Last
week saw mortgage rates begin and end almost the same, with only a small change
in rebate pricing. However, that belies the real action for the week,
where almost every day the MBS (Mortgage Backed Securities) market experienced
movements of at least 50bps, and pricing changes came fast and furious all
through the week. Last week was a perfect example of why it is so important
to monitor the pricing in real time, as some consumers saw a difference of
.125% or even .25% in interest rate from day to day and sometimes within the
same day. Last week's volatility was mostly caused by the trader reaction
to economic data released through the week as the markets looked for signs of
if the Fed will begin tapering in September.
We had a fairly light week in terms of the
number of economic releases and there were no major U.S. Treasury auctions to
guide bond trades.It was a very choppy week as MBS sold off on Monday, rebounded Tuesday and then sold off again on Wednesday, only to rally once again on Friday. We had a conflicting housing data as Existing Home Sales were much stronger than expected, while New Home Sales were much weaker than expected.
The FOMC released the minutes from their last meeting, while not providing any clear direction on the Fed's time table to start reducing their monthly bond purchases, it did appear as though a larger percentage of the voting members were open to some sort of taper in September.
Friday's rally gave you the best rates of the week. This was due to the Fed's Bullard making a comment that the Fed can "afford to be deliberate" about their timing of reducing their monthly bond purchases. The rally was accelerated by a much weaker than expected New Home Sales report.
This
week begs a close eye to the market as we have a huge week full of economic
data releases and reports. It appears that the markets have moved away
from the idea that the Fed will begin QE3 tapering in September; the economic
outlook still looks positive but there are some signs of cracks in the armor that
may keep the Fed from acting in September as they wait for more consistent data
that the economy is truly out of the woods.
This mornings release of the Durable
Goods Orders came in much weaker than expected.
This is a big-time miss and will have some traders thinking that the taper
will be moved back. This allowed MBS to
gain from Friday's close, but this mornings pricing is likely to be the best of
the day, with more data due to be released.
GDP
will get center stage as we get our second revision for this number.
There are three Treasury auctions this week, with the most important being the 7 Yr. Note on 8/29.
The head line news is positive for bonds but the prior revision will reduce the impact on bonds.
There are three Treasury auctions this week, with the most important being the 7 Yr. Note on 8/29.
The head line news is positive for bonds but the prior revision will reduce the impact on bonds.
You can view the updated Real
Estate Report at:
Having
your mortgage rates hinge on a speculative and jumpy market doesn't make for a
fun ride. Severe volatility looks to be the continued pattern, making
real time data extremely important. Depending on your scenario, it may be
prudent to lock your loan and move on. The best way to know for sure is
to talk to the Mortgage Professional who shared this information with you.
-
Michael Corboy
www.specialtyfinancialmtg.com
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