Mortgage Rates and What May Move Them This Week: August 30, 2010

 

 Last week spent most of the week FIRMLY in positive territory only to see most of the weeks gains washed away by a sell off on Friday. By time the dust settled at the end of the week Fannies managed to hold onto meager gains of 6/32nds.

This week begins a new month and with a new month comes some fresh data. To further confuse things this fresh data comes ahead of a holiday weekend.  Here is this week's calendar:

• MondayAugust 30: July personal income expected +0.3% Spending +0.3% and PCE+0.1%. The true numbers ended up with Income +0.2% spending up 0.4% and PCE in line at +0.1%. This news was taken well by the credit markets at least, and we saw a big gain on the day of 18/32nds.
• Tuesday August 31: August Consumer Confidence expected 50.5%. The Fed and the markets are more concerned with what the consumer is doing VS what they are thinking. Because of this the confidence number is typically not a market mover.
• Tuesday: Minutes of August 10 Fed Meeting. This is anticipated to a non event and the FOMC will probably not be all that excited about near term prospects for a recovery.
• WednesdaySeptember 1: Where the heck did the summer go? August institute of Supply Management (Manufacturing) expected 53.0. If accurate this would be the 4th monthly decline. As forecast this is supportive of steady rates. If this number falls more than expected - it will be a recipe for a sell off of stocks and a rally in the credit markets to help keep rates low.
• Thursday September 2: Initial Jobless Claims expected up 2,000 at 475,000. This report has been painfully stuck above 400k and until we see improvement here it is supportive of steady rates.
• Thursday: Revised second quarter productivity expected to be -1.9% and labor costs +1.2. Labor costs here will be the key, a bump up as anticipated could be bad news for rates.
• Thursday: July Factory Orders expected +0.4%. July is pretty old news at this point and is not likely to be a market mover.
• Friday September 3: Happy Birthday (to me!).
• Friday: Employment report with non farm pay roll anticipated -99,000,  Jobless rate 9.6% and Average hourly earnings +0.1%. As forecast this is supportive of steady rates. If we see a weaker report it is likely to see some market improvement.
• Friday: August Institute of Supply Management (Service Sector) expected 53.5%. The markets have already priced in this anticipated drop in the service sector so it is not a likely market mover unless we are surprised by a much different number
• Monday: its Labor Day, so the markets are closed

As with any holiday weekend: Trading activity winds down quickly as the week comes to a close. This is the first labor day weekend I can remember where the market is not scheduled to close early.  Lite volume can amplify markets and a shock in one of Friday's numbers has the potential to swing the market greatly, especially in a sell off where rates are climbing fast.  Friday itself is the wild card of the week, and added to that is the typical Biggie of The month (the employment report)

As always we need to watch stocks for improvement as well. Run ups in stock prices will almost definitely steal from the credit markets causing rates to creep up as well. I think this week we need to be careful as we get close to Friday and minimize risk by locking prior to. 

Have a great week!

Rob

Robert Rauf

Mortgage Banker

NMLS ID# 248937

www.RobertRaufHomeLoans.com   or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

RRauf@REMN.com

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

Real Estate Mortgage Network Inc.

 

 

 

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