Mortgage Rates and What May Move Them This Week: January 24, 2011

 

As anticipated last weeks movement in rates took it's cues from the stock market more than anything else. We had a pretty big loss in Fannies of 22/32nds last week which translates into another week of higher interest rates. I just took a quick look at the DOW today, and it looks like we might be Flirting with a $12,000 Dow soon.... I am not sure if that will cause a bigger rally in stocks, or a scenario for profit taking. A Stock Rally would lead to higher rates, while profit taking in Stocks might help interest rates improve a bit.

As we close out the first Month of 2011 this week we have a very busy calendar to keep an eye on, here is what we have in store for the week:

• Monday January 24: A no news day with a bouncy market. Fannies have been trading in a VERY tight range all day, a little up one hour, a little down the next, my guess is it is awaiting word from the FED.
• TuesdayJanuary 25: FOMC Meeting begins: This is the first day of the 2 day meeting of the FED.
• Tuesday: January Consumer Confidence is anticipated to be down a touch to 54.3. While the market typically doesn't care what the consumer thinks (by far it worries more about what we do than think) this is still a number to keep an eye on in case we get shocked by a stronger than anticipated number, it does have the potential to move rates up a touch.
• Tuesday: Treasury auction of $35 billion in 2 year notes. The short term "stuff" has been well bid in the past, so it is likely to continue moving forward. This should be supportive of steady rates.
• Wednesday January 26: December New Home Sales expected up 3.4%. Up a touch from previous months, but still not a stellar report so it is not likely to have any upward pressure on rates.
• Wednesday: Auction #2 with $35 Billion in 5 year notes. I always wonder what they were thinking, trying to hold an auction an hour before a Fed Announcement? This one could be bad, if it is not well bid it WILL cause upward pressure on mortgage rates.
• Wednesday: 2:15pm, Fed releases it's post meeting statement. The anticipation here is that they will mention a slight improvement in the economy, but leave policy unchanged. Since we already had a run up in rates, it is not a likely market mover unless they drop a bomb, which is HIGHLY unlikely.
• Thursday January 27: Initial Jobless claims expected up 1,000 to 405,000. Holiday factors are still in the numbers making this a less than reliable report, so it is not a likely mover ... YET.
• Thursday: December Durable Goods expected +1.5% Ex Transportation, +0.8%. As reported we will likely see stable trading, but stronger than expected could push rates higher.
• Thursday: last Auction of the week with $27 Billion in 7 year notes. With yields higher and the FED meeting out of the way I hope to see this auction be well bid. This one should be supportive of stable rates.
• FridayJanuary 28: First estimate of 4th QtrGDP expected +3.6%. Keep in mind that this report looks backwards almost 4 months at this point, so it is a bit of old news that is not a likely market mover, even if off by a few 1/10ths.
• Friday: First Quarter Employment cost index expected +0.5%. Higher wages can equal higher prices and inflation, but at the levels we have now the worry of inflation is not even in the thoughts of investors, so this should be supportive of steady rates.
• MondayJanuary 31: December Personal income expected +0.4% Spending +0.5% and PCE +0.1%. The Consumption piece is the key here (PCE).  As long as that stays low it will be supportive of steady rates.

That's a pretty long list of info for the markets to chew on this week. I do think the 2 biggies will be the Fed announcement on Wednesday along with the excess supply in the auctions. I think trading will be in a tight range ahead of Wednesday's announcement.  My gut says this will probably be a fairly flat week but there are enough butterflies to cause some indigestion along the way.

With Prices low, Interest rates just above there bottom and an improving economy it is a great time to consider jumping into a new home now before rates and prices go up. The only time I would advise a qualified buyer against buying in today's market is if they felt they would only stay in their home for the very short term. 

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.

 

 

 

 NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey, Toms River NJ 08753, Toms River NJ 08755,  Brick NJ 08723, Brick NJ 08724 Mortgages in Ocean County NJ, Mortgages in Monmouth County NJ, Jackson NJ 08527, Howell NJ 07731