Friday Market Wrap - 1/8/16 - China VS Employment

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Friday Market Wrap 1/8/16 - China VS Employment

 

 

     The market place is ending the week fighting against itself.  We saw a pretty calm week with mild improvements to interest rates, but nothing to write home about.  What's really interesting is what's happening with the stock market, and how it's affecting (or actually, not) the mortgage market.

mortgage rate prediction

 

     For months you've heard that rates on mortgages will be heading up, and this week offers a glimmer of some truth to that, even as rates have come down.  The stock market got crushed this week on news that things aren't looking too hot in Chinese markets, and what would normally be rally-causing news in the employment numbers coming in looking quite stellar, the DOW has continued to drop.  Typically, a flight from stocks and the volatility we're seeing there would lead to a flight to the safety of mortgage bonds, but today (and most of this week), that hasn't been the case, at least to the extend that would normally be expected.

 

 

     Could this be upward pressure on rates as a large supply of Treasury notes & bonds are set for auction next week?  Perhaps.  More likely, though, is that despite what the market IS doing, it's clear to see what the market WANTS to do, and that is drive mortgage rates up.  While we've seen moderate improvements, it's been on the heels of drastic stock losses, a continuing oil slump, and bad news out of nearly every corner of the world, geopolitically speaking.  Chances are, it wouldn't take much positive news to throw mortgage bonds into the red - resulting in higher mortgage rates.

 

 

     The good news for mortgage bonds is that with today's great employment numbers, rates have showed very minor improvements (with China and the stock selloff to thank), so around the world, things are not looking great.  That said, global events also leave the world with a LOT of room for improvement - economically, and geopolitically, and it likely won't take much good news to reverse the recent gains made in mortgage bonds and push rates higher.  For that reason, my advice is to lock in the recent gains made, because we can't be sure how long they'll stick around.

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Rainmaker
2,354,726
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale - Probate Broker

John, I've missed reading your market wraps.  I am celebrating our two wins this week ... the clear to close

Jan 08, 2016 04:15 AM #1
Rainmaker
799,230
Bob Ratliff
Renowned Realty - Austin, TX
"Sold with Bob"

Great advice John and we respect your opinion. Our local news has been mentioning is Austin heading for a market slow down with oil in west Texas not doing so great and now with China and other happenings only time will tell.

Jan 08, 2016 04:23 AM #2
Rainmaker
679,179
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

I haven't really seen anything out of the ordinary happening in my area market. We're in the typical Winter slow-down season so it's not a surprise that all of the numbers around here are trending downward. 

Jan 08, 2016 04:58 AM #3
Rainmaker
134,802
Kelly Turbeville
Keller Williams - Lake Forest, CA
Turning Real Estate Dreams into Reality

As I am sure you see in the OC, the low supply is more of an issue then rates.  Good recap of the overall market, thanks!

Jan 11, 2016 06:30 AM #4
Rainmaker
2,063,173
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning John. The bond market may be the place to be in 2016 and really good for interest rates.

Jan 16, 2016 06:53 PM #5
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