Real Estate and Mortgage Market Update

Weekly jobless claims were a little higher than estimates but not much; the consensus for claims was an increase of 8K, as reported claims were up 16K to 326K. Although higher there was no real response to the report. Claims last week at 310K were the lowest since last Sept but the increase today is at a five week high in terms of an increase. The 4 wk average, a better way to look at it, was unchanged at 319,500.

The Feb trade deficit increased to -$42.3B, higher than -$38.8B expected, the highest in six months. Exports declined while imports increased; the higher deficit will take a little out of Q1 growth forecasts. Exports decreased 1.1% to $190.4 billion, depressed by declining sales of refined petroleum products. Fuel shipments to overseas customers had climbed in prior months as U.S. energy production grew. Sales of U.S.-made products to buyers in South and Central America were the weakest since February 2011. Imports climbed 0.4% to $232.7 billion, the most since October.

I don’t expect much change today in the bond and stock markets with the March employment report tomorrow morning. The 10 is at very critical longer term technical level at 2.80%, the note hasn’t traded above it since late January and it has been tested a couple of times and it held, then taking rates down. The pattern of the 10 trading has built a huge triple bottom in yield at 2.60% with 70% of trading in the last 9 weeks between 2.70% and 2.80%. A break above 2.80% would be a bearish near term outlook and set a longer range goal of 3.00% with the first resistance at 2.90%. MBSs don’t have the volume compared to treasuries so the technical outlook is best based on how the 10 trades, it is the driver for MBSs.

March employment expectations tomorrow; non-farm jobs +200K, private jobs +210K, the unemployment rate 6.6% from 6.7% in Feb. While those are the ‘guesses’ I will stand with my usual forecast, that the data will not be close to those forecasts---the prime reason there is always a lot of volatility the first Friday of each month. I admit, we never guess; let the chips fall on those that do bet on it. 

Due to this reason I continue to suggest my customers to lock their interest rates unless their is a particular situation that prevents that. Stay tuned to this BLOG for tomorrows employment update figures.