Last week ended up being a pretty flat week with a few bounces along the way. The highlight of the week was Fridays Employment report that was quite a bit worse than expected. It did not cause a big improvement as one would have thought, it really only served to wipe out losses from earlier in the week and for the week we were only 3/32nds to the positive side on Fannies which is pretty much an unchanged week.
This week has its bumps and grinds to deal with as well, here is what we have in store:
- Monday November 9: First Treasury Auction of the week with $40 Billion in 3 year notes. This Auction went off as expected at about 1pm with strong bidding. It ended up being a market neutral event and Fannies are trading slightly to the positive side.
- TuesdayNovember 10: Auction #2 with $25 Billion in 10 year notes. Keep your fingers crossed and hope this one is well bid. It is expected to be well bid, and if so it will be more of a "non event" in the mortgage world. If it is not well bid we may see a ripple effect sell off in mortgages that will not be good news for mortgage rates.
- Wednesday, November 11: Happy Veterans Day. The market is closed for Veterans day.
- Thursday, November 12: Initial Jobless claims expected down 2,000. Not likely to be a market mover.
- Thursday: Auction number 3 with $16 Billion of 30 year bonds. The bidding here will be a sign of how the investment community sees the economy. If they see things as "the worst is behind us" they will demand a higher yield. If they see things staying weak, it should be well bid. This one is entirely up in the air. If well bid it will be a neutral event, if poorly bid it is likely that mortgage rates will climb.
- Friday: nothing exciting to report on.
Well this week is obviously being lead by the Treasury. I think the Mortgage market will also look toward the stock market for direction. Good days for stocks usually end up being bad ones for mortgages as the credit markets thrive on bad news. The concern with the auction is the Fed's $300billion check book is closed and it is not likely that the Fed will be buying Treasuries anymore. For most of the year the Fed has helped to keep rates low by being one of the "investors" buying up Treasuries and Mortgages... so lets hope for strong market participation, that would be the best news for the interest rate world. My gut feeling is we will see a bumpy but fairly flat week by time the dust settles.
Thats my 2 cents worth: Have a great week!
Rob
Robert Rauf
Mortgage Banker
www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf
(732)223-1630 x102
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Rob - Finally got back in - been out in the field all day taking care of some business. I had heard about the Feds wrapping up their shopping spree - that was expected. Actually, I'm really shocked they hung in there as long as they did. This is the trend up that I've been telling clients about for months - as soon as the Feds stop buying treasuries, rates will go up.