It’s that time of week again, where we take a quick look back at what happened last week in the mortgage backed securities market and what lies ahead. Last week’s report was omitted due to scheduling conflicts, which happens every now and then, but which will hopefully get ruled out in the near future. Nevertheless, the week was full of false alerts, or at least premature at best, and proves the need to listen to the right people and different perspectives, especially if you don’t understand what is going on.
Looking back over the last week, there was hardly any data to be seen, though we continue to hear news that favors an economy that is beginning to weaken again. Stocks entered into earnings season and rallied somewhat on good earnings reports, and may continue to do so this week. There are even reports of improved forecasts in earnings, giving more optimism for the stock market moving forward. Housing numbers, however, keep getting worse and the Fed is even starting to express concerns about where the economy is truly going, including Ben Bernanke whom has been right there in the spotlight beside Barack Obama in saying everything is going to be just fine. The Treasury Department also announced its upcoming Treasury Auctions with $38B for the 2-year T-Note, $37B for the 5-year T-Note and $29B for the 7-year T-Note, for a total of $104B in medium term auctions.
As we get into this week, the Treasury Auctions will likely p0lay a big role in whether or not mortgage rates can remain this low, or even go lower. Those auctions will start Tuesday along with the timing when solid data starts pouring in. Data is still fairly light most of the week, but will end with somewhat of a bang on Friday. Here is what is currently slated, keeping in mind that the Fed adds speeches as the week goes on…
- Monday: Chicago Fed National Activity Index (8:30), New Home Sales (10:00), 3-month T-Bill Auction (11:00), 6-month T-Bill Auction (11:00)
- Tuesday: S&P Case-Shiller HPI (9:00), Consumer Confidence (10:00), 4-week T-Bill Auction (11:30), 52-week T-Bill Auction (11:30), 2-year T-Note Auction (1:00)
- Wednesday: MBA Purchase Applications (7:00), Durable Goods Orders (8:30), Crude Inventories (10:30), 5-year T-Note Auction (1:00), Beige Book (2:00)
- Thursday: Jobless Claims (8:30), 7-year T-Note Auction (1:00), Money Supply (4:30)
- Friday: GDP (8:30), Employment Cost Index (8:30), Chicago PMI (9:45), Consumer Sentiment (9:55)
As you can see, there is not much data but there are some key reports and Treasury Auctions that can play a major role in keeping mortgage rates steady, bringing even lower mortgage rates, or even breaking the trend and sending them higher. To get a better idea of what lies ahead, let’s take a look at the charts.
The charts are the most accurate way to forecast where mortgage rates are headed, though most people do not fully understand them and some simply don’t trust them or continue to have knee-jerk reactions to market moves. This is why you need to seek guidance from the best and preferably a couple professional forecasters, especially if you do not understand the charts yourself. Last week say two false rate alerts to lock which were only good for those that were closing last week. Probably the best free advice you can get, at least free for now, is available at Florida Mortgage Daily. Make sure you are checking it out every day to avoid the false alerts.
As we look at the charts this week, we find that MBS prices have yet to break their trend sideways, even slightly up, leaving no real reason right now to rush to lock. They continue to remain above their 10-day moving average and all other moving averages continue their climb. Even stochastic indications have moved out of the overbought spectrum and allow growth. That being said, the trend may not be able to hold if we do not continue to make gains in MBS prices and that means if mortgage rates don’t keep setting record lows, they will likely be about to turn higher. Right now, things still look good, but that outlook could change by week’s end.
The bottom line for this week is again to keep watching every day, but there is no need to rush into a locking stance, and we may even see lower mortgage rates ahead. If MBS prices drop below their 10-day moving average, it may be time to lock, so be prepared if they do and make sure you are following solid guidance and don’t get caught up in knee-jerk reactions to market moves.
Comments(0)