It is another busy week of economic data, all of which is anticipated to support the possibility of lower mortgage rates. Here is what is in store for this week:
- Monday Nov 17: October Industrial production and Capacity Utilization; expected -0.5% and 76.1. Past reports have shown slowing factory orders and low retail sales. It is pretty much a given that these will be weak numbers. Doubtful that we will see movement off of these numbers (the market is flat but slightly positive on this news as I post)
- Tuesday Nov 17: October PPI; expected -1.7% with a core of +0.1%. Falling energy prices (as we have been happy with at the pump the past few weeks) has cut the headline number way down, but the core rate is still expected to post one of the smallest increases for the entire year. The expected numbers are already priced into the market.
- Wednesday Nov 19: Building permits and Housing starts; expected -3.1% and -4.5%. You don't have to be a rocket scientist to know that new construction has been slow and builders are not adding inventory to an already swamped market.... bottom line, no surprises here and thus, doubtful that the market will move on the data
- Wed 11/19: October CPI; expected -0.7% with a core of +0.1%. Based on the estimate, our cost of living has fallen the most in 60 years. This is mostly due to the drop in energy prices. The lack of inflation pressure in CPI and PPI has left the door open for Fed Funds to be cut in December. Many investors have priced in a 0.5% cut in fed funds, so it is not likely we will see any movement in rates today w/o a surprise in the figures.
- Wednesday(AGAIN!): Fed minutes from the 10/28 meeting released. The minutes from the FED meeting will include a forecast for inflation and unemployment. It is anticipated that there will be downward revisions in growth and inflation into next year. There are already gloomy forecasts out there, but if the FED's numbers are gloomier there is the potential for a late day rally in the credit markets, which will support lower rates.
- Thursday 11/20: Initial Jobless Claims; expected Down 9,000. A modest number that is not likely to draw any attention.
- Thursday 11/20: October's leading indicators; expected -0.6%. Investors will be looking at this number. They will be watching to see if there is 2 consecutive months of improved readings. If there is, it is a sign of a potential rebound, if not it will support steady to fractionally lower rates.
- Friday: No News day!
It is another busy week that will be over shadowed by the potential of excess supply in the market. The concerns are still that the Treasury will be flooding the markets with bonds as the US Government looks to borrow to support its bailout plans over the next few months. There is the basic rule of supply and demand here: too much supply and the price has to come down so that there is an appetite for the bonds. Unfortunately in the credit markets, price down = yield up. and if there is not demand for treasuries there will be limited demand for mortgages as well. Still a lot of unknowns out there, Everything points to lower rates and from an economic stand point, we should see lower mortgage rates than we have now, but there is enough volatility to cause concern, leaving the safest option being to lock in an interest rate when you can. Keep in mind that the average rate on a 30 yr loan for the past 20 years is 7.68%, considering that we are in the low 6's now, we are in Great shape and have nothing to worry about!
Have a great week!
Rob
(732)223-1630 x102
Real Estate Mortgage Network
Just about an hour left in the trading day... and we are holding onto modest gains in the mortgage world. I hope you find these reports useful, I try to post them every Monday
Hi Rob, Friday thinks that you are showing favoritism to Wednesday!
As always, thanks for the helpful update :)
Rob, Thank you for the information... all in one is not a pretty picture. I am waiting for - forecast for inflation and unemployment into next year - that will very much say wherever we heading in 09.