Market Comment for the Week of January 25th
MARKET COMMENT Mortgage bond prices rose last week pushing mortgage interest rates lower. The bond market rallied following crumbling stocks as the DOW fell 213 points Thursday. Weekly jobless claims came in higher than expected causing unemployment fears to cast a shadow over the state of the economy. In a consumer based economy it is difficult for people to spend money without a job. The producer price index was mixed as the headline figure was higher than expected but the core was lower than expected. For the week interest rates fell by about 1/4 of a discount point.
The Fed meeting Wednesday will be the most important event this week. The Treasury will continue the record auctions with 2-year notes on Tuesday, 5-year notes on Wednesday, and 7-year notes on Thursday. If foreign demand remains decent rates should hold near current levels. However, a drop in foreign demand will likely cause rates to head higher.
LOOKING AHEAD
Economic
Indicator |
Release
Date and Time |
Consensus
Estimate |
Analysis |
| Existing Home Sales |
Monday,
Jan. 25,
10:00 am, et |
Down 8.3% |
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates. |
| Consumer Confidence |
Tuesday,
Jan. 26,
10:00 am, et |
52.9 |
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| New Home Sales |
Wednesday,
Jan. 27,
10:00 am, et |
Up 1.9% |
Important. An indication of economic strength and credit demand. A decrease may lead to lower rates. |
| Fed Meeting Adjourns |
Wednesday,
Jan. 27,
2:15 pm, et |
No rate adjustment |
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting. |
| Durable Goods Orders |
Thursday,
Jan. 28,
8:30 am, et |
Up 2.0% |
Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Q4 Advance GDP |
Friday,
Jan. 29,
8:30 am, et |
Up 4.5% |
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Q4 Employment Cost Index |
Friday,
Jan. 29,
8:30 am, et |
Up 0.4% |
Very important. A measure of wage inflation. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment |
Friday,
Jan. 29,
10:00 am, et |
73.0 |
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
FED FOCUS The United States central bank, the Federal Reserve, coordinates the borrowing and lending activities of federally chartered banks. The principal reason the Federal Reserve was created was to reduce severe financial crises. One way of accomplishing this goal is to control the amount of money that flows through the economy. By manipulating the US money supply, the Fed influences inflation, unemployment, and the level of US economic activity. The Fed has a variety of tools that it uses to control the money supply, but its chief policy tool is the manipulation of short-term interest rates.
All eyes will be focused on the Federal Open Market Committee meeting Wednesday. No rate changes are expected. However, many analysts and traders believe rate hikes are on the horizon. Futures contracts show traders are pricing in a 77% chance the Fed will raise rates by November. Others argue those positions will be wrong because the economy isn’t strong enough for the Fed to change rates.
A cautious approach to float/lock decisions is prudent heading into the Fed meeting this week. Be prepared for potential market volatility.
Source: Courtesy of Todd Kabel, US Bank, Nashville, Tennessee
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January 25, 2010 -
Posted by kbargers |
economy, real estate | bargers solutions, Brentwood, dow jones, economic indicator, federal open market committee, federal reserve, kenneth bargers, market comment, middle tennessee, mortgage bond prices, mortgage interest rates, Nashville, producer price index, pruudential woodmont realty, realtor, tennessee, todd kabel, united states treasury, us bank
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Market Comment for the Week of January 25th
MARKET COMMENT Mortgage bond prices rose last week pushing mortgage interest rates lower. The bond market rallied following crumbling stocks as the DOW fell 213 points Thursday. Weekly jobless claims came in higher than expected causing unemployment fears to cast a shadow over the state of the economy. In a consumer based economy it is difficult for people to spend money without a job. The producer price index was mixed as the headline figure was higher than expected but the core was lower than expected. For the week interest rates fell by about 1/4 of a discount point.
The Fed meeting Wednesday will be the most important event this week. The Treasury will continue the record auctions with 2-year notes on Tuesday, 5-year notes on Wednesday, and 7-year notes on Thursday. If foreign demand remains decent rates should hold near current levels. However, a drop in foreign demand will likely cause rates to head higher.
LOOKING AHEAD
Indicator
Date and Time
Estimate
Jan. 25,
10:00 am, et
Jan. 26,
10:00 am, et
Jan. 27,
10:00 am, et
Jan. 27,
2:15 pm, et
Jan. 28,
8:30 am, et
Jan. 29,
8:30 am, et
Jan. 29,
8:30 am, et
Jan. 29,
10:00 am, et
FED FOCUS The United States central bank, the Federal Reserve, coordinates the borrowing and lending activities of federally chartered banks. The principal reason the Federal Reserve was created was to reduce severe financial crises. One way of accomplishing this goal is to control the amount of money that flows through the economy. By manipulating the US money supply, the Fed influences inflation, unemployment, and the level of US economic activity. The Fed has a variety of tools that it uses to control the money supply, but its chief policy tool is the manipulation of short-term interest rates.
All eyes will be focused on the Federal Open Market Committee meeting Wednesday. No rate changes are expected. However, many analysts and traders believe rate hikes are on the horizon. Futures contracts show traders are pricing in a 77% chance the Fed will raise rates by November. Others argue those positions will be wrong because the economy isn’t strong enough for the Fed to change rates.
A cautious approach to float/lock decisions is prudent heading into the Fed meeting this week. Be prepared for potential market volatility.
Source: Courtesy of Todd Kabel, US Bank, Nashville, Tennessee
Like this:
January 25, 2010 - Posted by kbargers | economy, real estate | bargers solutions, Brentwood, dow jones, economic indicator, federal open market committee, federal reserve, kenneth bargers, market comment, middle tennessee, mortgage bond prices, mortgage interest rates, Nashville, producer price index, pruudential woodmont realty, realtor, tennessee, todd kabel, united states treasury, us bank