Middle East concerns are still impacting both the stock and bond markets. Coming off the three day weekend, the mortgage bond market had a "gap up," meaning that there was a sizeable improvement from Friday to Tuesday.
Today that improvement seems to be holding up, maybe with a slight improvement.
This improvement is continuing a trend that began several days ago.
The real question for me is if the bond market is ready for a significant rally that will drive rates back down to December levels, or if the Libya unrest is just giving mortgage bonds a temporary boost.
We will know more as the week progresses, and we hear if the economic data support the continuing mortgage bond improvements. We have a couple important reports out Thursday and Friday.
Many analysts seem to think that the recent stock rally is running out of steam, and it is time for bonds to have a run. This would bring about an improvement in mortgage rates.
I am just a little cautious about expecting any significant rate improvement. But again we will know more by Friday.
The 45th Annual Chattanooga Home Show is this weekend. I posted more information about the Home Show on my other blog at www.RichardsRealEstateThoughts.com.
There is a lot of excitement with the show this year. Take time over the weekend to come.
Times: Friday and Saturday, 10am to 8pm
Sunday 11am to 5pm
After a 3 day weekend, the mortgage bond market opened with a little boost of improvement that helped mortgage rates maintain the improving trend of the last week or so.
There is no way to know if the trend of improving rates will continue because it seems to be based primarily, according to many analysts, on the fears over the troubles in the Middle East.
The bond market had lost 2 points since the beginning of February. Over the last several days it has gained over half of that back.
If you have decided not to lock you loan after these gains, then you are thinking that we are entering into a bullish bond market and the improving trend is going to gain more momentum.
Here is the Basic Home Loan Programs video segment for my Home Buyer Video series.
Mortgage bonds appear to have hit a low last week, meaning rates reached a high level. That is at least temporary.
For the last few days we have seen an improving bond market. Today though we may have reached a bond high. This week's reports on Producer Prices and Comsumer Prices gave some indication of an increase in inflation.
That may have put a brief stop on additional improvements in mortgage rates.
The good news of course is that rates are still at very low levels, and all indications are that the trend of increasing rates has at least been slowed down this week.
So far so good with the recent, slight, improvement in the mortgage bond market. We are far from regaining the low rates that everyone enjoyed even in December, not to mention way back in November.
This week we have some very important economic reports due that may push bonds, and mortgage rates, either way. The most important of the reports are the Producer Price Index tomorrow, and the Consumer Price Index on Thursday.
It is tough to predict which way the reports will swing, but today's Retail Sales figures were a little surprisingly low. In fact the numbers with Retail Sales seem to be developing into a downward trend.
Anyway, I at least hope that the longer term trend of increasing rates since November has been slowed down.
We had a string of 9 days of interest rate increases, beginning with January 31 until February 10. The bond market went through at least 2 support levels, and there seemed to be no end to the deterioration.
With the troubles in Egypt though investors began to show some concern, enough to look again at the bond markets. This chage caused a rather abrupt reversal, and was very well received by us all.
My thoughts are that this level may provide a support, but it will likely not mark a turn to significantly improved rates like we enjoyed a couple months ago.
I am thankful that the decline has ended. I just do not expect that rates will move much lower. The general trend since November has been for rates to increase. Nothing seems to happened to change that trend.
This morning markets were hit with a big, unexpected and significant, drop in the headline news unemployment rate.
It had been runing over 9.7 to 9.8%% for months and was expected to improve slightly, maybe 9.6 to 9.7%%. A slight improvement.
Wow - 9.4% was not at all expected, and should have caused the stock market to jump up and rates to jump even higher.
Funny thing, that is not what happened. Rates held steady and the stock market actually dropped.
The reason is the facts behind the 9.4% unemployment.
Fact 1 - the labor pool is shrinking, meaning the number of people who are either employed or looking is lower.
Fact 2 - long term unemployed is higher, people no longer qualified to receive unemployment
Fact 3 - discouraged workers grew by over 389,000 year over year
Fact 4 - actual non farm payroll growth has declined - 103k last month and 71k prior
Fact 5 - the non farm payroll 2010 average of 94k is almost half the number needed to bring about any real recovery in employment
Fact 6 - housing is still a big problem and the forclosure and pending foreclosure inventory is massive and growing.
The fact is despite the apparent good news of a drop to 9.4% unemployment, the markets were not impressed.
And rightfully so.
Ok, I have suggested over the last several days, that we had established a high level for interest rates. Today I am officially calling it a trend of improvement.
It looks to me like we have had steady improvment since just before Christmas.
Today's Federal Reserve statement has been received with mixed reaction on the bond market, and certainly any solid indicator of increasing strength in the economy will reverse the trend.
But we have an improving trend. Buyers, it will likely not get back to 4.25% or lower. Take advantage and lock in soon. The trend for the year should be higher rates, assuming we actually are in a sustainable economic recovery and all this good news is not simply from unsustainable Federal stimulus.