2009 ended on extreme volatility for mortgage rates and mirrored the broader market throughout the year. Although home loan rates fell to the lowest rates ever in 2009, mortgage rates have trended upward since mid-November. There is much anticipation for higher rates ahead as the Federal Reserve begins to back out of the purchase of mortgage backed securities at the end of the 1st quarter.
So what's in store for the first trading week of the 2010?
Monday's first economic report will be the December's Institute of Supply Management (ISM) Manufacturing Index. It is anticipated for a reading of 54.0 which would indicate continued strengthening as manufacturing executives positive sentiment prevails.
November's Factory Orders will be released on Tuesday which contains both durable (items that last more than 3 years) and non-durable goods. This report is not a major technical report but will impact the psychology of traders if the report continues to show monthly growth. Analysts expect to see an increase of 0.5%.
December's Pending Home Sales will also be released Tuesday and is expected to show a monthly decline. Keep an eye out for the headline number as the mass media will be quick to gravitate to it for over analysis.
Wednesday could or could not be a volatile based on the release of the December FOMC Minutes. There should be no surprises, but then again it will come down to the exact words and the banter provided by the voting members.
The most important report of the week and almost every month will come on Friday with the release of the December Employment. Forecasts are in for the national unemployment rate to increase by 0.1% to 10.1%. It has been said that the US economy has to produce a minimum of 125,000 jobs a month just to stay up with population growth. Whatever the number, the employment numbers will surely provide direction for the markets not only on Friday, but also for weeks to come.
Quick general rule of thumb when keeping an eye on mortgage rates.
- Weak Economic News: $$$ from Stocks --> Bonds = Home Loan Rates Improve
- Strong Economic News: $$$ from Bonds --> Stocks = Home Loan Rates Worsen
Want to see what other economic reports might impact home buyers in the coming week? Stop by and check out the Mortgage Market Update Provided to You Exclusively by The Barath Group.
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