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Fred W. Holland 14014 NE 181st Pl. # D101 Woodinville, WA 98072 Office: 425-821-9028 E-Mail: mvmfh@msn.com www.fredhollandmortgage.com |
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Mortgage Market Review Weekly
Good morning. Here’s an interesting little item…Bank of America paid $1.5 Billion dollars in legal fees during the last 3 months of 2010. Let’s put that in perspective. The U.S. median household pre tax income is $50,000.00. If a household were to work for 300,000 years, it would earn $1.5 Billion. Yeowww!!!!!!!!! Now for something really enlightening…Following is a great link from Playing for Change which is a foundation started in 2001. The founder recorded street musicians from around the world with a mobile recording studio. They played their part only while listening to the rest of the song through headphones. The original song was “Stand By Me” and has received over 27 million hits on You Tube (http://www.youtube.com/watch?v=Us-TVg40ExM.). Any donations received by the foundation are spent on music education programs and instruments to ensure that anyone with the desire to receive a music education would have the opportunity to do so. They recently released a new video…John Lennon’s “Imagine.” It is incredible. Here’s the link… http://biggeekdad.com/2011/01/imagine/.
I hope you have a great week and please let me know if you have any questions. Thanks for taking the time to read this over. I hope you find it useful.
Fred
This Morning…Monday, January 24, 2011:
There is no relevant economic data scheduled for release today, so expect a relatively calm day for mortgage rates unless the major stock indexes move significantly higher or lower than their current levels. Monday’s bond market has opened up slightly despite a positive open in stocks. The stock markets are showing relatively minor gains with the Dow up 33 points and the Nasdaq up 2 points. The bond market is currently up 2/32, which with Friday’s late strength should improve this morning’s mortgage rates slightly.
Last Week:
Mortgage bond prices started in negative territory and that carried through most of the week. Spain and Portugal had relatively successful bond auctions, which reversed the flight to quality buying of US debt instruments that helped rates fall. Lower than expected weekly jobless claims Thursday added to the losses causing rates to spike higher. Analysts were looking for jobless claims at 425k and the actual release showed claims at 404k. Leading economic indicators were higher than expected with an increase of 1% compared to the anticipated 0.6% increase. Mortgage bonds ended the week negative by about ¼%. .
This Week:
The biggest economic event this week will be Wednesday's FOMC meeting, with an update on the economy and the Fed's plans for monetary policy (but don’t look for any change in overnight rates). For economic news, there is nothing slated for today. Tomorrow we have the Case-Shiller 20-city Index, along with Consumer Confidence, the FHFA Housing Price Index and, of course, the State of the Union Address. Wednesday we have the MBA applications index and New Home Sales, along with FOMC rate decision. Thursday has the usual Jobless Claims, but also Durable Goods & Pending Home Sales. Friday is the Employment Cost Index and GDP number for the fourth quarter along with the University of Michigan Consumer Sentiment survey. And don’t forget that $99 billion 2-yr, 5-yr, and 7-yr supply. There is lots of news this week so I suggest you stayed tuned.|
Economic |
Release Date & Time |
Consensus Estimate |
Analysis |
| Consumer Confidence | Tuesday, Jan. 25, 10:00 am, et |
54.2 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| 2-year Treasury Note Auction | Tuesday, Jan. 25, 1:15 pm, et |
None | Important. $35 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| New Home Sales | Wednesday, Jan. 26, 10:00 am, et |
300k | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| 5-year Treasury Note Auction | Wednesday, Jan. 26, 1:15 pm, et |
None | Important. $35 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Fed Meeting Adjourns | Wednesday, Jan. 26, 2:15 pm, et |
None | Important. Few expect the Fed to change rates, but volatility may surround the adjournment of this meeting. |
| Weekly Jobless Claims | Thursday, Jan. 27, 8:30 am, et |
425k | Important. An indication of employment. Higher claims may result in lower rates. |
| Durable Goods Orders | Thursday, Jan. 27, 8:30 am, et |
1.9% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| 7-year Treasury Note Auction | Thursday, Jan. 27, 1:15 pm, et |
None | Important. $29 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Advance Q4 GDP | Friday, Jan. 28, 8:30 am, et |
3.8% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Q4. Employment Cost Index | Friday, Jan. 28, 8:30 am, et |
0.4% | Very important. A measure of wage inflation. Weaker figure may lead to lower rates. |
Market Forecast:
During this busy week, look for Wednesday or Friday to be the biggest days for mortgage rates. Friday's GDP is the single most important piece of data this week, but we may see quite a bit of movement in rates Wednesday afternoon after the FOMC meeting adjourns. If we see weaker than expected results from the most important reports, mortgage rates should close the week lower than this morning’s opening levels. If the data shows stronger than expected results, we may see mortgage rates move higher for the week. This is of course, assuming that the Fed meeting doesn't reveal any surprises. Look for the continued Treasury auctions to also factor into rate changes this week.
Some Humor:
Billy Bob and Luther were talking one afternoon when Billy Bob tells Luther, "Ya know, I reckon I'm 'bout ready for a vacation. Only this year I'm gonna do it a little different. The last few years, I took your advice about where to go."
"Three years ago you said to go to Hawaii. I went to Hawaii and Earlene got pregnant."
"Then two years ago, you told me to go to the Bahamas, and Earlene got pregnant again."
"Last year you suggested Tahiti and darned if Earlene didn't get pregnant again."
Luther asks Billy Bob, "So, what you gonna do this year that's different?"
And Billy Bob says, "This year I'm taking Earlene with me."