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Market Comment

Mortgage bond prices ended the week higher pushing mortgage interest rates lower. We had a week of very mixed data. Industrial production data was weaker than expected which was generally bond friendly to start the week. Stronger than expected housing starts data Tuesday was not what the bond market was looking for but the reaction was muted. Significant stock weakness Wednesday helped mortgage bonds finish the day in positive territory. This was followed by lower than expected weekly jobless claims Thursday. Fortunately mortgage bonds were positive overall for the week. Rates finished the week generally about 1/4 of a discount point lower.

The Treasury auctions will be carefully watched this week. If foreign demand remains solid rates should hold steady.

LOOKING AHEAD

Economic
Indicator

Release
Date & Time

Consensus
Estimate


Analysis

Existing Home Sales

Monday, Oct. 25,
10:00 am, et

4.23m

Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.

Consumer Confidence

Tuesday, Oct. 26,
10:00 am, et

50

Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

2-year Treasury Note Auction

Tuesday, Oct. 26,
1:15 pm, et

None

Important. $35 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.

Durable Goods Orders

Wednesday, Oct. 27,
8:30 am, et

Up 0.8%

Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.

New Home Sales

Wednesday, Oct. 27,
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, Oct. 27,
1:15 pm, et

None

Important. $35 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.

Q3 Advanced GDP

Thursday, Oct. 28,
8:30 am, et

Up 2.4%

Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.

7-year Treasury Note Auction

Thursday, Oct. 28,
1:15 pm, et

None

Important. $29 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.

Q3 Employment Cost Index

Friday, Oct. 29,
8:30 am, et

Up 0.5%

Very important. A measure of wage inflation. Weakness may lead to lower rates.

U of Michigan Consumer Sentiment

Friday, Oct. 29,
10:00 am, et

68.5

Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Employment Cost Index

The employment cost index is a quarterly report issued by the Department of Labor. The report measures the growth of wages, salaries, and benefits costs over a certain period of time. Though ECI figures are usually weeks old, the data remains the best indicator of employment price pressures considering it factors employees’ total compensation.

If wage pressures become evident, higher expectations of inflation also tend to arise. However, increasing compensation does not necessarily lead to increased inflationary pressures. Oftentimes, increased productivity enables employers to increase compensation without increasing the costs of their goods or services. Be cautious heading into this release.


Copyright 2010. All Rights Reserved. Mortgage Market Information Services, Inc.

www.ratelink.com The information contained herein is believed to be accurate, however no representation or warranties are written or implied

 

 

 

 

 

 

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