Whats happening to Mortgage Rates this week?

Last week was an overwhelmingly "happy" week for mortgages after an unchanged day on Monday we ended up with a gain of 29/32nds in Fannies by time the closing bell rang on Friday. This is mostly because word leaked out that The Fed stimulus will not abruptly stop as we originally thought in October. It is more likely to taper off over the next few quarter... Great news since Uncle Sam will stay in the market as a buyer.

This week is a busy one with everything crunched into a few days at the end of the week.

Here is what we have on the schedule:

• Monday and Tuesday September 28 & 29th: No News days. In the absence of any news we have continued on last weeks rally with the market up 7/32nds as we approach the close.
• Wednesday, September 30: final estimate of the second quarter GDP, expected -1.1%. The economic decline is tailing off, but the inventory reduction this year will make things look better as industry tools up to replace inventory. This number would have to be significantly stronger to cause an upward move in rates.
• Thursday, October 1: ( OCTOBER ALREADY???) September Personal income, Spending and PCE expected +0.1%, 1.0% and +0.1%. The consumption index is always the biggie here since it truly shows what the consumer is doing. As forecast it is supportive of steady to possible lower rates.
• Thursday: Initial Jobless claims, expected up 5,000. Not a mover especially since Friday is the big number.
• Thursday: Bernake (supreme ruler of the money world) testifies on financial reform in front of the House Finance Committee. Ben will probably be grilled by the panel like a pork chop!  Investors will look for any new insight but it is not likely that there will be anything new released in this format.
• Thursday: September institute of Supply mgt, Manufacturing index expected at 54.0. This should be factored into any trading already, so it is not a likely market mover.
• Friday October 2nd: The jobless report with Non farm payroll expected at -188,000, Un Employment at 9.8% and average hourly earnings at +0.2%. While we continue to see businesses lay off workers it is not at the same pace as the rest of the year andthe non farm number is reflective of that. The average loss in the first quarter was 691,000 jobs/month, so you can see it is much better now. This report should be supportive of steady rates unless we see a loss of 150,000 jobs or less and the jobless rate come in at 9.7% or better. If it becomes a good news report, rates WILL go up, almost instantly.
• Friday: August Factory Orders expected +1.1%, This is an old number at this while the forecast is quite a bit weaker than last months report, it is not likely to do much than use up toner if you print this.

Well the week has started off quite well, and we have a lot to chew on this week. I expect we will probably see fairly quiet trading for most of the week unless the stock market has significant swings up or down. Stocks up will be bad for rates, stocks down will be good for rates.... If we have a calm stock market it will be quiet in the credit markets (bonds and mortgages) as the markets await Friday's Employment report which is most likely the "biggie of the week" With no surprises in the data, we may actually see slight improvement in rates this week, but a surprise will likely cause a knee jerk reaction to the up side.

I hope you find these reports to be useful, as you can see there is a lot more than just an individuals whim that makes the Mortgage Rate world move. 

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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