 Short Term Direction of Mortgage Rates Dependent Upon Auctions and StocksMonday, February 8, 2010 - Article by: Anthony -
Short Term Direction of Mortgage Rates Dependent Upon Auctions and Stocks Who Dat!!!! Congratulations to New Orleans on a well played and exciting Super Bowl victory. Mortgage rate moved a few basis points lower on Friday following the Employment Situation Report. While we have seen scattered day over day streaks of improvements, mortgages rates have failed to fall lower than 4.75% in 2010. To remind readers, as mortgage-backed securities prices move higher in price lenders are able to pass along better rates. After what seemed like a steady flow of important economic data and market moving headline news last week, the data schedule slows down in the days ahead, but headline news is always a possibility. In terms of scheduled events, no economic reports are being released today or tomorrow. On Tuesday we have the first of three mortgage rate influential Treasury debt aucitons to occur this week. With the amount of debt issuance (supply) already known, market participants will determine the success of the auction based on investor demand for our nation's debt. Stong demand for our debt is one of several factors that have attributed to mortgage rates holding near record low levels despite record borrowing. AQ draws attention to the source of last week's stock market weakness as a possible hint toward this week's auction demand. With the health of European foriegn government finances in question, it is possible global investors will look toward US government debt as a safehaven. If demand for these risk free government securities is high, it would be supportive of mortgage rates holding near current levels. If demand is not strong, it may imply that the recent stock market sell off is due a recovery, which could pressure mortgage rates higher. With very little planned data hitting the news wires this week, these auctions (and the possibility of unexpected headline news) will probably have the largest impact on mortgage rates. Below is the auction schedule. All auction results will be released at 1 PM Eastern. Tuesday: $40 billion 3 year notes Wedneday: $25 billion 10 year notes Thursday: $16 billion 30 year bonds Ben Bernanke is expected to discuss the Federal Reserve's plan to exit the marketplace this week as well. This has the potential to move interest rate. HERE is a recap of events for the WEEK AHEAD |
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