In last week's Tug-O-War, Stocks won and the credit markets lost. By the end of the day on Friday Fannies lost 22/32nds for the week, the biggest lost since February 11th. Of course as a trade off we have the Dow WELL over $12,000 again.... and if you have been keeping up with my reports, you will be well aware that Good news is BAD news for interest rates.
This week has a good mix of auctions and data, We have $99 Billion in treasuries to be auctioned off this week, here is the calendar.
- MondayMarch 28: February personal income anticipatedat +0.4% Spending +0.6% and Consumption +0.2%. The actual numbers came in a bit mixed with income +0.3%, spending +0.7% and PCE +0.2%. All together this was pretty neutral since the most important piece here was the PCEindex, and that was in line with expectations
- Monday: Auction # 1 with $35 Billion in 2 year notes. Ahead of the auction the market was trading off a bit, and ever since the auction we have seen Fannies trading slightly positive to unchanged, all together today is a market neutral event.
- Tuesday, March 29th: Auction # 2 with $35 Billion in 5 year notes. Overall I think this auction will move along without any effect on the mortgage market, There is still enough world "fun" to absorb the supply so we are likely to see a well bid auction. There is a small chance that this is not well bid, so at best this will be a market neutral event, so rates flat... but if it is poorly bid we could see mortgage rates climb a bit here... Be cautious here mid day!
- WednesdayMarch 30th: Auction # 3 with$29 Billion in 7 year notes. Much the same as with the 7yr, I wouldn't worry to much about this auction, but it does have a greater chance of putting upwards pressure on rates than helping rates move lower. The most likely outcome is a relatively flat day for mortgages on the news.
- Thursday, March 31st: Good By March, and where the heck did the first quarter go? Initial Jobless claims expected down 2,000 to 380,000. Finally a trend in the right direction... While the weekly reports have been showing good news, it is not likely we will see the market react on these numbers ahead of Friday's Report.
- Thursday: February Factory orders expected +0.5%. It would that a significantly larger number for this to have any negative impact on mortgage rates, if we see a match to the expected report this will likely win the snoozer award for the week.
- Friday, April 1: APRIL FOOLS DAY... and an employment report; Non Farm Payrolls expected +188,000 with the Jobless Rate at 8.9% and average hourly earnings +0.2%. The consensus estimate is already priced into the market so it will take a noticeably stronger number to move rates up, if we see 200k jobs, or a significantly better than 8.9% we will probably see a sell off which will lead us on the path towards higher rates, and it could be a quick and painful trip back up.
- Friday: March Institute of Supply Management, Manufacturing index, expected 61.0% While this guesstimate is down a bit from the previous month, it is likely to be overshadowed by the morning's employment data and is not a likely market mover.
This weeks biggie is likely to be Friday's employment report, the biggest swings I have ever seen usually are produced by stronger than anticipate employment data, so stay on your toes here. The weekly reports suggest we will see gains, but it is not likely we will see head spinning increases in the payroll numbers, but it could happen. Once we get through the auctions all eyes will be looking for jobs news.
World news could still toss a wrench in the works, but I don'tthink we will see any big problems this week, I see this week more as a dust settling "been there, done that" sort of week for world issues and our markets. Last weeks setting down of the stock market seems to mirror that opinion of mine, but we both could be wrong if the markets get surprised by more world turmoil... In my humble opinion: I think we have enough turmoil for a decade, let alone a first quarter... So lets hope for some dust to settle and see us move on to a sense of normalcy in the markets. All that should lead us to a bouncy week that ends up at the end of the day Friday pretty darn near unchanged... at least that is my guess for this weeks mortgage moves!
Have a great week.
Rob
Mortgage Banker
NMLS ID# 248937
www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf
(732)223-1630 x102
Since 1987 I have been helping my clients fulfill their dream of home ownership!
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