Mortgage Rates, and what may move them this week: April 26, 2010

Reblogger Catherine Chaudemanche - Edison & Central NJ
Real Estate Agent with Metuchen Keller Williams Elite Realty / Middlesex County, NJ

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Original content by Robert Rauf NMLS 248937

 This Week's Economic Calendar

 Last week was a good mix of confusion that ended with Fannies losing 13/32nds. Much of this was due to action in stocks, but there was some good news that caused it as well. There was a huge jump in new home sales, the Forecast was for an increase of 3.9% and the Real number was +26.9%... HUGE news, (or was it?)  if you dig into that number, and realize that home sales have been in the toilet, any increase looks huge... Also 45% of that number was for homes under $200,000, only 13% was for homes above $400k. So it is a bit of a mixed bag number. 

This week has quite a mix of data, auctions and a Fed meeting to confuse the market. Here is the Calendar:

  • Monday, April 26: Treasury Auction # 1 for the week with $11Billion in 5 yr notes. The good news here is that these are inflation indexed, so they typically go over pretty well with investors. As I type this we have lost some ground since this morning, and with stocks on the + side... so today is a pretty flat day for rates.
  • Monday: Happy Birthday Summer!
  • Tuesday, April 27: Day one of the Fed Open Market Committee Meeting.
  • Tuesday: April Consumer Confidence expected 53.5 vs last month's 52.5. Typically investors do not care what a consumer thinks, they care much more about what they are doing. But if the number comes in stronger than forecast it could be bad for rates
  • Tuesday: $44 Billion in 2 year notes being auctioned at 1pm. The short term "stuff" is typically gobbled up with strong investor demand, that being the assumption this should be supportive of steady rates.
  • Wednesday, April 28: Treasury auction of $42 Billion in 5 year notes. These are not inflation indexed as we saw on Monday. Keep an eye on this one being just an hour ahead of the Fed post meeting statement - if investors are being cautious ahead of the statement it could make for a poorly bid auction which would push rates up.
  • Wednesday: 2:15 PM, The Fed meeting ends and investors pour over the post meeting statement. We are expecting Fed funds to stay unchanged, and the comments to closely mirror previous statements that we will see rates stay low for "an extended period"  This will be supportive of steady rates unless the language changes. (More below)
  • Thursday April 29: Initial Jobless Claims expected down 9,000. This still puts us well over 400k at 445k on a week over week basis. If this number stays above 400k it is supportive of steady to possibly lower rates.
  • Thursday: Yup, another Treasury auction with $32 billion in 7 year notes. Yesterday's Fed meeting is key to this auction.  For this to be well bid we need the Fed to keep their language the same.
  • Friday, April 30: First Quarter Employment Cost index expected to be  +0.5%, matching last month's report. As reported this is supportive of steady rates.

Last week seemed to be directed by stocks, this week will most likely wait till Wednesday for any serious moves. If we see Bernake and crew change the language of their post meeting statement, drop a little hint that the economy is picking up steam faster than expected, or that they will raise rates sooner rather than later, this week could be a horrible one for rates. I doubt we will see that, but it is a possibility. For the most part I expect the Fed to be cautious with their words keeping the policy the same and that will be supportive of keeping rates near where they currently are, bouncing back and forth with the typical hic-ups we have come to expect.

Have a great week!


Robert Rauf

Mortgage Banker

NMLS ID# 248937   or my blog:

(732)223-1630 x102

Since 1987 I have been helping my clients fulfill their dream of home ownership!

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