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Home Mortgage Rate Update June22, 2009

Mortgage Rate Update June22, 2009

Market Comment

Mortgage bond prices remained volatile in up and down trading last week. We started the week in positive territory only to have the gains erased as stronger than expected housing starts data shocked the market Tuesday and overshadowed the tame inflation data. Producer and consumer price data showed inflation remained in check however oil prices remained volatile. US debt concerns continued as the Treasury announced record auctions ahead. For the week interest rates remained near unchanged.. While the Fed meeting is usually the most important event it will likely be overshadowed by the record $104b Treasury debt auctions this week. Durable goods order, income, outlays, and consumer sentiment data may also cause mortgage interest rate volatility. LOOKING AHEAD

Economic
Indicator

Release
Date & Time

Consensus
Estimate


Analysis
Existing Home Sales

Tuesday, June 23,
10:00 am, et

Up 3.2%

 Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
2-year Treasury Note Auction

Tuesday, June 23,
1:30 pm, et

None

 Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders

Wednesday, June 24,
8:30 am, et

Down 0.9%

 Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
New Home Sales

Wednesday, June 24,
10:00 am, et

Up 2.3%

 Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction

Wednesday, June 24,
1:30 pm, et

None

 Important. $37 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Fed Meeting Adjourns

Wednesday, June 24,
2:00 pm, et

No change

 Important. Few expect the Fed to change rates, but volatility may surround the adjournment of this meeting.
Q1 GDP final revision

Thursday, June 25,
8:30 am, et

Down 5.7%

 Moderately important. A measure of US economic production. Weakness may lead to lower rates.
7-year Treasury Note Auction

Thursday, June 25,
1:30 pm, et

 None Important. $27 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Personal Income and Outlays

Friday, June 26,
8:30 am, et

Up 0.2%,
Up 0.4%

 Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates.
U of Michigan Consumer Sentiment

Friday, June 26,
10:00 am, et

 69.0 Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.

Fed Meeting

The Fed's chief policy tool is the manipulation of short-term interest rates. As of late, short-term rates have been so low that the Fed is limited with their options. The Obama administration is pushing for expanded Fed powers to supervise large banks, hedge funds, and consumer financial products. Both political parties express concerns about increasing the Fed's role citing previous failures. However, most agree something needs to be done and many argue the Fed is best equipped to tackle the current problems. All eyes will be focused on the Fed meeting Wednesday. A cautious approach to float/lock decisions is prudent heading into the meeting. Market volatility is likely. For more mortgage news and information visit www.ToMortgageServices.com .

Posted Monday Jun 22