Feb 10
16
What’s Ahead for Mortgage Rates February, 16th 2010
Last Week: interest rates on treasuries increased, the 10 yr note yield jumped 12 basis points,, mortgage rates however remained generally unchanged. The week brought the Greece deficit into full focus early in the week generating a little safe haven buying in treasuries but it didn’t las long as markets quickly realized the European Union would put a plan ion place to keep Greece from defaulting on its debt. Spain and Portugal are also being observed closely as their financial conditions are not much better than in Greece.
The take away from the revelations that sovereign deb among many nations is still on the edge of breaking down; not what markets need now as the debate about recover is heating up. Las week had very little economic releases from which to measure economic conditions. The week’s major headline was the quarterly refunding by Treasury; it sold $81 billion of 3 yr notes, 10 10 yr notes and 30 yr bonds. The 10 and 30 yr auctions were not up to recent standards of strong bidding, but were not failures. China’s decision to increase their bank reserves by 50 basis points was met with concern in the US that Asian countries may try to slow growth rates that have escalated to increase concerns over inflation.
This Week: unlike las week there are a number of economic report that will draw attention; no Treasury borrowing buy on Thursday treasury will announce the following week’s borrowing, 2 yr notes, 5 yr notes and 7 yr notes will be sold. Wednesday Jan housing starts and permits, starts will likely be up while we expect permits to have declined after a big jump in Dec.
Most of the economic data this week will be on the manufacturing and business sectors with industrial production and factory use for Jan and the key Philadelphia Fed Business index expected to be a little better. Interest rates remain tethered to a narrow range for mortgages, moving in a 10 basis point yield range; all focus is on the equity markets with a growing outlook of a major correction coming. That said, the equity markets have been looking for a correction for the past month but so far… nothing. A day or two of selling then a day or tow of rallies keeping the key indexes from and serious declines. It is overdue, we expect the stock market will deliver a huge decline but as long as traders see any decline as a buying opportunity, no bis sell-off is likely.
Market Moving News for this week:
- Housing Starts and Building Permits (Wednesday)
- The release of the last month’s FOMC Minutes (Wednesday)
- Business and consumer inflation figures (Thursday and Friday)
