MetroDenverRealty.com

This weeks economic news:

Monday:

• No relevant economic news scheduled for release.

Tuesday:

• November’s Goods and Services Trade Balance report showed a larger than expected $36.4 billion trade deficit. Analysts were expecting to see a $34.5 billion deficit, but this data is the week’s least important and does not carry the influence to heavily affect mortgage pricing. Therefore, its impact on today’s rates has been minimal.
• This week also kicks off the quarterly earnings season. Alcoa, who is usually the first Dow component company to report each quarter, gave investors disappointing results after the close yesterday. This has led to concern about results from other big-name companies in the coming weeks. That has some investors shifting funds from stocks (expecting stock prices to fall further as more disappointing results are announced) into bonds as a safe-haven. This is good news for the bond market, at least temporarily and could lead to further improvements in mortgage rates if the pattern continues.

Wednesday:

• Today’s relevant economic news will come from the Federal Reserve this afternoon when they post their Beige Book report. This report details economic conditions throughout the U.S. by region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises.
• Also on tap today is the 10-year Treasury Note auction. If there is a strong demand for them during the sale, we should see the bond market move higher during afternoon trading. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would result in upward revisions to mortgage rates.

Thursday:

• The Labor Department reported that December’s Consumer Price Index (CPI) rose 0.1% and that the more important core data reading increased 0.1%. The core data matched forecasts but the overall reading was slightly lower than expectations. The news is somewhat positive for bonds because it means inflationary pressures remained subdued at the consumer level of the economy.
• December’s Industrial Production report  revealed a 0.6% increase in out at U.S. factories, mines and utilities. That matched forecasts, indicating moderate growth in the manufacturing sector.
• The University of Michigan’s Index of Consumer Sentiment for December came in at 72.8, falling short of the 73.8 that was expected. This means that consumers were less optimistic about their own financial situations than many had thought. That can be considered favorable news for the bond market because waning confidence usually translates into less consumer spending and weaker economic activity.

 Morgage Commentary 2009

This weeks economic news:

Tuesday:August’s Consumer Confidence Index increased to 54.1, exceeding forecast, which is negative for bonds and mortgage rates.

 Wednesday

• The Commerce Department’s reported that July’s Durable Goods Orders increased 4.9%, beating expectations, which is negative for bonds and mortgage rates.
• July’s New Home Sales data increased 9.6%, greatly exceeded forecasts, which is negative for bonds and mortgage rates.

Thursday:

• Weekly Unemployment Claims declined 10k to 570,000.
• Q2 preliminary GDP was unchanged, beating expectations.
• The U.S. Treasury’s $28B auction of the 7 yr note met with strong demand.

Friday:

• July’s Personal Income data was unchanged, slightly lower than expected.
• July’s Personal Outlays increased 0.2%, meeting expectations.
• The University of Michigan revised consumer sentiment index for August was revised upward to 65.7.  This is negative for bonds and mortgages.

Quick Summary

                                      Friday (24th)                              Friday (31st)            %Change (Weekly)

DOW                             9,093.24                                        9,171.61                         0.86%
NASDAQ                       1,965.96                                        1,978.50                            0.64%
S&P 500                         979.26                                           987.48                             0.84%

30 Year Fixed Rates                           Last Week                    Friday (31st)
                                                              5.0%                                   5.125%

This weeks economic news:

Monday: 

• June’s New Home Sales surged 11% indicating that housing market may be staibilizing. (negative to bond market and interest rates)
• The U.S. Treasury auctions $6 billion of 20-year inflation-protected securities (TIPS) at a high yield of 2.387 percent.

This weeks U.S. Treasury Auctions:

• Strong auction demand may lead for the broader bond market to rally and mortgage rates to move lower.
• Weak demand could lead to bond selling and higher mortgage rates.

Tuesday: July’s Consumer Confidence Index showed a reading of 46.6, short of forecasts (this reading is good for mortgage rates).

Wednesday:

• June’s Durable Goods Orders  fell 2.5%, much weaker than the expected 0.5% decline (good news for bonds and mortgage rates because a slowing manufacturing sector makes an economic recovery less likely).
• The U.S. Treasury auction of the 5-year note did not meet expectations.

Thursday:

• The U.S. Treasury auctions 7 Year Notes.
• The Department of Labor reported that 584,000 unemployment claims were filed last week.  This met forecasts and has minimal impact on mortgage rates.
• The Fed Beige Book indicated that the economy is stabilizing in several regions of the U.S.   This is bad for bonds because economic strength makes long-term securities such as mortgage-related bonds less attractive to investors.

Friday:

• Preliminary GDP data is scheduled to be released.
• 2nd Quarter Employment Cost Index (ECI) is reported.

If you or someone you know is thinking about buying or selling real estate any time in the next year, please call to let me know. It would be my pleasure to contact and work with your referral. My commitment to you is to treat them with the utmost care as they work towards buying and/or selling real estate. Referrals are the core of my business!