Market Reports
A Mortgage Update from Jay Skwierawski for the week of April 27
Hello Everybody!
Interest rates rose slightly last week. The economic news was mixed, while there was some favorable news for one large bank, and less than favorable inflation news from abroad. Although it was a relatively quiet week, from a news standpoint, the news that was released caused much volatility in the mortgage bond market. The week ahead is chock full of news, including a Federal Reserve meeting, and the all important employment report.
First, let's take a look at the news that came out:
The week started on Monday with news that National City Bank announced that it was receiving a $7 Billion cash infusion from some investors. This was looked at very favorably, as it signaled that perhaps investors are starting to see value in the battered financial sector and just maybe we could be nearing the end of the credit crunch. On Tuesday, Existing Home Sales came in at 4.93 million units, slightly higher than the 4.92 million that were expected. Although the number was better than expected, it was still a large decline from the month before. On Thursday, Durable Goods Orders came in less than expected, while first time unemployment claims were reported at 342,000 vs. the 375,000 that was expected. Also on Thursday, New Home Sales came in less than expected at 526,000 units vs. 585,000 expected and 575,000 from the month before. The feeling is that the credit crunch is affecting the ability of some "would be" buyers of new homes to be qualified for mortgages. Finally, on Friday, the University of Michigan Consumer Sentiment report came in lower than expected. Gee, you think? Consumers are being hit over the head everyday with bad news on the economy and inflation, and are paying $4.00 per gallon for gas. One might suspect that consumer sentiment might be down.
Next week could be one of those trend setting weeks as far as mortgage rates are concerned, and that only has to do with the economic news that is expected to be released. Who knows what other surprises are in store for us. Here's what's coming up this week:
Tuesday - Consumer Confidence, another measure of the "mood of the consumer" - (Moderate impact on rates)
Wednesday - Federal Reserve Open Market Committee will announce their decision on short term rates - (HIGH impact on rates)
Wednesday - Employment Cost Index, measuring if inflation is making its way into our paychecks - (HIGH)
Wednesday - 1st Quarter Gross Domestic Product - will this number confirm that our economy is in a recession, or just really, really slow? The definition of a recession is when the GDP number is negative two quarters in a row. As you may recall, the 4th quarter GDP came in at a very slow .6%, but still positive. (Moderate)
Wednesday - GDP Price Deflator, a measure of inflation which is part of the GDP report - (HIGH)
Wednesday - Chicago Purchasing Managers Index (PMI), a measure of the economy in the Midwest (HIGH)
Thursday - Personal income and spending (Moderate)
Thursday - Personal Consumption Expenditures (PCE) and Core PCE, excluding food and energy - the Fed's favorite measure of inflation that is highly watched every month. (HIGH)
Thursday - First time unemployment claims, a measure of the number of people that are losing their jobs - (Moderate)
Thursday - The Industrial Supply Manager's report (ISM), a measure of the state of the economy across the country (HIGH)
Friday - The April Employment Report, including:
New jobs created (In March, 80,000 jobs were lost. The market is anticipating the same size loss for April)
Unemployment Rate (In March, this number jumped, unexpectedly to 5.1%. The market is expecting another increase to 5.2% in April)
Hourly Earnings (an increase would signal another sign of inflation)
Average Work Week (a decrease is expected)
All of the employment numbers have a HIGH impact on mortgage rates
Individually, each of the numbers could have a HIGH impact on mortgage rates, but what will probably happen is that we will have some good numbers and some bad, and mortgage rates could have the same kind of week ahead that they did last week. A lot of volatility in the market up and down, and rates ending up the week only slightly changed from where they started out.
The chart above shows the movement of mortgage bond prices. Each bar represents a trading day, with the most recent (Friday) on the far left. On the chart, remember that green and up are good, red and down are bad.
Here's some good news:
SPRING HAS SPRUNG...
...and that means it's time to wash away those winter blues! In fact, according to the Soap and Detergent Association - did you even know there was such a thing? - three-quarters of Americans engage in spring-cleaning. In fact, their surveys indicated that more than 80 percent of people who spring clean agree that it helps them save time throughout the year, and 96 percent of people donate or discard items during their spring-cleaning.
But the advantages can go much further than that. Check out these top ten spring-cleaning activities, compiled by www.medicinenet.com, that can help make your home healthier and safer:
1. Thoroughly dust your home. Also clean any air conditioning and heating filters, ducts, and vents to minimize pollens and other airborne allergens.
2. Organize your medicine cabinet. Throw away expired medications and old prescription medicines that you no longer need.
3. Inventory your garage and basement. Get rid of any old paint, thinners, oils, solvents, stains, and other similar items you no longer need. Note: You may need to take these items to a hazardous waste drop off center.
4. Inventory under your sinks and around your house. Dispose of old or potentially toxic cleaning products.
5. Have your chimney professionally cleaned. This will help you lessen the chances of carbon monoxide exposure when the cold weather returns..
6. Clean all mold and mildew from bathrooms and other damp areas. Use nontoxic cleaning products.
7. Check your rugs. Make sure that rugs on bare floors have nonskid mats and that older or dusty mats are either washed or replaced.
8. Inspect outdoor playground equipment. Make sure that all elements are sturdy and safe, especially guardrails, protruding bolts, and other potential sources of injury.
9. Change your batteries. Do so for both smoke detectors and carbon monoxide detectors.
10. Collect old batteries throughout the house for disposal. Dispose of them in a battery recycling or hazardous waste center.
And make it easy on yourself - take it one room, one cleaning task at a time. You'll be more likely to accomplish more if you tackle each spring-cleaning project separately. And that's great advice...any time of year!
Have a great week!
Some of the information contained in this update comes from Mortgage Market Guide, a service that I subscribe to.
Jay Skwierawski
President
First Sterling Mortgage Services, LLC
737 North Michigan Avenue, #1900
Chicago, IL 60611
312.268.7601
WE CLOSE ON TIME - EVERY TIME!
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