If you took a look at last Friday's postyou will see an example of an Unchanged week that was all over the map on a daily basis. We had some bright spots and some dark scary spots last week but literally ended up absolutely even on Fannies from Close of Business Friday to Friday. This is a fairly busy week with a busy calendar, but Treasury activity is likely to be the biggest influence.
Here is what we have in store for this week:
- MondayJuly 27: June New home sales was expected up 2.9%. The reality of the number, it was UP 11%... MUCH higher than expected which you would have thought would be bad news for interest rates, but NOPE. The market took it in stride, was off most of the morning, but only slightly. Why? Well Because 11% of crap is still Crap! OK, that's too technical, here is the real stuff: we may be up 11% from last month, but still DOWN 21.3% from June of 2008. When you fall hard the ups always look good. At current price levels there is still an 8.8 month supply in the new construction world
- Monday: Auction Number 1 from the treasury with 6 billion of 20 yr Inflation indexed securities. Adjustable to inflation has been well received this year, so this auction should go well, it is also a fairly small auction. When the auction started at 1pm I noticed the Mortgage market flatten out, so I assume it is going well.
- Tuesday, July 28: July Consumer Confidence expected 49.0, down a bit from last month. While you would think that the confidence number is an important one when 70% of our economy is consumer based, the reality is no one cares what we think, they only care about what we do, that is why retail sales numbers etc pull more weight than confidence numbers.
- Tuesday: Auction Number 2 with $42 Billion in 2 year notes. Geeze that's a big number! but the short term stuff seems to go fairly well and it is not anticipated to be an issue this week.
- Wednesday July 29: Happy Birthday to my son!
- Wednesday: June Durable Goods Orders expected -0.7% ex transportation 0.0%. This is not expected to move the markets at all.
- Wednesday: More Treasury activity with $39 Billion in 5 year notes. This one could go either way, a 5 yr commitment to an interest rate is a big deal if the investors expect the markets to improve. If they do they will want a higher yield which is a bad thing for mortgage rates. We are probably 50/50 on this one so I am not going to commit either way.
- Wednesday: Fed releases its Beige Book. The Beige book takes crunches together the 12 districts, while there are some bright spots there are some ugly numbers on the employment front. Since this is a bunch of reports that are already floating about it is not likely to surprise the markets.
- Thursday, July 30: Initial jobless claims expected up 16,000. While not a market mover especially with statistical issues working through the weekly reports, at these levels the report is supportive of steady rates.
- Thursday: Last Auction of the week with $28 Billion in 7 year notes. Cut and paste the 5 year notes here! This one could go either way as well, if well bid it will be a good thing for rates, if it is a poorly bid auction we will see mortgage rates climb in sympathy. 5's and 7's are very similar to a 30 year mortgage in terms of life expectancy... so they need to be watched carefully.
- FridayJuly 31: (Where the heck did this summer go??? August already?) First Estimate of second Quarter GDP is expected -1.5%. This is the most revised number in economic reporting and this is just phase one of the report. BUT... (always a but!) The markets expect to see the down turn moderating, thus the minus 1.5, with that number or a weaker number it should be good news for rates, if we see a -1.4 it can be bad news. I still think it will be revised so many times in the next few months that today's number will not be as important as the Treasury Auctions this week.
Well, If I wasn't clear enough earlier, the Auctions are the Biggie's of the week. The Excess supply along with the insecurity of how well bid they will be (especially the 5 and 7 yr) is enough to put a knot in any bond traders stomach. I expect this week to be a bumpy one, but I would not be surprised to have similar results to last week with a scary ride pulling right back into the same station it left from.
Have a great week!
Rob
Mortgage Banker
www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf
(732)223-1630 x102
Since 1987 I have been helping my clients fulfill their dream of home ownership!
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