Rates for the week starting Monday January 17th. This is a holiday shortened week as we all take the time to remember the life and legacy of Dr. Martin Luther King Jr.
There is a lot of data on tap this week that has the potential to move rates either way. Last week I was looking for a pull back on Wed. with a successful bond auction and we had a little pull back but Friday morning before the market turned back around was the best time to lock. This week those with floating loans will have a good idea on where the market is moving after tomorrow. An abundance of 2010 4th quarter earnings reports are going to be out this week starting tomorrow with Citibank (C).As we know the banks have been struggling to find their footing as they do their best to navigate the volatile housing market while trying to raise capital and start lending in the new highly regulated world of home financing. I think earnings should be good this week for the banks for a couple of reasons. The first half of the quarter saw record low rates which was great for loan origination numbers particularly refinances, and with the rates jumping up after Thanksgiving this caused a steeping of the yield curve. A yield curve is really just a graph of US government bonds across different maturities. When the yield curve steepens it's better for banks. They can make more money on their deposit base.
JP Morgan Chase reported better than expected earnings last week and although they are considered the cream of the crop when it comes to solid banks, it could be giving us some foreshadowing into this weeks' results. Good results could prove to be more energy for the stock market and more energy for higher rates. I still believe we are at the top of a trading range for the stock market and it's going to be harder for this market to move than it will be to make back down a bit,
Mortgage rates starting for the week of January 17th could also be affected by some economic data on the calender not just earnings.
This weeks' housing data
Wed. 8:30AM Housing Starts: By definition it's the start of construction of a new residential building marked by the excavation of the foundation
Thur. 10:30AM Existing Home Sales: By definition its the tally of previously constructed homes that have sold during the month
Both of these reports along with a week filled of bank earnings could move the stock market and the bond market either way.
My Opinion: Once again I think we are looking at a flat week of rates with a chance for some downward pressure. I think the market is at the top of a trading range and a healthy correction is in view. It's going to take more good news to move the market up than bad news to move the market down. Either way I don't think there will be a profound move but there is enough data to keep a close watch on things.
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