The Week in Review:

A relatively calm week last week with interest rates ending where we started the week.  In general we continue to have good news relative to inflation with many indicators coming out either below expectations or at expectations.  Additionally, on Thursday the auction of $13 Billion in five-year US Treasury's showed strong foreign demand and heavy buying by large institutional investors.  When demand is strong, prices move higher; as bond prices move higher, conforming home loan rates improve. 

With all of the "Bond friendly" news, we should have seen a slight improvement in interest rates.  But, many of the Federal Reserve Presidents spoke on Friday and were perhaps overly vocal about the continuing concern over inflation.  The bond market responded and we lost any gains that we may have realized during the week, resulting in no change for the week.  Keep in mind that the bond market trade on technical indicators, statistical reports and data, and unfortunately on the emotion of the news.

The Week Ahead:

This week we will have the most important report of this month, which is the Jobs Report.  If you recall from prior weeks news letters, last months job report came in with a net loss in jobs for the month and the prior two months were adjusted down dramatically.  So on Friday the markets will be poised for that report and it will prove to be a volatile day.  If the Jobs Report comes in lower than expectations and there are not significant upward adjustments to prior months, we will probably see interest rates improve slightly.  If the opposite happens with the Jobs Report, we may see interest rates worsen.

Technically, Bonds are trading above the 200 day moving average and will probably trade above it all week waiting for the news on Friday.  I am recommending that your clients cautiously float along this week.

Interest Rates:

Conforming Loans ($417k or less)

30yr Fixed                     6.375%

3yr ARM                       5.75%

5yr ARM                       6%

7yr ARM                       6.125%

Jumbo Loans (Greater than $417K)

30yr Fixed                     6.75%

3yr ARM                       6.125%

5 & 7 yr ARM                6.5%

Justin Whitney

Home Loan Consultant

C- 843-270-8366

F- 866-650-0216

justin_whitney@countrywide.com

www.loansbyjustin.com