Monday Market Commentary February 8th, 2010: Where Mortgage Rates are Headed

by Alex Stenback on February 8, 2010

Last Week:
30 year mortgage rates improved slightly just about everywhere last week as a volatile stock market and improving but still fairly depressing employment report (employment rate dropped to 9.7%, but revisions to prior reports “found” another 1 Million jobs that were lost in 2009.)

This Week:
What the economic calendar lacks in volume this week, it may make up in impact.

In fact, for the first half of the week,  technical factors and the bond markets interplay with stocks and other markets will drive rates (recall: Rates usually move higher when stocks do well, lower when stocks do poorly.  Not always, usually.) There’s also some $80 Billion worth of new auctions (Treasury bonds and notes) straddling the middle of the week to contend with.

As for the meat on the calendar? Watch these reports:

Thursday 11 Feb, 8:30AM; Weekly Initial Jobless Claims: Don’t look now, but average weekly jobless claims have been on the rise again, which suggests there could be more job losses to come.  Market expects 480K jobless claims this week.  Higher than that is probably a rate friendly report.

Thursday 11 Feb, 8.30AM; Retail Sales:  As the consumer spends, so goes the economy, and recently the consumer hasn’t been “going” much.  last month, retail sales declined .3%, expectations are for a .4% increase this month .  This number can be volatile, but anything showing consumers are consuming at a better than expected clip should help stocks and may hurt mortgage rates.

Friday, Feb 12th, 10AM; Consumer Sentiment:  See above, only this number measures “feelings & attitudes” rather than, you know, actual sales, so the impact is only moderate compared to Retail Sales and other harder data.  Seen as a leading indicator, since sentiment and spending do correlate.  Upside surprise here is the one that has the potential to hurt rates.

· This Week’s Economic Calendar [Barron's]

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