2006 April

Friday’s bond market has opened fairly flat despite the release of several important economic reports. The stock markets are showing losses with the Dow down 5 points and the Nasdaq down 15 points. The bond market is currently down 4/32, but we should still see an improvement in this morning’s mortgage rates as a result of strength late yesterday.

The big report of the morning was the first reading of the 1st Quarter Gross Domestic Product (GDP). Analysts had expected to see growth during the quarter at a 4.9% annual rate. This morning’s release showed a 4.8% pace. While this was slightly weaker than expected, it still was a very strong reading. The 4.8% rate was more than double the 1.7% of last quarter and the strongest reading since the third quarter of 2003. This indicates that the economy rebounded quite well from last quarter’s disappointing activity. The bond market took this with mixed results and it has had little impact on mortgage rates.

The second report of the day was the 1st Quarter Employment Cost Index (ECI). It showed only a 0.6% rise in employment costs compared to a 0.9% forecast. This is good news for the bond market and mortgage rates because wage inflation is a concern of the Fed. The weaker than expected reading should help ease some fears about it.

The University of Michigan updated their Index of Consumer Sentiment for this month. It was expected to show a reading of 89.0, down slightly form the previous estimate. However, today’s report showed a reading of 87.4, indicating that consumers were not as confident in the own financial situations than previously thought. This is good news for bonds and mortgage rates.

Overall, this morning’s data has failed to sway bond traders either way, leaving the market relatively flat considering the significance of this morning’s data. I would not be surprised to see bonds improve slightly this afternoon, but probably not enough to affect mortgage rates. This will especially be likely if stocks move lower than current levels. Still, with the benchmark 10-year Note yield still over 5.00%, there is no telling what will happen, particularly in the short-term. Therefore, I am holding the lock recommendations for the time being.

Next week is packed with economic data for the markets to digest. The first comes Monday morning with the release of March’s Personal Income and Outlays report along with the April’s ISM manufacturing index. Both of these can affect bond prices and mortgage rates. Look for more details in Sunday evening’s weekly preview.

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Thursday’s bond market has opened in positive territory following favorable comments by Fed Chairman Ben Bernanke. The stock markets have fluctuated in a wide range between positive and negative ground during early trading, but are currently showing losses. The Dow is now down 14 points while the Nasdaq has lost 1point. The bond market is currently up 7/32, w hich will likely improve this morning’s mortgage rates slightly.

There is no relevant economic news scheduled for release today. The Labor Department reported that new claims for unemployment benefits rose to 315,000 last week. This was higher than expected, but the data usually has little impact on bond prices and mortgage rates.

Yesterday’s Fed Beige Book didn’t reveal any significant surprises. The economy continues to grow at a good pace in most regions, but there are signs of price pressures as a result of high fuel costs. This raises inflation concerns and is an issue that affects bond prices.

This morning’s volatility came as a result of words from the Fed Chairman to a Congressional committee about the economy. He indicated that the economic continues to expand but higher energy prices are a threat to that stability. He went as far as hinting that a pause to the rate hike campaign may come in the future. He also said that future Fed move s will be “increasingly dependent” on economic data. This was taken as good news by bond traders and helped push prices higher during morning trading.

Tomorrow brings us the release of three important reports. The first is the preliminary version of the 1st Quarter Gross Domestic Product (GDP). This is arguably the single most important report that we see on a regular basis. The GDP is the sum of all products and services produced in the U.S. It is considered to be the best indicator of economic growth or contraction. I expect this report to cause major movement in the financial markets tomorrow and therefore the mortgage market also. Analysts are expecting to see output at an annual rate of 4.9%. A considerably smaller jump would be ideal for mortgage rates. But, a larger increase would almost certainly cause inflation concerns in the bond market that would push mortgage rates sharply higher tomorrow morning.

The next report of the day is 1st Quarter Employm ent Cost Index (ECI), which tracks employer costs for wages and benefits- giving us a measurement of wage-inflation. If it shows a large increase, we may see inflation concerns cause the bond market to fall and mortgage rates to rise. A smaller than expected increase would be good news for the bond market and mortgage pricing. Current forecasts are showing a rise of 0.9%.

The last important data of the week is the University of Michigan’s update to their Index of Consumer Sentiment for April. This report should cause a similar reaction in the financial and mortgage markets as Tuesday’s CCI does. Current forecasts are calling for a small downward revision to this month’s preliminary reading of 89.2.

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Wednesday’s bond market has opened in negative territory again following the release of stronger than expected economic news. The stock markets are showing sizable gains with the Dow up 67 points and the Nasdaq up 7 points. The bond market is currently down 7/32, which with yesterday’s losses will likely push this morning’s mortgage rates higher by approximate ly .250 of a discount point.

The Commerce Department reported early this morning that new orders for big-ticket items rose 6.1% last month. This was well above forecasts of a 1.6% increase and indicates that the manufacturing sector was stronger than expected in March. The large increase is partly being attributed to a spike in airplane orders, but even if transportation related orders were excluded, new orders exceeded forecasts. This is bad news for bonds and mortgage rates.

The Commerce Department also reported that sales of new homes rose 13.8% last month, again greatly exceeding analysts’ forecasts. This report was expected to show an increase in the neighborhood of 2.0%, further supporting yesterday’s existing home sales numbers that indicated the housing sector remains strong. While the housing reports aren’t considered to be of extreme importance to bond traders, the recent concern and talk over housing has elevated their importance. The concerns that housing will soften are still apparent, so any numbers that are related may affect bond trading in the coming months.

The Federal Reserve will post its Fed Beige Book report at 2:00 PM ET this afternoon. This data 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.

This week’s bond weakness has pushed the benchmark 10-year Note yield above 5.00% again. There was plenty of talk that this would draw interest into bonds and lead to higher prices and lower mortgage rates. Unfortunately, this theory has not come true yet and there appears to be little problem with the 10-year yield staying above that threshold. Accordingly, until we see prices move higher and yields drop, I am extending the lock recommendation. I still believe that we will see weakness in stocks and other fact ors lead to a shift of funds into bonds that will drive prices higher and mortgage rates noticeably lower. However, it has not come as quickly as expected. So, until we begin to see that shift, please proceed cautiously if you have not locked an interest rate.

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This week brings us the release of several very important pieces of economic news. There are a total of eights reports due to be posted this week, with all but two of them considered to be of high importance to the bond market and mortgage rates. This makes it likely that we will see plenty of movement in mortgage pricing over the next several days.

The first report comes late Tuesday morning when the Consumer Confidence Index (CCI) for April will be released. This Conference Board index is a key indicator of future spending by consumers. The group surveys 5000 consumers from across the country about their personal financial situations. If sentiment is strong or rising, it is believed that consumers are more apt to continue to spend. However, if they are concerned about issues such as job security and investments, they will probably delay making large purchases. The latter is better for the bond market and mortgage rates because the expected slowdown in spending would ease inflation concerns. But, a sizable increase could hurt the bond market, pushing mortgage rates higher Tuesday. It is expected to show a reading of 106, which would be a decline from March’s 107.2 reading.

The next piece of data is one of the week’s least important. Also late Tuesday morning, the National Association of Realtors will post March’s Existing Homes Sales numbers, which are expected to show a drop from February. A similar report to this one- March’s New Home Sales will be released Wednesday morning. Both of these releases give us an indication of housing sector strength and mortgage credit demand, but unless they vary greatly from analysts forecasts, I don’t think they will cause much movement in mortgage rates.

March’s Durable Goods Orders will be posted early Wednesday morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts call for an increase in orders of approximately 1.6%. A smaller increase could help boost bond prices and cause mortgage rates to drop Wednesday morning. However, a stronger than expected reading would indicate that the manufacturing sector is gaining strength quicker than many had thought. This would be negative news and would probably help drive mortgage rates h igher.

The Federal Reserve will post its Fed Beige Book report at 2:00 PM ET Wednesday. This data 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.

Friday brings us the release of three important reports. The first is the preliminary version of the 1st Quarter Gross Domestic Product (GDP). This is arguably the single most important report that we see on a regular basis. The GDP is the sum of all products and services produced in the U.S. It is considered to be the best indicator of economic growth or contraction. I expect this report to cause major movement in the financial markets Friday and therefore the mortgage market also. Analysts are expecting to see output at an annual rate of 2.8%. A considerably smaller jump would be ideal for mortgage rates. But, a la rger increase would almost certainly cause inflation concerns in the bond market that would push mortgage rates sharply higher Friday morning.

The next report of the day is 1st Quarter Employment Cost Index (ECI), which tracks employer costs for wages and benefits- giving us a measurement of wage-inflation. If it shows a large increase, we may see inflation concerns cause the bond market to fall and mortgage rates to rise. A smaller than expected increase would be good news for the bond market and mortgage pricing. Current forecasts are showing a rise of 0.9%.

The last important data of the week is the University of Michigan’s update to their Index of Consumer Sentiment for April. This report should cause a similar reaction in the financial and mortgage markets as Tuesday’s CCI does. Current forecasts are calling for a small downward revision to this month’s preliminary reading of 89.2.

Overall, look for plenty of movement in the financial markets and mortgage rates this week. Friday is the most important day of the week with the GDP and ECI reports due to be posted, but we may see significant changes to rates Tuesday or Wednesday also. If this week’s reports reveal weaker than expected economic conditions, the bond market should rally and mortgage rates should fall significantly for the week.

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Friday’s bond market opened in positive territory this morning but has since given back those gains after oil prices spiked higher. The stock markets are mixed with the Dow up 45 points and the Nasdaq down 5 points. The bond market is currently unchanged, but we will likely see a slight improvement in this morning’s mortgage rates due to the earlier gains.

There is no relevant economic news scheduled for release today, so the spike in oil was enough to influence bond trading. Oil crossed $74 a barrel this morning, setting yet another record price. This is adding fuel to the theory that gas prices will continue to rise this summer. This translates into inflation related concerns for consumers and causes bond prices to fall and mortgage rates to move higher.

Next week brings us the release of several important pieces of economic news. We will see indicators of consumer confidence, manufacturing strength, home sales and employment costs amongst others. We also have the first reading of the 1st Quarter GDP due next week. I am expecting to see plenty of movement in the markets and mortgage rates.

The first piece of data is scheduled for release Tuesday when the Consumer Confidence Index (CCI) will be posted. Look for oil prices and stock movement influenced by corporate earnings to drive bond trading and mo rtgage pricing Monday. More details will be available in Sunday’s weekly preview.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

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perhaps you are renting and putting off calling me for a bit of free advice?

 This post is here for the one reason of saying dont do that, and I love to help.

I was born and raised in Huntersville, North Carolina and the onegreat skill I have is that as a professional mortgage broker. Allow me a chance to show you as your neighbor that I can better your situation with one call. If you are paying rent, we both benefit when I help you to buy this month.

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Here is the initial post from the new STSFC blog. We have assebled this blog to help local area neighbors and loan seekers with a free advice source from an expert who also knows your neighborhoods from a lifetime of calling Huntersville home.

Contact our team for a free professional conversation with a true Huntersville native loan and mortgage consultant. We strive to provide friendly free advice, and help people find the right loan solution.

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