Economic Calendar: Where will Mortgage Rates be This week? and what is causing the Moves...

Wasn't Last week's move in Rates fun??? Tuesday and Wednesday (especially Wednesday) last week were just HORRIBLE days for the mortgage market. Rumors and speculation sparked a sell off on Wednesday that was just plain painful. Fortunately on Friday we gained back a big piece of what was lost on Wednesday.... Unfortunately the market is getting ugly now with a significant rally in the stock market today we have lost more than we gained on Friday in the credit markets. If this keeps up we will solidly see rates about 1% higher than the lows of this year. Over the weekend there were rumors of a leak from an anonymous source in the Fed or Treasury that said they would step back and take a "wait and see" attitude rather than stepping in, the market did not like that.

So: What happened last week? That was the Subject of my Friday blog you can see here .

For this week we have a busy calendar with a few potential Biggies to move the market:

• MondayJune 1: Personal Income and Spending both came in better than expected with a fairly significant increase in Personal income and a spending was only down .1% vs the forecast .2%. For me it is not a surprise that PI is up. You lay people off and the workers that are left typically have to work OT to do the job of their laid off Co Workers. This is simple Economic principals. But the market seems to be taking things differently today and "poof" went Friday's rally.
• Monday: May Institute of supply Mgt.. Boring number! not a factor in the Mortgage world today.
• Tuesday June 2: a No News Day. Perhaps the dust will settle?
• Wednesday, June 3: The fed is stepping in to buy 7-10 year notes. Hopes here are that they will be aggressive in their buying to help keep rates down.
• Wednesday: April Factory orders expected +0.9%. April is moldy old data, not a mover.
• Wednesday: May institute of Supply mgt, Service Sector, expected 45.0. This is likely up due to consumer confidence and stocks being up. not likely to be a market mover
• ThursdayJune 4: Fed back for another day buying notes maturing in 2-3 years: This is more of a "Govt Refi" using the cheap money from bond sales to pay off the higher rate "stuff". Wednesday's buying is much more important than Thursday's.
• Thursday: The Treasury announces the size of next weeks 3, 10 and 30yr auction. This is a case where Size does matter! If it is similar to the size of previous auctions this year, it will be "Ho-Hum" if it is significantly higher than previous auctions than that excess supply will most likely scare the markets and rates will go up.
• Thursday: initial jobless claims for previous week expected down 3k: Look at tomorrows news, this one will be over shadowed by the "real" numbers tomorrow.
• Thursday: Revised first quarter productivity and unit Labor Costs expected +1.2% and +2.9%. Welcomed news, but not likely a market mover
• FridayJune 5: May Employment report, with Non Farm Payroll expected at -520,000, Jobless rate of 9.2%, and Avg hourly earnings +0.2%. As always with this report, it is the difference in the forecast that will potentially move the market. Most of this report is not only ugly, but that 9.2% number is down-right scary in my book. If there is any strength in the report over and above the forecast look for a sell off bouncing rates up. lets hope we don't see anything worse, for OBVIOUS reasons....

Quite a mixed bag this week. I see 2 potential "biggies" this week, but will probably put the most weight on Wednesday. If the Fed steps in and is Aggressive in their buying it may just prove that this past weekends rumors are NOT true and we should see a rally, but if they sit back and don't buy in earnest, it will add some weight to the rumors that caused today's sell off. The Employment report has also always been a "biggie" and can be a huge market mover when the analysts get the numbers wrong, so caution on Friday is a wise choice. Last item that has some smoke coming from it is Thursday's Treasury announcement... it is a bit of an "unknown" but has some potential to mix things up.

Hopefully we will see the fed step in on Wednesday and be clear in their path with a strong commitment to keeping rates low. This is the best recipe for all of us to see rates come back down. But this week is a HUGE unknown and has started off badly enough to keep me from even guessing where rates will be Friday afternoon... If I had to guess I would guess we will see rates up.

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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