Monday Market Commentary: Rates Jump

by Alex Stenback on December 10, 2007

1210_rate
                                                                 Graphic via MSNBC
Last Week:
A middle-of-the-road employment report (94,000 jobs created, versus 70,000 expected) spurred a sell off in mortgage bonds.  Prior to the selloff, (which began Thursday and continued Friday,) mortgage rates were at two year lows, so in many ways this was a technical correction.  Rates worsened by .25-.375 for most conforming mortgages. Note: The chart above reflects rates as of last Wed, before the selloff.
This Week:
Fed week.  FOMC meets tomorrow.  The discussion at this point centers around not whether the Fed cuts, but how much.  Will it be a quarter, or a half point? As always, bear in mind the Fed does not control mortgage rates.  The statement accompanying the FOMC’s rate decision will get the most scrutiny, and has the most potential to move mortgage rates.  If the Fed statement contains any hawkish, inflation fighting tones, mortgage rates may move up in the face of this cut.  Later in the week, retail sales, and two key measures of inflation (consumer and producer price indices) will add additional color, and may move mortgage rates.
This Week’s Economic Calendar [Barron's]

{ 1 comment… read it below or add one }

Duane December 10, 2007 at 11:13 am

Rates are supply and demand right? With all these subprime loans getting bailed out and refinanced soon, rates should go up! kidding of course.

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