This weeks calendar has a host of information being released along with 3 Treasury auctions, some FED testimony and The Toxic Asset factor.
Here is what we have for the week:
- Monday March 23: Existing Home Sales for February, expected down 0.8%. The market had a bit of a surprise this morning as this number came out and was MUCH more of a positive number than anticipated. (up 5.1%). It ultimately had little effect on the market which has remained only 2/32's above or below positive the entire day. The reason? Because the prices on these homes fell 15.5%, so while there was some good news, there was enough bad to balance out the good.
- Tuesday: Fed Chair Bernake testifies to the House Financial Services Committee. He is there to be grilled about the Fed Bail out of AIG and the retention bonuses. This will most likely be nothing more than political grandstanding and not likely to have any substance that will move the mortgage world.
- Tuesday: Treasury Auctions $40 Billion 2 year notes. Expected to be well bid, especially since the Fed is also there to buy to keep rates at reasonable levels. With the Fed as a buyer it is not likely to be a market mover.
- Wednesday: February Durable Goods, expected -2.0%. most likely a ho-hum event as it has been widely anticipated that that this would be a weak number.
- Wednesday: February new Home Sales, Expected -2.9%. As forecast this number will be the lowest since 1963. Not likely to be a market mover.
- Wednesday: Treasury auctions $34 Billion 5 year notes. While we have the Fed there to step in and bid to keep yields low, a poorly bid auction could be a bad news signal to the mortgage market. If bidding goes well with out the Fed stepping in it is supportive of lower rates, but the Fed stepping in as a bidder in any major sense will be bad for rates.
- Thursday: Initial Jobless claims, expected up 4,000. Once again this is not a number that is expected to move the market, especially since the Jobs report will be released on April 3.
- Thursday: Final Revision of fourth quarter GDP, expected -6.5%. The weak number is already priced in, and it is stale data. we are almost done with the 1st quarter after all!
- Thursday: Treasury back in action with $24 Billion of 7 year notes to sell. See the notes for the 5 year auction... Cant really say more than that!
- Friday: February Personal Income, Spending and PCE index, expected -0.1%, +0.2% and +0.2%. The PCE is the FEDs favorite, since it truly shows what consumers are doing vs what they are feeling. (PCE = Personal Consumption). But as forecast this bucket of numbers is not likely to move mortgage rates.
The biggie of the week is not even on the official calendar, it is the Obama Administration's program that is anticipated to be announced this week on what to do with the bad loans banks are holding. These so called "toxic assets" are clogging balance sheets and banks are not willing to lend (mostly on the corporate side), if the plan clearly lays out a way to free up the lending it will help business grow pushing stocks higher and the credit markets lower. Lower prices on Credit instruments equate to higher yields. If the plan is disappointing to the stock markets, it will likely push stocks down and the flight to quality into the credit markets will push prices up and yields down. To date, Treasury Secretary Geithner has not exactly been clear, and the markets have not been happy with his lack of clarity.
In my humble opinion, I think we need to see the Resolution Trust come back into play. back in the 80's S&L crisis the government would step in and take over troubled banks... shake out the bad and hand them over to a healthy bank. My very first job in the mortgage industry was with one of these S&L's that were taken over, it was not much fun for me, but for account holders it was a seem less step, and historically speaking Uncle Sam only held the banks for a few months at a time while they were cleaned up and handed off.
For this week, we may see slightly lower rates by the end of the week if things fall into play as anticipated, but the wild card may push things the other way. With rates bouncing around in the low (almost never before seen territory) it is not likely we will see significantly lower rates, but time will tell!
Have a great week!
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