I spent the better part of today working on getting a difficult deal worked out, PRIOR to taking the application. I will never just toss something against the wall... Multiple jobs, just out of school, dealing with all part time income and high ratios all makes for a mess if not handled correctly! So sorry this is late, but glad we have a happy first time buyer!

This week started off BAD, More to follow on that.  It doesn't look like that busy of a week, but there are a few very important numbers being released this week that we MUST pay attention to. So here is the week:

• MondayAugust 3: July institute of supply mgmt (manufacturing) came in quite a bit better than expected and the market did not like it. Fortunately we re-gained some ground later in the day, but still lost 13/32nds by the end of the day on Fannies.  That's NOT good for rates!
• TuesdayAugust 4: June Personal income, spending and PCE; expected -1%, +0.3% and +0.2%. The PCE piece is the most important, it shows what personal consumption is... even at the +0.2% it may be bad for rates, if higher... really bad news. 
• Wednesday Aug 5: June Factory Orders expected +0.2%. Old stuff that is more of a place holder on the calendar, just a snooze factor for the markets.
• Wednesday: July Institute of Supply Mgmt (service sector) expected 48.2. While not likely to have an effect on the market, the manufacturing side on Monday certainly threw things for a loop.  So while I doubt this will be an issue, there is a chance it could raise an eyebrow or 2 after Monday's reaction.
• Thursday August 6: Initial jobless claims expected up 16,000. While this gives some insight to Friday's report, I doubt that it will have any effect since tomorrow is the big day for employment.
• Friday August 7: July employment report with Non farm payroll expected -340,000, Jobless rate up to 9.7% and average hourly earnings +0.1%. As forecast, we will have steady rates, it is the deviations in the report that catch a market off guard that will move it.

Well that looks like a short list, but there are a few biggies. The Employment report is certainly at the top, but the PCE index is a Fed Favorite that shows consumers actually activity, and since the consumer is 70% of the economy it is an important one to keep an eye on.

For the employment report, a number at or below 9.5% and the non farm number being better (-320k-ish)will make stocks happy, but kill the credit markets (sell off in the credit markets is a bad day for rates). but if we get surprised in the other direction and we have an even weaker number than forecast... Stocks will sell off and we will see a flight to quality that will drive bond and mortgage prices up, and the yields down. If the employment report is better than forecast it may be a sign that the economy is at the bottom and that the that this recession (which is the worst since 1929 and the great depression) is beginning to settle down.  This is the biggest unknown of the week, and has the biggest potential to move rates. 

This is a difficult week to call, the trend has been towards lower rates, and I would like to see that continue, but we will not go too much lower now, we are much more likely to see a big move to the upside in a knee jerk reaction than the reverse.

Have a great week!

Rob

Robert Rauf

Mortgage Banker

www.RobertRaufHomeLoans.com   or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

Since 1987 I have been helping my clients fulfill their dream of home ownership!

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