Guess what the word is? Lock, lock, lock...
Over all Rates have stayed near all time lows and we can still lock in a 30yr fixed in the LOW 4's with no points for highly qualified buyers. The market did lose 7/32nds last week and if you take a peek at Freddie's weekly report, that was enough to see a noticeable pop on that weekly average, yet we are still at crazy low levels with affordable prices to match!
This week has a laundry list of info and auctions for the market to digest:
- Monday August 23rd: Auction $1 of the week with the Treasury selling $7 Billion in 30 year bonds. These were inflation based and the auction participation was great enough to make the Mortgage market happy and we currently are trading high enough to wipe out most of last week's losses.
- Tuesday August 24: July Existing Home Sales expected -10%. This is an ugly low number that is likely to support steady mortgage rates.
- Tuesday: Auction #2 with $37Billion in 2 year notes. As with past auctions, the shorter term notes have had pretty decent bids/participation and there is no reason to think this will be any different. This one is not likely to move mortgage rates in either direction.
- Wednesday August 25: July Durable Goods expected +3.0% excluding Transportation +0.5%. This one is up after a weak June report. It sounds strong and may influence rates to the up side, but only if it comes in higher than anticipated. Remember, good news is bad news for rates.
- Wednesday: July New Home Sales expected +3.0%. Weekly MBA reports continue to show weak applications for purchases. This is not a likely market mover.
- Wednesday: Auction #3 with $36 Billion in 5 year notes. While it is not likely this will be a big deal for the mortgage market, there is a slim chance that it will be poorly bid and if so it will hurt yields across the board in the credit markets, and when I say "hurt" I mean weakness in this auction may cause rates to climb a bit.
- Thursday, August 26: Initial jobless claims expected to be down 10k, with pretty big bump up to 490k. This is obviously going in the wrong direction, until we see job growth it will be difficult to get the economy rolling.
- Thursday: Another Auction with $27 Billion in 7 year notes. Some analysts don't think we need to worry about this one, but anytime we see BILLIONS in excess supply in a competing instrument I personally think we have to keep an eye on it. A 30yr loan doesn't have much more than a 7yr shelf life, so it is a very similar instrument. There is enough weakness in the economy that it should be a non event, but we should keep an eye out here.
- Thursday: My Daughter heads off to her first year of college, Where the heck did the past 18 years go???
- Friday August 27: Revised second quarter GDP expected +1.4%. This is a revision lower than previous and it is probably already priced into the market so it is not a likely mover of markets.
- Friday: Fed Chair speaking in Wyoming. When ever Bernake talks the market will listen. The real question: What the heck will he say? This will be the question until he starts speaking at 11am. Investors will be looking to see what the Fed may be hinting towards in terms of any additional stimulus packages.
This week has quite a bit of news, mostly projected to be bad, that the market is anticipating. So if any one of these comes in stronger than expected we may see a bit of a sell off that will drive prices down and yields up. This is especially true this week with the additional supply being pumped through the credit markets with the Auctions. As I have been typing on a regular basis the past month or so: Just lock the darn thing in and don't look back.... We will not see 30 year fixed rates in the 4's forever!
Have a great week!
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