Mortgage backs have slipped into the red. As I mentioned last week, the next few days could be high volatility, market moving affairs with the mid-term elections, FOMC meeting, and a boat load economic data culminating with the Employment Report on Friday.
Today, much like yesterday morning, we had the release of several economic numbers, some volatility, and a bond market that settled into neutral territory before pricing went out.
We look to still be headed for better Austin mortgage rates. With the bounce back today, these are very nice levels.
For the sixth week in a row now, Austin mortgage rates have eased to all-time record lows, even during a week of pretty mixed housing data. Rates sit at the lowest point since Freddie began tracking it in 1971.
Short term we say “go on, take the money and run”. Longer term, our bias is for a double dip recession of sorts and one more chance to refinance.
After several weeks of focus on Fed actions and events in foreign markets, domestic economic data was the primary influence on mortgage markets this week. Weaker than expected results from the data helped Austin mortgage rates, which ended the week lower.
The market was looking for a better number, given high hopes of a better holiday season. We see the negative December reading as unsettling, reflecting a consumer that has started to spend but at a snail’s pace.
What needs to happen to solidify a recovery is an expansion or long term investment, consumer spending, and lowering the unemployment rate. If not, we could see another economic dip. If the Fed steps in too quickly to raise rates, given my last statement, we could see a repeat of what happened in 1937 when the Roosevelt administration prematurely bumps rates.
Mortgage pricing is trying to work its way back from the lows of the early morning trade. We are not out of the woods yet, although I wouldn’t expect this trade session today to be very volatile facing tomorrow morning’s Employment report. From what we are seeing, the estimates are anywhere’s from 100k to 130k job losses vs the 190k number from the previous report. I am leaning more towards the -110k mark at this point. Expectations are for the unemployment rate to stay at the 10.2% previous month number, as well as avg hourly earnings and avg work week numbers to stay the same as well.
From our technical view, the chart looks more like “crack the whip” than any type of symmetrical trading. Last Friday caught a bid from month end buying (portfolio extension needs), Monday gave it all back as stocks traded and closed above 1000 on the S & P chart, and today’s rally has been derailed by Pending Home Sales.
