The economic news calendar is normally responsible for moves like this - but with a super thin schedule of reports last week, it was everything else under the sun driving the action. First, Stocks had a terrific week overall - and investors that want to move money into the Stock market logically have to take that money out of somewhere, right? Guess where that somewhere was? Bonds. So the move of money out of Bonds and into Stocks caused Bond pricing and home loan rates to suffer. Though Stocks enjoyed a great week overall, buyers can be fickle, and a day or two of disappointing Stock earnings news drove midweek volatility, with some anxious buyers moving money right back out of Stocks and into Bonds.
In terms of volatility, it also didn't help matters much that Bond rating services like Standard & Poor's and Moody's announced the potential downgrade of Mortgage Bonds. Most big pools of Mortgage Bonds contain a small number of loans with "subprime" credit - and these loans are currently experiencing a higher rate of default. So if the pool is deemed riskier overall, investors will want a higher rate or yield to compensate them for the higher risk - so this news caused a bit more concern for the Bond market overall.
Just when you thought it was safe to look away from the economic calendar...the schedule for the coming week is swimming with potentially market moving events and releases. Manufacturing, producer and consumer inflation, new home construction, the insightful "Minutes" from the last Fed Meeting - this week has a little something for everyone, and the result may be more volatility lurking ahead for Bonds and home loan rates. Remember that when Bond prices move higher, home loan rates get lower and vice versa, so we want to see Bond prices move higher for home loan rates to improve. Bonds react more strongly to these technical floors and ceilings when the news calendar is light, so with a heavy news week in store, the tone of the headlines will likely determine if Bonds can muster up enough muscle to crack through the overhead ceiling and help home loan rates improve or if they'll be pummeled lower, causing home loan rates to rise. Check out the economic calendar below for all the action. Chart: Fannie Mae 6.0% Mortgage Bond (Friday Jul 13, 2007)
|
Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise. Economic Calendar for the Week of July 16 - July 20
|
 |
|
|
Purchase & Refinance, Residential, Construction, Commercial, A Paper, Subprime, Hard Money, FREE Credit Consulting, Priority Lending, choose rate & closing costs, Bellevue Chamber of Commerce
HOME TIPS included in my NEWSLETTER
Enter a Buyer into a Purchase & Sale Agreement WITHOUT AN APPROVAL?
Loan Officer's in WA - REQUIRED LICENSING by 12/31/07
Credit Analyzer & Repair - FREE
HAVE A WELL-MANAGED BUSINESS - HAVE A SELF-MADE PROMOTION!!
Sharing your Business Philosophy may EARN YOU MORE BUSINESS
THE HABITUAL PROCRASTINATOR IS ALWAYS AN EXPERT CREATOR OF ALIBIS.
Extreme Makeover HOME EDITION - Does anyone else cry when they watch?
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
Powered by the ActiveRain Real Estate Network
© 2008 ActiveRain Corp. All Rights Reserved
So are rates going up or down? That is the million dollar question!!! Have a great day
Ethan - Rates are holding steady after a short drop and slight raise. Depending on when you jump in the game will depend which part of the cycle we're in. So the million dollar answer is...........they are ever changing! :)
I'm hoping to bring a deeper insight of understanding the impact factors. All the while, this might confuse people more. At best, I'll pick up some readers.
Thanks for stopping by.
Great breakdown on the market changes!! Simple & very informative. You picked me up as a reader Melissa! Well done.
Thank you Erik!
Thank you Paul. Same to you!
Melissa.... I concur... great job at giving a somewhat easy perspective on how rates change. But remember, it doesn't always happen, that when bond rates move higher that rates move lower and vise versa.... I have seen when bonds went higher that rates move higher. You did say that the market is hard to judge sometimes and that it can be very volatile. Overall, this was a great job.
Jeff - Do you know why the bonds went higher and rates moved higher the time you saw? What was happening in the market?
Melissa.... sorry, I just can't remember what happened in the market or when... just knowing that it took place. But I do know that this is extremely rare.
But again, great job on this....
Jeff - Thanks for getting back to me on that. Understanding the market is a critical part of our business, so I appreciate your comments.
All the best!