It has been missing for quite some time as I transitioned Florida Mortgage Daily into Mortgage Rate Forecaster™, but the Mortgage Market Weekly is back, and is now going to be an email newsletter, so don’t forget to sign up for it on Mortgage Rate Forecaster™. I have received many inquiries as to what happened and when it would return, so here it is. Keep in mind that I go into greater depth in Mortgage Market Weekly, my weekly BlogTalkRadio show, not to mention my daily mortgage rate forecasts, now found exclusively at Mortgage Rate Forecaster™.
WEEK IN REVIEW
Last week was a holiday-shortened week which always adds a little volatility to the mix, not to mention its moves become questionable at times due to lower trading volumes. Last week certainly did not surprise in this matter, especially on Wednesday when the bulk of economic data was released. European Woes and the mounting Korean crisis are the news headlines shaping the markets, and will continue to do so this week. Last week, however, had some major data plays as well, especially in regards to inflation.
The week had started off quiet, with just Treasury Auctions paving the way. The weekly 3-month and 6-month T-Bill auctions continue to see strong and steady results. Adding to the mix was the 2-year T-Note auction, also seeing strong results as the week began. Tuesday started off nicely, but data and auctions began weighing on the markets, even more than the boost they got from overseas. GDP was revised to 2.5%, up from 2.4%, and that signals a better economy than previously thought. The GDP Price index was at 2.3%, so no impact here. Existing Home Sales then threw a curveball, coming in at 4.43M, down 2.2% month/month and bringing the year/year to –25.9%. Then the 5-year T-Note auction saw poor results and mortgage backed securities prices just could not hold on. The final round was Wednesday in regards to economic data and the continued losses. Durable Goods Orders came in at were below expectations, even after removing transportation, Personal Income and Consumer Spending were near expectations and Core PCE (Fed’s favorite gauge on inflation) was 0.0%, bringing its year/year to 0.9% which is the lowest on record. Consumer Sentiment was better than expected, but New Home Sales was just 283K, with the median price dropping 13.9% to $194,900 and the average price dropping 8.0% to $248,200. Finally, the 7-year T-Note Auction saw disappointing results as well and MBS prices continued their fall. Friday was a shortened trading day and no economic data, allowing a rebound to take place. And keeping with the Thanksgiving holiday, there may very well be something to be thankful for mortgage rates.
FORECAST FOR THE WEEK AHEAD
This week will certainly not be a quiet one as we have plenty of major economic reports on the docket, culminating with the monthly Employment Situation report, aka the Jobs Report or “Jobs Jamboree”. Today is a quiet one, but don’t let the calm fool you as it may just be the calm before the storm. We will be looking at the Chicago PMI, Consumer Confidence and the S&P Case-Shiller HPI tomorrow. Wednesday will bring the ADP Employment Report and the ISM Manufacturing Index, not to mention the Beige Book. Thursday houses Jobless Claims, and numerous Treasury Announcements of their upcoming auctions. Friday is the most watched day of the month as the Employment Situation report houses several reports, though all eyes tend to focus on just two, Nonfarm Payrolls and the Unemployment Rate. We will also get a look at the ISM Non-Manufacturing Index, which is also known as the ISM Services Index.
As you can see, there will be plenty of data plays to shape the outlook for mortgage rates, not to mention the drama overseas. When we look at the charts, we have an interesting dilemma as last week was holiday-shortened and we must factor that in. This week will certainly solidify the outlook, for better or worse, so it will be important to be watching the daily forecasts as the week unfolds. Right now, mortgage bonds are up and back within their recent sideways trading pattern, but just barely. They are currently battling their 10-day moving average, which has been winning thus far. So, the question will be is this move a corrective move, a move to maintain the status quo (sideways pattern), or an attempt to break free and try to push higher and send mortgage rates lower again? Well, I have to reserve that outlook to my listeners and, of course, the daily outlooks for my clients.
I hope you all enjoy the resumption of my Mortgage Market Weekly reports. If you do, spread the word that they are here and anyone can sign up for them as an email newsletter over at Mortgage Rate Forecaster™. I look forward to assisting you all in having a very successful 2011 and don’t forget to join me on Mortgage Market Weekly!