Monday Market Commentary: Soft Economy, Trouble in Europe Anchors Low Mortgage Rates

by Alex Stenback on June 27, 2011

Last Week:
Mortgage rates improved modestly last week as the negative news flow continued to etch a picture of a slowing and struggling economic recovery.

The Fed has again walked back it’s prediction for 2011 GDP, which started the year at 3.9% and now is at 2.9%. Hitting that number will require things pick up between now and year-end. Unemployment/employment fails to improve and chugs along at recessionary levels, while Europe dithers over Greece and other sovereign-European basket case economies. China inflation which would in part mean US inflation looms.

Net result here is investors seek safety, driving mortgage and other rates lower.

This Week:
Markets have a full hopper to sort through, as the economic calendar prints a number of key reports on inflation (Personal Consumption/Expenditures, Monday 0830,) Manufacturing (Chicago Purchasing Managers Index, Thursday ) and Housing (Pending Sales – Wednesday.)  Negativity in any or all will normally favor stable to lower mortgage rates.

Thursday’s weekly jobless claims will also garner some attention – this report in particular has been trending higher than probably anyone expected or is comfortable with – averaging over 400K per week.  The longer these numbers stay elevated, the longer the road back to a better employment situation, but when they start to turn a corner, it may be the first indicator that higher rates are incoming.

As a backdrop, Treasury auctions 2′s, 5′s and 7′s (Treasury Notes) to the tune of $99 Billion this week, which may also influence rate movements.

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Watching mortgage rates?  Follow me on Twitter for several-times-daily updates on mortgage rate movement and related topics. 

Seeking a mortgage?: Alex Stenback is a seasoned professional with over ten years as a loan officer who’d like a shot at your business (and answers his own phone/email,) so if you are in MN or elsewhere, drop a line: Alex [AT] alexstenback [Dot] Com or 952.417.8490.

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