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Mortgage Market/Economic Update for June 4th - June 8th

By
Mortgage and Lending with GMH Mortgage and Century 21 Adams Realty

Good morning,

We have a rather quiet week ahead of us, with the release of only a few pieces of economic data for the markets to digest. There are three reports of interest scheduled to be posted, but none are considered to be very important to bonds or mortgage rates. 



The first of the three comes tomorrow when the Commerce Department will release April's Factory Orders data. This manufacturing sector report is similar to last week's Durable Goods Orders release, but also includes orders for non-durable goods. It can cause some movement in the financial markets if it varies from forecasts by a wide margin, but it isn't expected to cause much change in rates this month. Current forecasts are expecting to see an increase in orders of 0.6%.



The revised 1st Quarter Productivity and Costs report will be released Wednesday morning. This data measures employee output and employer costs for wages and benefits. It is considered to be a measurement of wage inflation and is thought to allow low inflationary economic growth when productivity is high. Last month's preliminary reading revealed a 1.7% rate, but it is felt that this piece of data will not have much of an impact on the bond market or mortgage pricing unless it varies greatly from its forecasted reading of 1.4%.



The third and final report of the week will be posted Friday morning. April's Goods and Services Trade Balance data, which gives us the size of the U.S. trade deficit will be released at 8:30 AM. It isn't likely to cause much movement in the markets or mortgage rates, but nevertheless forecasts are expecting to see a $63.0 billion deficit.


Overall, there is little "high impact" reports/data scheduled to drive mortgage rates this week. This makes the stock markets the likely influence on day-to-day bond trading. Whether or not this is good news depends on if the stock indexes continue their record setting climb or if a pullback is in the works. The yield on the benchmark 10 year Treasury Note has climbed to 4.95% recently as some of the major stock indexes have set new records. The continued upward trend was not expected and drew funds from bonds, thus affecting mortgage rates negatively. A pullback in stocks would help shift money back into bonds and if we see the major stock indexes post losses this week, bonds should benefit and mortgage rates could hopefully improve and gain back the ground we've already lost. 


Have a great week,

Michael Savas

Mortgage Consultant/Planner

Comments (2)

Kris Krajecki
Kris Krajecki - FOX VALLEY MORTGAGE - Huntley, IL - Huntley, IL
Mortgage Broker Huntley, IL

Nice cat!!

:-)

Jun 07, 2007 04:05 AM
Kris Krajecki
Kris Krajecki - FOX VALLEY MORTGAGE - Huntley, IL - Huntley, IL
Mortgage Broker Huntley, IL
U.S. Treasury 10-year notes are poised for their biggest weekly decline in more than two years, even after recovering from early losses today, on concern that faster economic growth will lead central banks to raise interest rates.

Ten-year notes, whose yields determine interest rates on mortgages and corporate bonds, had their biggest slump in more than three years yesterday. The yield touched 5.25 percent earlier today, the highest since May 2002.

Jun 08, 2007 03:53 AM