/25/11 09:55:00 AM Michigan Sentiment – Final Mar 68 68.2

 

The stock market, after the strong selling on panic moves is likely to rebound and recover most of the losses on the indexes. Gold and oil prices are likely to increase after a volatile last week. Through the week as long as investors return to equity markets the bond and mortgage markets will see prices fall and yields increase. The week is very likely to be volatile from day to day with unfolding news out of Japan and the Mideast. We do not expect interest rates to increase a lot, but we also don’t see any major decline this week. Still suggest using the recent rate decline to get deals done and not get enthused about lower rates. Interest rates are not likely to fall much while the wider perspective is still bearish as the US economy improves and the ECB likely to raise rates.

 

All this volatility means Richmond area mortgage rate shoppers should consider locking this week.  Call me at 804-433-1510 to discuss locking a mortgage rate

 

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Bond and equity markets face the problems coming out of Japan and the FOMC meeting on Tuesday. The economic data, while always important, is a little less so now while investors try and handicap the economic importance of the impact of Japan’s earthquakes. Two reports on inflation with PPI and CPI due out on Wednesday and Thursday, inflation continues to get attention, although many are not concerned. Weekly claims are expected to be lower on Thursday and the Philadelphia Fed index of business strength on Thursday are the two keys for data.

Date Time (ET) Statistic For Market Expects Prior
03/15/11 02:15:00 PM FOMC Rate Decision Mar 0.25% 0.25%
03/16/11 08:30:00 AM Housing Starts Feb 575K 596K
03/16/11 08:30:00 AM Building Permits Feb 573K 562K
03/16/11 08:30:00 AM PPI Feb 0.60% 0.80%
03/16/11 08:30:00 AM Core PPI Feb 0.20% 0.50%
03/16/11 10:30:00 AM Crude Inventories 03/12/11 NA 2.52M
03/17/11 08:30:00 AM Initial Claims 03/12/11 386K 397K
03/17/11 08:30:00 AM CPI Feb 0.40% 0.40%
03/17/11 08:30:00 AM Core CPI Feb 0.10% 0.20%
03/17/11 09:15:00 AM Industrial Production Feb 0.60% -0.10%
03/17/11 09:15:00 AM Capacity Utilization Feb 76.50% 76.10%
03/17/11 10:00:00 AM Leading Indicators Feb 1.00% 0.10%
03/17/11 10:00:00 AM Philadelphia Fed Mar 28.1 35.9

 

The Fed meets Tuesday, we are not looking for anything significant from the meeting. The short statement will likely be about the same as in the past; the fed stands ready to keep rates low, the job market is still struggling, the Fed will complete QE 2 but will not completely abandon a possible QE 3 although that is not likely with the economic improvement. The bond and mortgage markets are somewhat more encouraging, both the 10 yr note and mortgages have moved through their respective resistance levels. That said, rates are tied directly to stock market direction; a rally in equities will push rate prices lower and could change the dynamics overnight.

Wednesday morning the Labor Department will post February’s Producer Price Index. This important index measures inflationary pressures at the producer level of the economy. There are two portions of the index- the overall reading and the core data. The core data is more important and watched more closely because it excludes more volatile food and energy (including gasoline) prices. If the index shows a large increase, inflation concerns will rise, making long-term investments such as mortgage-related bonds less attractive to investors. This would lead to higher mortgage rates Wednesday morning. Current forecasts are calling for a 0.6% increase in the overall reading and a 0.2% increase in the core data.

Also Wednesday, February’s Housing Starts report will be posted but it will likely not have much of an impact on mortgage rates. It gives us a measurement of housing sector strength and future mortgage credit demand, but is usually considered to be of fairly low importance to the financial markets unless it shows a large variance between forecasts and actual number of new home starts. It is expected to show a decline in new starts from January to February, signaling weakness in the housing sector.

Overall, look for Thursday to be the most important day of the week due to the CPI release, but tomorrow’s FOMC meeting can also heavily influence the markets. Wednesday may also be an active day for rates with the PPI on tap. Friday will probably be the calmest day for mortgage rates, but it appears there is a good possibility of seeing plenty of movement in rates the next several days. Therefore, please proceed cautiously if still floating an interest rate.

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Mortgage rates improved last week as the price of mortgaged backed securities rose.  The price of a rate for thirty-year fixed rate mortgages improved by about ½ of a discount point.  However, the long term outlook for mortgage rates continue to be bearish.  The near term outlook has shifted from solid bearish reads to a more neutral pattern. This week both existing and new home sales in Jan are expected to have declined from Dec but whatever slippage we see will likely be seen as weather related distortions.

US financial markets are closed Monday for President’s Day. The week has two housing reports, existing and new home sales, Jan durable goods orders and the weekly jobless claims as the main data points. Treasury will auction $99B of notes; Tuesday $35B of 2 yrs, Wednesday $35B of 5 yrs and Thursday $29B of yr notes totaling $99B the same as the past four months.

Date Time (ET) Statistic For Market Expects Prior
02/22/11 09:00:00 AM Case-Shiller 20-city Index Dec -2.40% -1.59%
02/22/11 10:00:00 AM Consumer Confidence Feb 67 65.6
02/23/11 10:00:00 AM Existing Home Sales Jan 5.23M 5.28M
02/24/11 08:30:00 AM Initial Claims 02/19/11 410K 410K
02/24/11 08:30:00 AM Durable Orders Jan 3.00% -2.30%
02/24/11 10:00:00 AM New Home Sales Jan 310K 329K
02/25/11 08:30:00 AM GDP – Second Estimate Q4 3.30% 3.20%
02/25/11 09:55:00 AM Michigan Sentiment – Final Feb 75.1 75.1

.

Tuesday morning brings us the first of this week’s data with the release of February’s Consumer Confidence Index (CCI) during late morning trading. This Conference Board index measures consumer confidence in their personal financial situations, giving us a measurement of consumer willingness to spend. If consumers are feeling good about their own financial situations, they are more apt to make large purchases in the near future. Since consumer spending makes up two-thirds of the economy, related data is considered important in terms of gauging economic activity. It is expected to show an increase in confidence from 60.6 in January to 65.0 this month. A lower reading would be considered good news for bonds and mortgage rates.

The National Association of Realtors will post January’s Existing Home Sales report late Wednesday morning. It tracks home re-sales, giving a measurement of housing sector strength. It is expected to show a small decline in sales of existing homes, meaning the housing sector remained fairly flat during the month. Ideally, the bond market would like to see a sizable decline in sales because weak housing is one of the hurdles that the economy must overcome to recover from the recession. The longer it takes for the housing market to recover, the longer it will take the economy to do the same.

Thursday’s first of two releases is January’s Durable Goods Orders data will provide a measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. A smaller increase than the 3.0% that is expected would be good news for the bond market and mortgage rates. This data is quite volatile from month-to-month, so large swings are fairly normal.

The economy based on recent data continues to improve, all but employment and housing. Inflation concerns are slowly mounting as global inflation ticks higher. The outlook for inflation remains on the minds of investors, who are not likely to sit and wait for confirmation, putting pressure on long term rates. Both the improving economy and inflation concerns however are being overlooked to some extent with increasing violence and protests spreading across the Mideast. After Tunisia and Egypt over through their rulers people in most of the region are taking to the streets. Safety moves into US treasuries are countering inflation worries and strengthening economic data points.

January’s New Home Sales report will be posted late Thursday morning. This is one of the least important reports of the week, and is the sister report to Wednesday’s Existing Home Sales release. They measure housing sector strength and mortgage credit demand, but usually do not have a significant impact on bond trading or mortgage rates unless they show significant surprises. This report is also expected to show a decline in sales.

The first of two revisions to the 4th Quarter GDP reading is scheduled for release Friday morning. Analysts’ forecasts currently call for an annual rate of growth of 3.3%, indicating that the economy was slightly stronger in the last quarter of the year than initially thought. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market, while a sizable downward revision would be good news and could lead to improvements in mortgage pricing

The last piece of data scheduled for release this week is the University of Michigan’s revision to their Index of Consumer Sentiment for February. Current forecasts show this index not changing much from its preliminary estimate of 75.1. This index is fairly important because it helps us measure consumer confidence that translates into consumer willingness to spend.

Look for continued volatility in bond prices and mortgage rates this week, especially Tuesday, Thursday and Friday. This would be a very good week to maintain contact with your mortgage professional.

To find out about applying for a mortgage call Paul Cantor (804) 719-1515 or click here.

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Considering an FHA loan to buy or refinance a home? If so you should move fast. HUD has announced new annual FHA mortgage insurance premium (MIP) rates starting April, 2011. This means that the initial payment on FHA mortgages will feel like the note rate has increased .25%. These new monthly premiums are double what they were last year.

New FHA Annual Mortgage Insurance Rates

The following is the table for the new rates

Transaction Type LTV Loan Term UFMIP Annual MIP(% ÷ 12)
PurchaseStreamline (All Types)

Rate-Term Refinances

<= 95% > 15 Years 1.00% 1.15%
> 95% > 15 Years 1.10%
<= 90% <= 15 Years 0.25%
>= 90% <= 15 Years 0.50%

This may mean it may be harder to qualify to purchase a home and some FHA Streamline refinances will not make sense.

Apply for an FHA mortgage

If you are thinking of buying your first home or refinancing your current FHA loan with a streamline refinance start by sending a email by clicking here an email by clicking here..

Paul Cantor
(804) 719-1515

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Tensions in Egypt, higher oil prices, higher than expected home sales, and the Fed’s meeting made last week a busy week for financial markets.  Mortgage bond prices rose last week pushing mortgage interest rates lower, mostly due to foreign investment in the US due to the uncertainty in Egypt, several Treasury auctions and most resulted in decent foreign demand. Stock weakness along with weaker than expected GDP figures also led to rate improvements Friday afternoon. Mortgage bonds ended the week positive by about 1/8 to 1/4 of a discount point.

This Week is employment week on Friday, between Monday and Friday however there are a number of key economic reports. The markets start Monday with developments over the weekend in Egypt and the equity markets looking toppy and possibly headed for a long overdue correction. At the end of last week the famous 10 yr treasury note yield fell to 3.31% on Friday and closed at 3.33%, the bottom of its six week trading range (33 market days). A break in stocks and increased fears about the uprisings in Tunisia and Egypt should push interest rates lower on safety moves, if however stocks hold and there is no escalation of concerns in the mid-east the 10 yr and mortgages will move back to the top of their ranges on yields

Date Time (ET) Statistic For Market Expects Prior
01/31/11 08:30:00 AM Personal Income Dec 0.50% 0.30%
01/31/11 08:30:00 AM Personal Spending Dec 0.60% 0.40%
01/31/11 08:30:00 AM PCE Prices – Core Dec 0.10% 0.10%
02/01/11 10:00:00 AM Construction Spending Dec -0.50% 0.40%
02/01/11 03:00:00 PM Auto Sales Feb NA 3.90M
02/01/11 03:00:00 PM Truck Sales Feb NA 5.56M
02/02/11 07:00:00 AM MBA Mortgage Purchase Index 01/28/11 NA -12.90%
02/02/11 07:30:00 AM Challenger Job Cuts Jan NA -29.00%
02/02/11 08:15:00 AM ADP Employment Change Jan 150K 297K
02/03/11 08:30:00 AM Productivity-Prelim Q4 2.20% 2.30%
02/03/11 08:30:00 AM Unit Labor Costs Q4 0.00% -0.10%
02/03/11 08:30:00 AM Initial Claims 01/29/11 425K 454K
02/03/11 08:30:00 AM Continuing Claims 01/29/11 3925K 3991K
02/03/11 10:00:00 AM Factory Orders Dec -0.70% 0.70%
02/03/11 10:00:00 AM ISM Services Jan 57 57.1
02/04/11 08:30:00 AM Nonfarm Payrolls Jan 150K 103k
02/04/11 08:30:00 AM Non-farm Private Payrolls Jan 163K 113k
02/04/11 08:30:00 AM Unemployment Rate Jan 9.60% 9.40%
02/04/11 08:30:00 AM Average Workweek Jan 34.3 34.3
02/04/11 08:30:00 AM Hourly Earnings Jan 0.20% 0.10%

.

Economic data this week has Dec personal income and spending, the ISM manufacturing and service sectors indexes, Jan auto sales, Dec construction spending and the employment report. Early forecasts for all non-farm job growth is for an increase of 150K jobs, private non-farm jobs up 163K and the unemployment rates at 9.6%, up 0.2% from Dec. There are no Treasury auctions this week.

Mortgage interest rates have been very stable now for the past five weeks, not a bad thing as consumers continue to digest the spike up in rates last Nov and early Dec. If the rate markets do improve this week it will present an opportunity to get deals done, unlikely any rate improvements will last long with the economic outlook improving. Lots of talk about inflation, although it hasn’t shown itself yet with rates so low just the thought of it will keep longer term rates for holding these low levels for long.

Tuesday and Friday look to having the highest potential for volatile for mortgage rates. Friday’s Employment report is the most important piece of data, but Tuesday’s ISM Index draws a lot of attention also. We could also see movement in rates tomorrow morning following the activity at the end of last week. If we get weaker than expected results from Tuesday’s ISM report and Friday’s employment data, we should see rates close the week lower than last Friday’s closing levels. If the data shows stronger than expected results, we may see mortgage rates move higher for the week. With some very important data being posted over the next five days, I strongly recommend keeping fairly constant contact with your mortgage professional if still floating an interest rate.

.

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