Mortgage Market Review - 10/5/09

This Morning…Monday, October 5, 2009:
The bond and mortgage markets opened a little better this morning after a volatile session last Friday on the larger decline in Sept job losses than expected. At 9:30 the Dow is up +21 and mortgage prices are stable. We can rest up this week, given that the only scheduled news of substance is not until Thursday with Jobless Claims, and some trade figures on Thursday and Friday.

Last Week:
Last week was a volatile but good week for the rate markets. Mortgage rates fell to their lowest levels since last April. Treasuries continued in demand from foreign central banks and domestic investors; likely some of the buying is associated with new concerns that the economy isn't on the fast track of recovery as markets were expecting recently. Job losses in Sept were a third higher than markets were expecting, increasing the fears that unemployment is not close to bottoming. Consumer confidence came in weaker than expected and the ADP employment release showed more job losses than expected. The employment report Friday morning confirmed the ADP payroll data. With inflation fears waning and increasing uncertainty have helped to make interest rates decline in the past two weeks.

This Week:
Confidence for a quick economic recovery has been shaken a little but most analysts expect investors will step up to buy securities on any major dip in the market. There a just three first tier economic releases this week; Monday the Sept ISM services sector report, Wednesday the August consumer credit report, and on Thursday weekly jobless claims are expected be down from last week.

EconomicIndicator
3-year Treasury Note Auction
Tuesday, Oct. 6,1:30 pm, et
None
Important. $39 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction
Wednesday, Oct. 7,1:30 pm, et
None
Important. $20 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Consumer Credit
Wednesday, Oct. 7,2:00 pm, et
Down $9.5 billion
Low importance. A significantly larger than expected figure may lead to lower mortgage interest rates.
Weekly Jobless Claims
Thursday, Oct. 8,8:30 am, et
None
Moderately Important. A measure of employment. Job weakness may help rates improve.
30-year Treasury Bond Auction
Thursday, Oct. 9,1:30 pm, et
None
Important. $12 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Friday, Oct. 9,8:30 am, et
$33 billion deficit
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.

Market Forecast:
This week the economic calendar has little to chew on, but what there is significant in the running debate on the future of the economy. Another round of Treasury auctions hits the market this week. Solid foreign demand will help rates remain the same or improve slightly. Signs that foreign demand is diminishing will not bode well for mortgage interest rates. Weekly jobless claims set for release Thursday will carry a bit more weight than usual due to the lack of other economic data.

Some Humor:
Two women were out for a Saturday stroll. One had a Doberman and the other, a Chihuahua. As they walked down the street, the one with the Doberman said to her friend, "Let's go over to that bar for a drink."
The lady with the Chihuahua said, "We can't go in there. We've got the dogs with us."
The one with the Doberman said, "Just watch, and do as I do."
They walked over to the bar and the one with the Doberman put on a pair of dark glasses and started to walk in. The bouncer at the door said, "Sorry, lady, no pets allowed."
The woman with the Doberman said, "You don't understand. This is my seeing-eye dog."
The bouncer said, "A Doberman?"
The woman said, "Yes, they're using them now. They're very good."
The bouncer said, "OK, come on in."
The lady with the Chihuahua thought that convincing him that a Chihuahua was a seeing-eye dog, may be a bit more difficult, but thought, "What the heck," so she put on her dark glasses and started to walk in.
Once again the bouncer said, "Sorry, lady, no pets allowed."
The woman said, "You don't understand. This is my seeing-eye dog."
The bouncer said, "A Chihuahua?"
The woman said indignantly, "A Chihuahua? You've got to be kidding me, they gave me a Chihuahua???!

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.