Despite stronger than expected economic data, the financial situation in Greece held the greatest influence on mortgage rates this week. A flight to quality and prospects of slower economic growth in Europe were favorable for mortgage markets and negative for the stock market, and Austin mortgage rates ended the week lower.
We also have the FOMC announcement today at 1:15 pm cst. No Austin mortgage rate change is expected but watch the FOMC policy statement closely. Hopefully, we will not get sideswiped. Want to get this out as the market is taking some heat. Mortgage backs now off 10/32’s so a price change is imminent.
The tactical bias for Austin mortgage rates and pricing is to remain neutral, trading a range on the 10 year note between 3.75% and 3.82%. Stocks want clarity on the Goldman/SEC issue which will lead bonds to react accordingly. Our work on the 10 year note chart is providing neutral to bullish trend signals and overbought conditions at the same time. Classic example of a mixed bag.
Although this week's economic data was generally stronger than expected, it was overshadowed by solid demand for the Treasury auctions and intensified concerns about the economic situation in Greece, which helped mortgage markets. After reaching the highest levels since August, mortgage rates ended a little lower than where they ended last week.
A combination of factors was negative for mortgage markets this week, and Austin mortgage rates ended higher. Large budget deficits and economic troubles in smaller European Union nations made bonds less attractive to global investors.
With so many variables to consider - employment, sovereign debt, political rang lings’, and on and on - managing interest rate risk and helping our borrowers with their decisions on Austin mortgage rates is very hard to handicap. Best advice is to use any rally to lock your interest rate in!
During a very light week for economic news, the economic data and Treasury auctions contained few surprises and produced little reaction in mortgage markets. Austin mortgage rates ended the week nearly unchanged.
Using one standard deviation and a dart board, our bias is for 100k in job losses and a 9.9% unemployment rate. JPMorgan has the call at minus 90K and 9.9%, Barclays at Minus 75K and 9.8%, Wells Fargo at minus 80k and 9.7%, and Credit Suisse the outlier at minus 125K and 9.9%.
For the most part, it’s a quiet trading day with treasuries and mortgage backed product being supported by the massive MBS short/accelerated pay down program going on. Not sure how long this bid (buying frenzy) will go on but until it’s over, it will help our mortgage pricing.
If our work (and that of others ) is correct, we would expect a larger bearish move (more selling/worsening mortgage pricing) in the days ahead. To avoid another leg down, we need to close below 3.74% on the 10 year note (end of day close). Best to keep both hands on the wheel.
