Mortgage Interest Rates, and the events on the calendar that may move them
This week has a little bit of everything to keep the markets entertained: From Auctions to they typical monthly data keeping things moving.
Last week ended up a mixed bag with some nice UP days and some not so nice DOWN days, by the end of the week we only lost 1/32nd in the price of Fannies close enough to "Unchanged" that from Friday to Friday there was not much to worry about. This week is a tough one to call, but I expect more of the same ups and downs to upset our stomachs.
Here is this weeks Economic Calendar:
- MondayAugust 24: Today is a no news day, and in the absenceof any data the market is trading comfortably up, with Fannies trading up 9/32nds at Noon. This surprised me a bit, especially since we have solid gains in stocks today.
- Tuesday, August 25: Auction #1 for the week with $42 Billion in 2 year notes. The sell off in the credit markets on Friday probably has yields at high enough levels to keep investors interested in this auction, and it will probably be well bid which will be supportive of steady rates.
- Wednesday August 26: July Durable Goods expected +3.2% ex auto +1.0%. Not likely to move the markets much.
- Wednesday: July New Home sales expected +1.5%. If this forecast is accurate it will be the 4th month with a gain in New Home sales. Mortgages are not likely to move higher on this news unless it comes in at an improvement of +2% or higher.
- Wednesday: Auction #2 for the week with$39 Billion in 5 year notes. Last month the 5 year auction was not well bid, and foreign investment was noticeablyabsent. If foreign investors stay away this time it will be bad for mortgages. Analysts think that the yield should be high enough that we will see demand from foreign and domestic bidders.
- Thursday August 27: Initial jobless claims expected down 16,000. The weekly numbers have been high all year, not a likely market mover.
- Thursday: Revised second quarter GDP expected -1.4%. This number shows the decline in growth is not as bad as it was, and that is the spin that will be put on it. As inventory went down in the first half of the year it will need to be replaced the rest of the year which will show improvement in manufacturing. My Go to Guy thinks it would take the revision to be at -2.0% or worse to help improve rates, and that is not a likely thing.
- Thursday: Third auction of the week, this time $28 Billion in 7 year notes. Foreign investment is key here. if well bid this will be supportive of steady rates.
- FridayAugust 28: July Personal income expected +0.1%, Spending +0.2% and PCE +0.1%. This is a FED favorite. If the numbers match it is likely supportive of steady or even improving mortgage rates. This number is all about what the consumer is doing, not thinking, or feeling... That is why the Fed looks at it so closely.
At first glance I would pick Fridays PCE index as the biggie of the week, but I am more concerned about the auctions. It is not just the excess supply in the market (which is always a concern) it is because the FED came out and said it is just about done buying treasuries and Mortgages and its check book will soon be put away. (If you have not been reading my blogs: The FED has been a major player in the credit markets, stepping in and buying mortgages and Treasuries to help calm the market and keep interest rates near the record low levels we have seen all year). So as of October we lose a big buyer in the markets. It is yet to be seen how investors feel about that, andwe will findout either this month or next, and it will be during an auction when there is excess supply that it will become apparent!
My gut says we may lose a little ground this week, but it could be just like last week and we could end up dizzy by the end of the week but end up in the same place by close of business on Friday.
Have a great week.
Rob
Mortgage Banker
www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf
(732)223-1630 x102
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