Monday is shaping up to be a good days for us Austin mortgage types. Stocks are on the run, starting in Asia, China, and London with state side traders picking up the ball on the open. Currently, the Dow is off 170 points, focusing on a soft consumer and a GDP miss in China. Many feel that China has been cooking the books all along, creating further skepticism about the health of their economy. Keep in mind that for China to grow, they need the U.S. to buy their products. With the U.S. consumer holding tightly to their wallets, it’s tough to find any growth around the globe.
The New York Manufacturing index posted a 13 point rise to 12.1, the highest level since November 2007. Although it is a positive growth number, we see it as a rebuilt of inventories. Restocking the shelves will put a kick in our GDP but, with today’s consumer be willing to take it home? We shall see. I have been asked the question, why are we not getting much bang for the buck out of MBS when the 10 year treasury rallies. This is all about spreads which have widened on consumer concerns, escalating foreclosures, and investor appetite for anything related to credit (tied to the consumer).
Case in point is today’s move; 10 year note plus 17/32’s (yield 3.49%), MBs plus 6/32’s. Good news is that we are 6/32’s better than Friday’s close and if you haven’t looked lately, Austin mortgage pricing looks pretty good. Time to wake up those Austin refinance people who missed the last bus.
The week ahead will feature PPI, inflation at the wholesale level and New Residential Construction tomorrow, zippo on Wednesday, Weekly Claims and Leading Indicators on Thursday, and Existing Home Sales on Friday to close out the week. Plenty to give us volatility. Stocks will be the main driver as we need to see if this is just minor consolidation or something bigger in the making. Say a 10% to 15% correction.
