Brentwood TN Real Estate
Mortgage bond prices fell pushing mortgage interest rates higher. Rising inflation fears dominated trading. Oil prices hit all-time highs as the price of a barrel eclipsed $135. Fortunately the steep price increases subsided in overnight trading Thursday evening. Mortgage bonds were able to bounce back a bit Friday morning erasing some of the prior losses and helping rates recover.
For the week, interest rates on government and conventional loans rose by about 1/4 of a discount point.
The preliminary GDP data will be the most important event this week. Consumer confidence and the inflation data also have the potential to cause mortgage interest rate volatility. The bond market is closed Monday in honor of the Memorial Holiday. Expect market volatility when trading resumes Tuesday.
Economic Factors |
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Economic Indicator |
Release Date Time |
Consensus Estimate |
Analysis |
Memorial Day |
Monday, May 26, 2008 |
None |
Shortened week may lead to market volatility when trading resumes Tuesday morning. |
Consumer Confidence |
Tuesday, May 27, 2008 |
61.0 |
Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates. |
New Home Sales |
Tuesday, May 27, 2008 |
Down 1.1% |
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
Durable Goods Orders |
Wednesday, May 28, 2008 |
Down 0.7% |
Important. An indication of the demand for |
Q1 Preliminary GDP |
Thursday, May 29, 2008 |
Up 0.9% |
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
Personal Income and Outlays |
Friday, May 30, 2008 |
Income up 0.2%, Outlays up 0.2% |
Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates. |
PCE Core Inflation |
Friday, May 30, 2008 |
Up 0.1% |
Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
U of Michigan Consumer Sentiment |
Friday, May 30, 2008 |
60.2 |
Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates. |
Trading This Week
Market conditions that often lead to mortgage interest rate volatility are thin trading and shortened trading weeks. If very few market participants are buying and selling bonds, the potential for short-term volatility is escalated. A large buyer or seller can execute trading orders that, without additional traders to buffer out the extreme buying or selling, can lead to swift market movements. In addition, shortened trading weeks have the potential to compress a week's worth of trading into fewer days. Bond traders often take defensive positions ahead of weekends and holidays to guard against unforeseen events that could possibly jeopardize their investments. This positioning can be beneficial or detrimental to mortgage interest rates. If investors sell stocks and buy mortgage-backed securities, mortgage interest rates will improve. However, if investors sell mortgage-backed securities and hold cash positions, mortgage interest rates will rise.
Holidays can often result in volatility as trading resumes following the extended close. This week could result in market swings that are favorable or negative in nature. Considering the heightened possibility for mortgage interest rate volatility, a cautious approach to interest rate exposure is prudent.
* Information courtesy Tonya Esquibel, WR Starkey Mortgage, Franklin TN*
Vanessa Stalets
Brentwood TN Real Estate
RE/MAX Elite
615-957-6333
615-661-4400
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