Robert Rauf

Last week was not a friendly one for interest rates. Every day last week was a loss for the market all together Fannie 30 yrs lost 40/32nds by the end of the week which is pretty ugly on a rate sheet. There was a bright spot. On Friday the employment data came out much better than expected and we saw a big sell off that approached a full point, by the end of the day the market clawed its way back up the hill with a loss of only 7/32nds, if it did not we would have lost MUCH more!

This week is a busy calendar with a laundry list of reports, auctions, meetings all that have the potential to move Mortgage rates. Here is the weeks calendar:

• Monday: Today is a no news day, in the absence of any news the market is trading in positive territory, and has wiped out all of Friday's losses. (actually close to 1/2 of the weeks loss has been recovered as I type) So today is a good day for rates.
• Tuesday August 11: first day of the Fed Meeting.
• Tuesday: June Wholesale Inventory expected -0.9%. "old stuff" that is not likely to move things.
• Tuesday: First auction of the week, $37 Billion worth of 3 year notes. Best guess is the shorter term stuff will be well received and will be supportive of steady mortgage rates.
• WednesdayAug 12: Auction number 2. This time $23 Billion in 10 year notes. This one needs to be watched, especially since the auction is happening an hour before the Fed meeting ends. If it goes well Rates will hold steady. If it is poorly bid the yield will be driven up and that is not a good thing for mortgages. It will probably be a non event, but it has the potential to hurt a little.
• Wednesday2:15pm: FOMC meeting ends and the Fed releases a statement. It is widely anticipated that the FED will leave rates unchanged. What will be looked at is the wording of the statement and hints to what the Fed sees in the future. The most important piece: The fed purchase of Treasuries is set to expire in September. This would be bad news because it removes a big participant next month. Also their view on inflation is an important one. If the FED down plays inflation and allows the treasury purchase to expire, it will not be supportive of low rates and rates may climb on the news.
• Thursday: Initial Jobless claims expected down 5,000. (Ho HUM... not a mover)
• Thursday: July Retail Sales expected +0.7% ex Auto +0.1%. The boost in the headline number is all credited to the Cash for Clunker program, that is why the ex auto number is fairly weak. As forecast it is a recipe for steady rates.
• Thursday: More supply in the form of $15 Billion 30 year bonds being auctioned. It is expected that the Fed will need to step in here to keep the yield low. If there is not support for this auction it will likely cause a bump up in rates.
• Friday, Aug 14: July CPI expected 0.0% with a core of +0.1%. If the core stays below 0.2% the market will continue down its path and hold steady.
• Friday: July Industrial Production expected +0.2% and Capacity 68.2%. The bump up is attributed to Auto Sales and is not likely to be a market mover.

SO MUCH DATA! Which is the biggie??? It is a difficult call this week. One item never on the calendar is Stock market trading, it is there every day and has potential to move the market. with the run up in stocks the past week or so it is likely there will be a bit of profit taking which may help drive mortgage prices up and the yield down. As far as a "report biggie" it will either be the Fed Announcement, or the Auction activity that has the potential to move the markets this week. So far we have a happy credit market today, I expect that this will be a bouncy week with not a heck of a lot of difference as we end the week. Lets hope I am right!

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!

Real Estate Mortgage Network

NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey

With a stronger than expected employment report, what happens to rates?

July employment report with Non farm payroll was expected -340,000, Jobless rate up to 9.7% and average hourly earnings +0.1%. was released at 8:30am and it was much stronger than expected with only 247,000 jobs lost and the actually jobless rate dropped to 9.4%. (did I really just type "only 247k jobs lost?)

The knee jerk reaction in the Mortgage Backed Securities market was a quick sell off, ahead of the report the market opened slightly positive at +1/32 and immediately following was off over 20/32nds and was fast approaching 30/32nds when it turned around and started improving. at this point (9:25am) we have crawled our way back to off 14/32nds so it is not a huge blood bath in the interest rate world.

The reality is that good news is bad news for rates. The markets were expecting a number that was worse than forecast and when it came in better the thoughts are "gee that's good" but I do believe that the traders are stepping back and saying "A loss of 247k jobs and the possibility of a 10% UE rate still sucks is not great news." That is probably why the dust is settling at this point in time,

So the recap of the week: Not a great one for rates, we will end the week with Mortgage rates slightly higher than the end of last week. You can read my entire report for the week here .

Have a great weekend, look for my Monday report with my forecast for the following 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!

Real Estate Mortgage Network

NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey

Well, the Biggie of the week is only 12 hours away, 8:30 AM the employment data is release for an anxious market, over all this week has been a slightly negative one for interest rates with a few surprises and a lot of anxiety awaiting tomorrow's report.

So, Fasten your seat belts tightly and hold on, tomorrow could be a bumpy ride.

Here is what was forecast:

• Friday August 7: July employment report with Non farm payroll expected -340,000, Jobless rate up to 9.7% and average hourly earnings +0.1%. As forecast, we will have steady rates, it is the deviations in the report that catch a market off guard that will move it.

You can read my entire report for the week here .

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!

Real Estate Mortgage Network

NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey

I spent the better part of today working on getting a difficult deal worked out, PRIOR to taking the application. I will never just toss something against the wall... Multiple jobs, just out of school, dealing with all part time income and high ratios all makes for a mess if not handled correctly! So sorry this is late, but glad we have a happy first time buyer!

This week started off BAD, More to follow on that. It doesn't look like that busy of a week, but there are a few very important numbers being released this week that we MUST pay attention to. So here is the week:

• MondayAugust 3: July institute of supply mgmt (manufacturing) came in quite a bit better than expected and the market did not like it. Fortunately we re-gained some ground later in the day, but still lost 13/32nds by the end of the day on Fannies. That's NOT good for rates!
• TuesdayAugust 4: June Personal income, spending and PCE; expected -1%, +0.3% and +0.2%. The PCE piece is the most important, it shows what personal consumption is... even at the +0.2% it may be bad for rates, if higher... really bad news.
• Wednesday Aug 5: June Factory Orders expected +0.2%. Old stuff that is more of a place holder on the calendar, just a snooze factor for the markets.
• Wednesday: July Institute of Supply Mgmt (service sector) expected 48.2. While not likely to have an effect on the market, the manufacturing side on Monday certainly threw things for a loop. So while I doubt this will be an issue, there is a chance it could raise an eyebrow or 2 after Monday's reaction.
• Thursday August 6: Initial jobless claims expected up 16,000. While this gives some insight to Friday's report, I doubt that it will have any effect since tomorrow is the big day for employment.
• Friday August 7: July employment report with Non farm payroll expected -340,000, Jobless rate up to 9.7% and average hourly earnings +0.1%. As forecast, we will have steady rates, it is the deviations in the report that catch a market off guard that will move it.

Well that looks like a short list, but there are a few biggies. The Employment report is certainly at the top, but the PCE index is a Fed Favorite that shows consumers actually activity, and since the consumer is 70% of the economy it is an important one to keep an eye on.

For the employment report, a number at or below 9.5% and the non farm number being better (-320k-ish)will make stocks happy, but kill the credit markets (sell off in the credit markets is a bad day for rates). but if we get surprised in the other direction and we have an even weaker number than forecast... Stocks will sell off and we will see a flight to quality that will drive bond and mortgage prices up, and the yields down. If the employment report is better than forecast it may be a sign that the economy is at the bottom and that the that this recession (which is the worst since 1929 and the great depression) is beginning to settle down. This is the biggest unknown of the week, and has the biggest potential to move rates.

This is a difficult week to call, the trend has been towards lower rates, and I would like to see that continue, but we will not go too much lower now, we are much more likely to see a big move to the upside in a knee jerk reaction than the reverse.

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!

Real Estate Mortgage Network

NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey

Last weekend we put a big dent in my son's Eagle Project, Planted bushes and a truck load of perennials and installed a fence to keep people from cutting across one of the flower beds.

• Thank you to Carl's Fencing on Route 9 in Toms River for donating the fence, custom for this location.
• Thank You to Santos Nursery (Santos Garden & Landscaping, 2030 Rt # 9, Toms River, NJ, 08755, 732-341-2444 ...) for donating the perennials
• Thank You to Berry Fresh too (2278 Lakewood Rd., Toms River (732) 886-8840) for donating the bushes.

Now he just needs to get some one to donate the mulch, and fill out a LOT of paperwork and he will have Earned the his Eagle Rank.

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!

Real Estate Mortgage Network

NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey