Should you paint your brick?

By Taff Weinstein at

Should you paint your brick?

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 2.500 MBS) lost -58 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly  higher from the prior week.

Overview:  Overall, the March economic data was very weak.  Normally, this would help lower mortgage rates but instead rates ticked up on the reduction of demand on the buy side of the trade as the Federal Reserve purchased fewer MBS than they had the prior week.\

 

Domestic Flavor:

Economic Indicators: The March Leading Economic Indicators dropped by -6.7 vs est of -7.0, it is the worst reading ever on record.

Jobs, Jobs, Jobs: Initial Weekly Jobless Claims were higher than expected, coming in at 5.245M vs st of 5.105M. Continuing Claims jumped to 11.976M but that was actually less than market expectations of 13.50M. This means that 22 million jobs have been lost in just 4 weeks. That wiped out ALL of the job gains that our economy picked up after our last recession.

Taking it to the House: March Housing Starts were 1.216M vs est of 1.30M which is a sizable pullback from Feb's annual pace of 1.564M. Building Permits were inline with estimates, 1.353M vs est of 1.300M. Weekly Mortgage Applications increased by 7.3%, thanks to a pick up of 10% in Refinance Applications. Purchase Applications fell for the 5th straight week, down -2.0%. The April NAHB Housing Market Index dropped to 30 vs est of 55, it was hanging in the low 70's for awhile.

Manufacturing: The April Philly Fed Manufacturing Survey was dismal with a contraction of -56.6 vs est of -30. The April New York Fed Regional Manufacturing Survey for NY (Empire Manufacturing) tanked by -78.2 which was far worse than the projected pull back of -35.0. The March Industrial Production report was also dismal, down -5.4% vs est of -4.0%. Capacity Utilization was only 72.7% vs est of 73.8%


What to Watch Out For This Week:

 


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.
 

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