Existing Home Sales Vs. 30 Year Mortgage Rates, via Barron’s Econoday
Monday Market Commentary is a weekly post on the week ahead in the mortgage market. I’ve published this here since 2004 with one thought in mind:
Deciding when to lock your rate is not about knowing where rates are going, but about understanding the market, avoiding dumb risks, and taking smart ones.
Mortgage rates drifted slightly higher last week as stocks rallied on the heels of a better than expected exisiting home sales report. Benchmark 30 year rates posted increases from .125%-.25% by weeks end.
Most of the damage to rates occurred Friday, when new home sales printed the best number in two years and stocks went on a romp. This despite relatively mortgage-rate friendly reports on infaltion (PPI: non-threatening), weekly jobless claims (576K: stopped falling), and manufacturing (Philly Fed: Weak but improving)
The backdrop: Uncle Sam is set to issue 109 billion dollars worth of notes and bills this week. This is no mean sum. I’ve discussed the impact that sort of supply can have on mortgage rate prospects before, but for the benefit of new readers: Supply can act like a current that the mortgage market must overcome to see any improvement in rates. Simply put, they can improve, but it is just tougher, because the market is swimming upstream.
The economic calendar proper will give readings on Consumer Confidence, Durable Goods Orders, New Home Sales, Gross Domestic Product, and Personal Consumption this week.
Friday’s personal consumption expenditures report is widely regarded as a key yardstick for inflation, and is likely the most important report for mortgage rates this week. That said, I am keeping an eye on stocks, and some of the normally second tier reports like New Home sales – any positive surprises suggesting a stronger than expected economy can hurt mortgage rates quickly.
This Week’s Economic Calendar [Barron's]