Market Comment for Week of November 21, 2011…

MARKET COMMENT Mortgage bond prices ended lower last week, which pushed mortgage interest rates slightly higher. The producer price index and core rate both came in lower than expected and helped rates improve earlier in the week. Unfortunately, retail sales beat expectations which countered the PPI data. Poor auctions in France and Spain fanned the Euro debt concerns which helped rates a bit. However, housing starts showed a surprise increase and weekly jobless claims were lower than expected Thursday which didn’t help rates. Positive stocks Friday morning also made it tough for rates to push lower. Mortgage interest rates rose by approximately 1/8 of a discount point for the week.

LOOKING AHEAD

• 2-year Treasury Note Auction; Nov. 21; Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
• Q3 GDP Second Estimate; Nov. 22; Consensus Estimate Up 2.5%; Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
• Fed Minutes; Nov. 22; Important. Details of the last Fed meeting will be thoroughly analyzed.
• 5-year Treasury Note Auction; Nov. 22; Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
• Weekly Jobless Claims; Nov. 23; Consensus Estimate 390k; Important. An indication of employment. Higher claims may result in lower rates.
• Personal Income and Outlays; Nov. 23; Consensus Estimate Up 0.1%, Up 0.3%; Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
• PCE Core Inflation; Nov. 23; Consensus Estimate Up 0.1%; Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve.
• Durable Goods Orders; Nov. 23; Consensus Estimate Down 0.2%; Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
• U of Michigan Consumer Sentiment; Nov. 23; Consensus Estimate 63; Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
• 7-year Treasury Note Auction; Nov. 23; Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.

QUALITY Investors are constantly searching for opportunities that will provide the greatest return with the least amount of acceptable risk. Investment products inherently all possess some sort of risk. As foreign financial markets struggled recently, many market participants withdrew their funds and searched for a safe haven in the US financial markets. With the backing of the US Government, investors viewed the US Treasury and mortgage bond markets as less risky investment opportunities amid global economic uncertainty. This resulted in an increased demand for US investments, such as the mortgage-backed securities that affect mortgage interest rates. Increased demand for mortgage bonds drove the prices higher and interest rates lower. Whether or not the trend will continue is still debated. A cautious approach to lock decisions is wise to take advantage of mortgage interest rates at these historically favorable levels.

Source: F&M Mortgage, Todd Kabel; MMIS, Rate Link; Blog distribution provided by Kenneth Bargers and Bargers Solutions, a proud member of Pilkerton Realtors, residential real estate services located in Nashville, Tennessee

Author: Kenneth Bargers

REALTOR®, Tennis Player, Titans, Vols & Preds Fan, Nashvillian... let's connect on Instagram, LinkedIn, Pinterest and Twitter. -- contact Kenneth at kb@bargers-solutions.com

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