Mortgage Marketr Review - 11/23/09

This Morning…Monday, November 23, 2009:
At 10:00 Oct existing home sales were up 10.1% which was much higher than expected. 1st time homebuyers accounted for 33% of the sales. Sales according to the data this morning are up 23.5% from October, 2008. There has been no immediate reaction to the 10:00 report in the mortgage markets, but the DJIA jumped about 20 points from pre report levels.

Last Week:
Mortgage rates lowered slightly last week. Mixed data resulted in up and down trading but within a relatively narrow range. Things were going well the first part of the week with rates improving until Wednesday when the consumer price index and the core came in higher than expected. Inflation, real or perceived, erodes the value of fixed income investments causing prices to fall and rates to rise. We saw some of that mid-week. In FED Chief Bernanke's speech on Monday to the NY Economics Club he reiterated he would keep rates low; essentially admitted he has little insight as to how the economic recovery will unfold and remarked "The best thing we can say about the labor market right now is that it may be getting worse more slowly." In layman speak, he isn't sure the unemployment situation is at its bottom.

This Week:
There is a decent amount of economic data to be released this week. Today is Existing Home Sales (see information above). Tomorrow we have GDP, Consumer Confidence, and the FOMC Minutes from the November 4th Fed meeting. Wednesday, when everyone would rather be somewhere else, we have Durable Goods Orders, Personal Income, Core PCE inflation, New Home Sales, and Consumer Sentiment. Add on the Treasury auctions today through Wednesday, and many traders off for the week, and we have a recipe for volatility.

EconomicIndicator
Existing Home Sales
Monday, Nov. 23,10:00 am, et
Down 0.5%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Preliminary 3Q GDP
Tuesday, Nov. 24,8:30 am, et
Up 3.0%
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Consumer Confidence
Tuesday, Nov. 24,10:00 am, et
47.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Personal Income and Outlays
Wednesday, Nov. 25,8:30 am, et
Up 0.2%,Up 0.5%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Inflation
Wednesday, Nov. 25,8:30 am, et
Up 0.1%
Important. A measure of price increases for all domestic personal consumption. Weakness may help rates improve.
Durable Goods Orders
Wednesday, Nov. 25,8:30 am, et
Up 0.5%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Wednesday, Nov. 25,10:00 am, et
66.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales
Wednesday, Nov. 25,10:00 am, et
Up 2.9%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.

Market Forecast:
Look for increased volatility this week with thin volume. There are a lot of reports due in a shortened week. Plain and simple.

Some Humor:
Recently I received a parrot as a gift. The parrot had a bad attitude and an even worse vocabulary. Every word out of the bird's mouth was rude, obnoxious and laced with profanity.
I tried and tried to change the bird's attitude by consistently saying only polite words, playing soft music and anything else I could think of to "clean up" the bird's vocabulary.
Finally, I was fed up and I yelled at the parrot.
The parrot yelled back.I shook the parrot and the parrot got angrier and even ruder. So, in desperation, I threw up my hands, grabbed the bird and put him in the freezer.
For a few minutes the parrot squawked and kicked and screamed.
Then suddenly there was total quiet.Not a peep was heard for over a minute.
Fearing that I'd hurt the parrot, I quickly opened the door to the freezer.
The parrot calmly stepped out onto my outstretched arms and said, "I believe I may have offended you with my rude language and actions. I'm sincerely remorseful for my inappropriate transgressions and I fully intend to do everything I can to correct my rude and unforgivable behavior."I was stunned at the change in the bird's attitude.
As I was about to ask the parrot what had made such a dramatic change in his behavior, the bird continued,
"May I ask what the turkey did?"

Once again…I hope you have a wonderful Thanksgiving!


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