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Brentwood TN Real Estate - Finance Market Comment- Wk of May 26, 2008

By
Real Estate Agent with RE/MAX Elite

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

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

Comments (1)

Larry Brewer - Benchmark Realty llc
Benchmark Realty LLc - Nashville, TN

Vanessa - Thanks for the information. You know I'm a numbers person.

I'm sure that the buyers on the sidelines are getting very nervious right now. I expect rates to start creeping up. And the inventory of cheap homes is disappearing quick.

May 28, 2008 02:10 AM