Monday Market Commentary: Push and Pull, Up and Down, There and Back Again

by Alex Stenback on March 7, 2011

Graph via Calculated Risk

Last Week:
The fact that mortgage bond prices, (and Mortgage Rates) closed the week at almost precisely the same level as they started might lead you to believe nothing much happened in interest rate land last week.  To the contrary – last week was marked by extreme volatility. 

Bond prices cycled furiously through a 75 basis point range (.125 -.25% yield, or rate change) as Mideast Turmoil, jobs and employment reports, and wild swings in the stock market gave the whole trading week a very bi-polar feel.

The biggest news, of course, was Friday’s employment report, showing the economy created 192,000 jobs (222,000 in the private sector) and January’s weather-depressed totals were revised upward from 36,000 to 63,000.  That sounds like great news until we realize that the economy is only averaging 127,500 jobs created per month – barely enough to keep up with labor market growth, much less cut into the 7 million+ lost jobs since the beginning of the last recession.

As you can see in the graphic above, the employment situation is improving, just not very robustly.

This Week:
The economic calendar may look thin this week, but do not be fooled – oil prices, Mideast boil-overs, and a Treasury auction for a cool 66 Billion dollars in 3, 10, and 30 year government debt, and stock market gyrations will score the week’s mostly second tier economic reports.

Thursday: Weekly initial and continuing jobless claims.  This number looked good last week and hurt mortgage rates.  The market will be looking to see if this number can follow through with another positive – good news here might spook rates higher.

Friday: Consumer Sentiment and February retail sales.  A confident and money spending consumer bodes well for future growth – strongly positive data here could send rates higher.

Remember: Data or events that suggest a recovery or improving economy will tend to push rates higher.  Rates may fall on weaker then expected developments.

This Week’s Economic Calendar [Econoday]
Watching Mortgage Rates?  Need a quote?  Follow me on Twitter for running commentary on this week’s mortgage rate and real estate news.  It is anything but dry, and we try to have a little fun with the numbers along the way.

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