Economic Calendar 6/8/2009; What is happening with Mortgage Rates This Week?

Mortgage Rates, and what may happen this week

The past two weeks have been ugly ones for Mortgage rates, Easily a full percent higher in rate now than we were at our lows for the year. Last week continued the blood bath that started the last Wednesday in May. Of the 5 trading days last week we had 2 slightly positive days and 3 really bad days where mortgages sold off. By the end of the week the market lost 83/32nds. to put that number into perspective: you see noticeable changes on a rate sheet when the market moves 5-7/32nds, so this was a big loss for the week. So far this morning we have had choppy trading in the absence of any news. Monday started off positive and has since turned negative.

Here is what we have in store for this weeks Calendar:

• Monday, June 8, 2009: No news day: Most likely Mortgages will take their direction from stocks today.
• Tuesday, June 9: April Wholesale Inventories expected -1.1%. April data is OLD and the market is not likely to notice this at all.
• Tuesday: First Treasury Auction of the week, $36 BILLION of 3 year notes. The short term auctions are expected to be well bid, so it is not likely to move the Mortgage market.
• Wednesday, June 10: Fed Beige Book Released. It is expected that the Beige book will show moderating recessionary pressure in most of the country. The Beige book covers all 12 Federal Districts. It is not likely to be a mover in the markets.
• Wednesday: Treasury Auction of $19 BILLION 10 year notes. It is the 10 yr that bounced above a psychological level of 3.6% 2 weeks ago that sparked the sell off. The yield is now over 3.9% and it is anticipated that it will be well bid at the 3.9% rate. if this is the case this will probably be supportive of steady Mortgage Rates.
• ThursdayJune 11: Initial Jobless claims for last week, expected down 6,000. Not likely to have any impact on the mortgage market especially since we know there is likely to be a strong surge in jobless claims looming on the horizon in the Auto Industry.
• Thursday: May Retail sales expected +0.5% ex auto +0.2%. These numbers are higher than they have been, but it may not be great news as the activity is expected based on Tax Refund Checks and Fiscal stimulus monies. Once again not likely to be a market mover.
• Thursday: April Business inventories, expected -1.0%. More stale news that is not likely to be looked at.
• Thursday:Last of the Auction for the week, $11 BILLION of 30 Year Bonds. Yields on the 30yr are now above 4.5%. At these levels we should see happy investors buying which will support steady rates. If poorly bid, LOOK OUT, we will see rates move up by the end of the day.
• Friday: No News

This Week's 'Biggie' comes over 3 days, It is the $65 Billion in excess supply in the market being auctioned off by the Treasury. Extra "stuff" is always a threat to lower rates, and could actually cause rates to creep higher.

Fears of inflation are being sparked by the low dollar, Higher Oil prices and future Treasury auctions that will continue at huge levels until Uncle Sam's fiscal year ends September 30th. If stocks stay strong it is not likely that we will see a significant drop in mortgage rates. We need a melt down in the stock market to spark a flight to quality to help boost Mortgage prices up and Yields down.

PERSPECTIVE: While we have rates that are significantly HIGHER than the 4's that our clients have fresh in their minds we still need to look at how good we have it. Rates are still low if you look at things from a more historic perspective. Long term rates usually are good indicators for the future, if they are climbing it may be because they see the light at the end of the tunnel and that we are climbing out of the recession, and NONE of us can complain about that! If you ask me nicely I may send you a pretty color chart of interest rate history over the past 20 years, or you can see it here: http://activerain.com/blogsview/1052297/20-year-interest-rate-history-how-low-can-they-go-pretty-color-graphics-too-

Have a great week.

Rob

Robert Rauf

Mortgage Banker

www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

Since 1987 I have been helping my clients fulfill their dream of home ownership!

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