Home > Blogs > Mick Rothblott > Mick's Mortgage Market Report

Mortgage Market In Review - 2/28/2010

By Mick Rothblott

Mortgage and Lending with Mortgages By Mick

February 28, 2010 01:21 PM

MARKET COMMENT

Mortgage bond prices rebounded last week pushing mortgage interest rates lower. The majority of the data came in bond friendly. Weaker than expected consumer confidence data Tuesday helped mortgage interest rates improve. The Treasury auctions showed decent foreign demand. The gross domestic product price deflator component showed a smaller price increase than expected while the consumer spending component also came in weaker than expected. Existing home sales fell a surprising 7.1%, considerably weaker than the expected 1% increase. Rates fell about 3/4 of a discount point for the week.

The employment report Friday morning will take center stage this week. Until then, look for the PCE inflation data to set the tone for the beginning of the week and the ADP employment report to set the tone for the mid portion of the week.

LOOKING AHEAD

Economic Indicator	Release Date and Time	Consensus Estimate	Analysis
Personal Income and Outlays	Monday, March 1, 8:30 am, et	Income up 0.4%, Outlays up 0.4%	Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates.
PCE Price Index	Monday, March 1, 8:30 am, et	Up 0.1%	Important. An indication of inflationary pressures. Decreases may lead to lower rates.
Construction Spending	Monday, March 1, 10:00 am, et	Down 0.6%	Low importance. An indication of economic strength. A significant decrease may lead to lower rates.
ISM Index	Monday, March 1, 10:00 am, et	58.0	Important. A measure of manufacturer sentiment. A large decline may lead to lower mortgage rates.
ADP Employment	Wednesday, March 3, 8:30 am, et	-15k	Important. An indication of employment. Weakness may bring lower rates.
Fed “Beige Book”	Wednesday, March 3, 2:00 pm, et	None	Important. This Fed report details currenteconomic conditions across the US. Signs of weakness may lead to lower rates.
Revised Q4 Productivity	Thursday, March 4, 8:30 am, et	Up 6.2%	Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Factory Orders	Thursday, March 4, 10:00 am, et	Up 1.2%	Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Employment	Friday, March 5, 8:30 am, et	Unemp. @ 9.8%, Payrolls -25k	Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Consumer Credit	Friday, March 5, 3:00 pm, et	Down $4.1 billion	Low importance. A significantly large increase may lead to lower mortgage interest rates.

FUNDAMENTAL WEEK

The abundance of fundamental data this week provides a good opportunity for mortgages to improve. If the data shows weakness in the economy with little or no inflationary pressures then it is possible for mortgage bonds to rally resulting in mortgage interest rate decreases. However, if the data shows that the economy is rebounding or any significant signs of inflation, mortgage bonds may fall pushing mortgage interest rates higher.

Mortgage interest rates remain favorable. Now is a great time to avoid the uncertainty surrounding continued market volatility.