Monday, March 24, 2014

Real Estate, Interest Rate and Market Calendar Update


Last Friday the bond and mortgage markets improved a little, early this morning the bond and mortgage markets started weaker---about the same price changes that occurred Friday. Markets still focusing on Janet Yellen’s remarks last week that the Fed may begin increasing interest rates as early as next Spring, about a year earlier than what was generally thought prior to her comments. Since her statement the debate has intensified between those that say no way the Fed will move that soon and those that concur and even say the Fed is likely to stay too long with low rates that will set off inflation. There are no answers, no consensus. Job gains in the food service industry are not jobs that fuel strong economic growth. Investors and businesses were taken aback on her comments, increasing interest rates about a year ahead of what was previously expected; yet even she isn’t that convinced; she also went on to say "The general assessment is that even after we've had an accommodative monetary policy for long enough to get the economy back on track in the sense of meeting our objectives, the stance of policy that will be appropriate to accomplish that will be easier or involve somewhat lower than would be normal short-term interest rates."

This week has a lot of Fed officials speaking, that should add to the confusion with varying opinions and outlooks. 

Although today there are no economic reports, this week has a plate full. Tomorrow three housing sector reports and through the rest of the week a number of key data points. Q4 final GDP on Tuesday is expected to be revised higher for the second time; on the preliminary report last month GDP was reported up 2.4%, the final report is expected up 2.7%.
This Week’s Economic Calendar:
          Tuesday,
             9:00 am Jan Case/Shiller (+13.3% yr/yr, +0.7% m/m)
                         Jan FHFA housing price index (+0.4%)
            10:00 am Feb new home sales (-6.0%, 440K units)
                           March consumer confidence index (78.4 from 78.1 in Jan)
            1:00 pm $32B 2 yr note auction
        Wednesday,
            7:00 am weekly MBA mortgage applications
            8:30 am Feb durable goods orders (+1.0%, ex transportation +0.3%)
            1:00 pm $35B 5 yr note auction
       Thursday,
            8:30 am weekly jobless claims (+3K to 323K)
                         Q4 final GDP (+2.7% from +2.4% on the prelim report last month)
            10:00 am Feb pending home sales from NAR (-0.8%)
            1:00 pm $29B 7 yr note auction
      Friday,
           8:30 am Feb personal income and spending (income+0.2%, spending +0.3%)
           9:55 am March final U. of Michigan consumer sentiment index (80.5 from 79.9)

Where to from here? The 10 is still holding a key chart resistance at 2.80%, unable to climb above it but equally not finding much lasting support when its rate falls to 2.70%. Since the 23rd of Jan the 10 has found comfort in a 20 bp range between 2.80% and 2.60%. Geo-political issues are a factor but not much; with all that is happening in Russia/US relations the financial markets here and in Europe have yet to be seriously rattled. Technicals for both MBSs are mixed but the balance is tilted slightly to the bearish side. Need to watch how stocks act, lower prices the indexes support the bond and mortgage markets, higher prices take that support away; the Fed comments haven’t moved markets but are generating a lot of debate. Wrap a ribbon around the interest rate markets and the package is neutral presently; we could argue for lower rates and higher rates, there is enough to swing either outlook in a big move. Like that teeter-totter, it is in balance. 


If you have not locked your interest rate I would suggest doing so. The markets may see some big swings coming up and you don't want to be on the losing end. Lock today and take advantage of our FREE interest rate float down in the event rates decrease after you lock. 

Continue to follow my BLOG for all your Real Estate and Mortgage news for Texas!

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