Mortgage Market Review - 12/28/09

This Morning…Monday, December 28, 2009:
There are no economic reports today, but interest rates are still continuing their slide from last Thursday. There is a Treasury auction today. Many investors will be closely eyeing demand as interest rates are climbing ahead of any Fed moves to tighten. As the dollar improves, there is concern that foreign central bank demand will abate and that higher rates will be demanded.

Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. The bond market took a beating as stocks surged despite mixed data. Existing home sales in November rose a surprising 7.4%. However, revised gross domestic product figures showed the economy only grew 2.2%, which was weaker than the expected 2.8% mark. Personal income and outlays data came in weaker than expected helping a bit. Unfortunately, the thin trading conditions magnified the earlier losses and made it difficult to recover. For the week interest rates rose by about ¼ to 3/8%.

This Week:
This week, of course, is shortened by the holiday on Friday, but prior to that we have a Treasury auction to get through. If foreign demand falters we will likely see mortgage interest rates head higher. The bond market will close early Thursday in advance of the New Year’s Holiday Friday. The scheduled economic news is pretty light, with the S&P/Case-Shiller price index and Consumer Confidence tomorrow, and the Chicago Purchasing Manager’s Survey on Wednesday. The shortened trading week may result in some market volatility coupled with thin trading conditions likely.

EconomicIndicator
2-year Treasury Note Auction
Monday, Dec. 28,1:00 pm, et
None
Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Consumer Confidence
Tuesday, Dec. 29,10:00 am, et
49.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
5-year Treasury Note Auction
Tuesday, Dec. 29,1:00 pm, et
None
Important. $46 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
7-year Treasury Note Auction
Wednesday, Dec. 30,1:00 pm, et
None
Important. $32 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, Dec. 31,8:30 am, et
470K
Moderately Important. An indication of employment. Higher than expected claims may help rates improve.
New Years Day
Friday, Jan. 1
None
Important. Thin trading conditions and a shortened trading week could result in significant market volatility.

Market Forecast:
This week’s Consumer Confidence release will be eagerly anticipated. It is significant in that it provides a precursor into consumers’ willingness to spend in the months ahead. Look for any variation from estimates to cause mortgage interest rate volatility. Signs of eroding consumer confidence could lead to improvements in mortgage interest rates. However, stronger than expected figures could spike rates higher. With mortgage interest rates relatively low, capitalizing on current levels is recommended to protect against future volatility. Remember, mortgage interest rates tend to trend lower slowly, while increases tend to occur quickly. A cautious approach is necessary to protect from future market volatility.

Some Humor: (I had one more Christmas joke)
There was a man who worked for the Post Office whose job was to process all the mail that had illegible addresses. One day, a letter came addressed in a shaky handwriting to God with no actual address. He thought he should open it to see what it was about.
The letter read: Dear God, I am an 83 year old widow, living on a very small pension. Yesterday someone stole my purse. It had $100 in it, which was all the money I had until my next pension payment.
Next Sunday is Christmas, and I had invited two of my friends over for dinner. Without that money, I have nothing to buy food with, have no family to turn to, and you are my only hope. Can you please help me? Sincerely, Edna.
The postal worker was touched. He showed the letter to all the other workers. Each one dug into his or her wallet and came up with a few dollars.
By the time he made the rounds, he had collected $96, which they put into an envelope and sent to the woman.
The rest of the day, all the workers felt a warm glow thinking of Edna and the dinner she would be able to share with her friends.Christmas came and went.
A few days later, another letter came from the same old lady to God. All the workers gathered around while the letter was opened.
It read:
Dear God, How can I ever thank you enough for what you did for me? Because of your gift of love, I was able to fix a glorious dinner for my friends. We had a very nice day and I told my friends of your wonderful gift. By the way, there was $4 missing. I think it might have been those *&^%’s at the post office.
Sincerely, Edna.

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.