Animated job loss heatmap from Slate.com
Mortgage bonds faced some selling pressure but managed to mostly hold their ground in the face of a better than expected start to earnings season on Wall Street, which did pull money out of bond markets and into equities. 30 Year fixed rates drifted slightly higher, but are still sporting a 4 handle.
There was cautious, qualified optimism about the economy from several important sources – most notably Ben Bernanke – who affirmed his “fundamentally optimistic” outlook.
As mentioned last week, I am not convinced we are past crisis stage, but the velocity of the economic contraction seems to have slowed in some quarters, which is encouraging.
Never forget, interest rate levels can be thought of as a proxy for general economic health. This is the very real paradox involved if you are “rooting” for lower rates – you want them to go low, but not so low that you are out of a job. And when the economy does begin to recover in earnest, rates are going to reverse course in a hurry.
Earnings season continues as 40% of DJIA components report earnings this week. Watch this closely – bond markets will remain tightly levered to stocks, and rallying stocks usually hurt mortgage rates.
The economic calendar has a handful of mostly second tier reports scheduled. Leading Economic Indicators, Home sales (Existing (Thurs) and New (Fri) and durable goods orders stand out as the most likely market movers. As always you can track the reports themselves at the link below from Barron’s
This Week’s Economic Calendar [Barrons]
Watching Rates? If you are following mortgage rates, don’t forget to subscribe to my RateWatch Twitter feed. It’s posted in (almost) real time in the center column, or you can grab the feed directly and have updates piped to your phone, RSS reader, IM, or Twitter account.