Robert Rauf

Well, if you read any of my Monday economic calendar updates you will know that I typically point out the biggies of the week. Well this week the biggies are gone and buried.

The 5 year and 7 year auctions are over and the market is pretty happy about it.

I had a concern that the excess supply in the markets this week would put a strain on Mortgage Rates. Today's 7 year auction was my biggest fear. Well The auctions are done! While the 7 year auction saw a slight increase in the yield, there was strong bidding and a lot of foreign investors stepping in and investing in our bonds. That was a "good news" scenario for our credit markets. If you ask a bond trader they would probably call it a neutral event, but that is a heck of a lot better than a sell off in my book!

If this keeps up through tomorrow we will see an improvement in rates for the week in comparison to last weeks bouncy, yet compleatly unchanged status.

So, Don't worry about this week's Biggie, it is digested, and there is no need for any antacids!

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

If you took a look at last Friday's postyou will see an example of an Unchanged week that was all over the map on a daily basis. We had some bright spots and some dark scary spots last week but literally ended up absolutely even on Fannies from Close of Business Friday to Friday. This is a fairly busy week with a busy calendar, but Treasury activity is likely to be the biggest influence.

Here is what we have in store for this week:

• MondayJuly 27: June New home sales was expected up 2.9%. The reality of the number, it was UP 11%... MUCH higher than expected which you would have thought would be bad news for interest rates, but NOPE. The market took it in stride, was off most of the morning, but only slightly. Why? Well Because 11% of crap is still Crap! OK, that's too technical, here is the real stuff: we may be up 11% from last month, but still DOWN 21.3% from June of 2008. When you fall hard the ups always look good. At current price levels there is still an 8.8 month supply in the new construction world
• Monday: Auction Number 1 from the treasury with 6 billion of 20 yr Inflation indexed securities. Adjustable to inflation has been well received this year, so this auction should go well, it is also a fairly small auction. When the auction started at 1pm I noticed the Mortgage market flatten out, so I assume it is going well.
• Tuesday, July 28: July Consumer Confidence expected 49.0, down a bit from last month. While you would think that the confidence number is an important one when 70% of our economy is consumer based, the reality is no one cares what we think, they only care about what we do, that is why retail sales numbers etc pull more weight than confidence numbers.
• Tuesday: Auction Number 2 with $42 Billion in 2 year notes. Geeze that's a big number! but the short term stuff seems to go fairly well and it is not anticipated to be an issue this week.
• Wednesday July 29: Happy Birthday to my son!
• Wednesday: June Durable Goods Orders expected -0.7% ex transportation 0.0%. This is not expected to move the markets at all.
• Wednesday: More Treasury activity with $39 Billion in 5 year notes. This one could go either way, a 5 yr commitment to an interest rate is a big deal if the investors expect the markets to improve. If they do they will want a higher yield which is a bad thing for mortgage rates. We are probably 50/50 on this one so I am not going to commit either way.
• Wednesday: Fed releases its Beige Book. The Beige book takes crunches together the 12 districts, while there are some bright spots there are some ugly numbers on the employment front. Since this is a bunch of reports that are already floating about it is not likely to surprise the markets.
• Thursday, July 30: Initial jobless claims expected up 16,000. While not a market mover especially with statistical issues working through the weekly reports, at these levels the report is supportive of steady rates.
• Thursday: Last Auction of the week with $28 Billion in 7 year notes. Cut and paste the 5 year notes here! This one could go either way as well, if well bid it will be a good thing for rates, if it is a poorly bid auction we will see mortgage rates climb in sympathy. 5's and 7's are very similar to a 30 year mortgage in terms of life expectancy... so they need to be watched carefully.
• FridayJuly 31: (Where the heck did this summer go??? August already?) First Estimate of second Quarter GDP is expected -1.5%. This is the most revised number in economic reporting and this is just phase one of the report. BUT... (always a but!) The markets expect to see the down turn moderating, thus the minus 1.5, with that number or a weaker number it should be good news for rates, if we see a -1.4 it can be bad news. I still think it will be revised so many times in the next few months that today's number will not be as important as the Treasury Auctions this week.

Well, If I wasn't clear enough earlier, the Auctions are the Biggie's of the week. The Excess supply along with the insecurity of how well bid they will be (especially the 5 and 7 yr) is enough to put a knot in any bond traders stomach. I expect this week to be a bumpy one, but I would not be surprised to have similar results to last week with a scary ride pulling right back into the same station it left from.

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

What moved rates? Why did they move? and, How did we end up where we are today?

From time to time we have bouncy weeks that will have big swings in rates on a daily to almost hourly basis, This week was one of them. It was entirely possible to call me in the morning and in the afternoon and be quoted to entirely different rates in a given day, but if I quoted rates last Friday and again this Friday it would look like NO CHANGE. Yet from Friday of last week to Tuesday it looked like a home run. That is the Fun of the mortgage business, and all the more reason you need a trusted mortgage adviser helping you in the biggest investment of your lives.

Here is a quick synopsis of this week:

This has been a bumpy ride for Mortgage rates this week with some mixed signals that have the market confused.

Monday was a fairly quiet day that ended up in positive territory with a gain of about 6/32's in Fannies The real news started with the Biggie of the week on Tuesday as Bernake was getting Grilled like a porterhouse at Outback. His comments were scary, but scary in a good way for the credit markets. He feels that the markets will not return to any sustainable growth until the end of the first quarter of 2010 and that they will keep the target rate near 0% for the foreseeable future, this sparked a rally in mortgages that had the day end with a gain of 15/32s.

On Wednesday the market was fairly flat most of the day, but by day's end we saw a bit of profit taking and we lost 5/32's

On Thursday Stocks saw a Rally that ate up a lot of the gains we had early on in the week. Part of the problem here is the marked caught wind of the Treasury auction for next week. We are expecting a record $115 BILLION in treasuries to flood the market and added supply is always a concern in the Supply/Demand world the markets live in. The fear of the excess supply along with the equities markets stealing from the credit markets caused a loss of 15/32s by the end of the day.

Well, Friday is over as I type this, and we had a slightly negative market most of the day with some quick spins from negative to positive and back again only to end up with a loss of 1/32ndby time 5pm rolled around.

if you do the quick math, that is a bouncy week that had Fannies absolutely UNCHANGED from Monday Morning till Friday Afternoon...

This quick synopsis of the week should help explain the fluctuations that you can expect from day to day (sometimes hourly) trading in the credit markets.

Have a great weekend

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 hope you had a great weekend, I spent this past weekend sailing the Red Grant Regattaout of RYC. It was a great event with 98 boats registered just shy of the goal they set for 100. The event raised thousands of dollars for the Red Cross and will probably be the biggest regatta in NJ this year. You can see Photos of me sailing here. We had A GREAT regatta with 5 bullets in 5 races.

Well, now that you know what I did this weekend you probably want to see whats going on this week in the credit markets! Here is this weeks calendar with my typical Rob-isms tossed in for your reading pleasure.

• Monday July 20, 2009: June Leading Indicators was expected up .5% ended up being stronger than expected (up .7). This is the 3rd monthly gain and it is a very forward looking number which should be bad for interest rates, but by days end the Mortgage market was happy and closed up 6/32 which is enough for a small improvement in rates.
• TuesdayJuly 21: Fed Chair Bernake's Semi-annual testimony to House Financial Services Committee on Monetary Policy.
• WednesdayJuly 22: Day two, Bernake Talking in front of the Senate Banking Committee.
• Thursday, July 23: Initial Jobless Claims expected up 28,000. The markets are likely to ignore this number since they continue to view the markets as weak. As forecast this is supportive of steady rates.
• Thursday: June Existing Home Sales expected up 1.47%. If accurate this will be the strongest pace in existing home sales since October. Improving home buyer sentiment and distress sales are a big piece of this rebound, no matter the reason it is not supportive of lower rates.
• Friday: No News Day
• MondayJuly 27: June New home sales expected up 2.9%. Housing starts and permits have been strong so it is likely that there will be a gain, but it is already priced in and not likely to have any noticeable influence on the credit markets as forecast.

The Corporate earnings season for the second Quarter is up and running showing some signs of improvement. It is possible that better than expected earnings could be a sign that the recession is coming close to an end which will raise stock prices at the expense of slightly higher rates.

The Biggie of the week is most likely to be Bernake's testimony Tuesday and Wednesday. I am expecting him to say he will keep rates the same since he thinks it will take a long period of time for growth to return to normal levels. That's the "happy side" of his testimony.. The Bad side is if he says that the Fed will be exiting the market as a buyer. While the FED can not lower rates any further, they have helped keep rates low by being a buyer in both the Treasury and Mortgage Markets. If they exit these markets or hint that they may, it will be VERY bad news for interest rates. Remember, it is a matter of Supply and demand, lower demand means lower prices and higher rates.

I think he will make carefully crafted statements to keep the market guessing, (commonly called "fed speak") Lets hope that the Fed continues to stay in the markets to keep things stable until the economy is firmly back on its feet.

So my guess for the week, Stable to possibly slightly higher rates by week's end.

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 AM BACK! I spent last week in a tent with my Boy Scout Uniform on. I am back to the world of Flush Toilets, AC, Electricity, Starched shirts and WORK....

Well, it is a pretty busy week of data, but the past few weeks have been good ones, there has been quite a bit of improvement in mortgage rates in the past 14 days or so... How much better? well from the highs we saw we are probably about 1/2-3/4% lower now than we were just a month or two ago as we saw interest rates spike up on us. That cant be bad news?

Here is what we have in store for this week:

• Monday: No News day. So far the day has been a mixed bag of ups and downs. The market is actually off slightly as I type this, but I wouldn't doubt it goes back to even by time I am done, that's just the way today has been.
• TuesdayJuly 14: June PPI expected +0.9% with a core of +0.1%. If you drive a car you know that the price at the pump jumped quite a bit last month. that is why there is such a big difference in the headline number vs the core. a modest core PPI number is "OK" for rates and would most likly support steady rates.
• Tuesday: June Retail Sails expected +0.4% ex Auto +0.5%. As forecast this will likely cause steady to possibly lower rates. If there is some surprise strength it will be bad news, but that is not likely.
• Tuesday: May Business Inventories expected -0.8%. ZZZZ its a boring old news number that the market will not look at.
• Wednesday, July 15: June CPI expected +0.6% with a core of +0.1%. I could almost cut and paste PPI comments here. As forecast we will see stable rates.
• Wednesday: June Industrial Production and Capacity Utilization expected -0.6% and 67.9%. Inventory has been falling as business are less likely to tie up cash in "stuff" at some point this decline will cause more orders and higher production in the future, for now this is not a market mover.
• Wednesday: Fed releases the minutes of the 6/24 meeting. This report will be torn apart, scoured and digested for sure, all in an effort to try to read between the lines as to when the FED may see the need to raise rates. The Post Meeting Statement did not paint a clear picture of the Fed's long term view of the economy. The Fed is great at "fed speak" so it is not likely there will be any new clues here.
• Thursday July 16: Initial jobless claims expected up 10,000. This number has remained high for most of this year, bordering on the ugly. But it is not anything that is a surprise.
• Friday, July 17: June Housing starts and Building permits both expected to be unchanged. Analysts are predicting a bottom in new home construction. It is not likely we will see a rebound next month, but we will probably see a few more "unchanged" months prior to any improving figures. Once there is improvement it would be bad for long term interest rates.

Well that all sounds like a lot! But reality is it is not too much to worry about. The potential biggie of the week is the Retail Sales number... Far off the mark on either side of the forecast number and this is the one number with the most potential to move the market. Nothing really to worry about because the forecasts are usually pretty accurate. The retail number is the most important since the consumer accounts for about 70% of the economy, so what they are doing is HUGE to the markets.

My best educated guess is that we will see steady to slightly improving rates by weeks end.

That's this weeks two cents! 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