Our Real Estate Blog

Mortgage Rates Looking Ahead (7/26/2010)

July 26th, 2010 12:53 PM by Lehel S.

This Week; after a strong week last week in the stock market and selling in the bond market, one focus will be Treasury auctions. Always an issue with traders, but for over 18 months now Treasury has seen strong overall demand for its borrowing. A total of $104B of notes will be sold beginning on Tuesday with $38B of 2s, Wed $37B of 5 s and Thursday $29B of 7 yr notes. June new home sales on Monday are expected to be up 4.25% from the fall off in May. Other key data points this week are on Friday with the first look at early estimates for Q2 GDP, expected at +2.5% frm +2.7% in Q1; also Friday we will get the Chicago purchasing mangers' index expected at 67.0 frm 66.5 in June.
While the 10 yr note and the 5 yr note rates increased 7 basis points last week, mortgage rates held generally unchanged. Most of the recent rate market volatility is in treasuries while mortgage rates remain comparatively stable. The bellwether driver for 30 yr mortgage rates (the 10 yr note) has solid resistance at its recent lows at 2.90% to 2.88% with support in the area of 3.05% on recent selling. The stock market remains confined to a wide trading range with many large investors still sitting it out while more data is assessed about the near term economic outlook. We continue to hold that the economy will not fall into a double dip but remain skeptical about any increased economic activity. US interest rates are going to remain low for an extended period with the economy struggling to rebound in a jobless recovery and the housing sector still in recession. Last week Bernanke spoke of employment; it was an anti-forecast. "Uncertainty about the outlook for growth and unemployment... greater than normal...." it didn't phase the equity markets, but taking that comment and trying to paint a glowing sunrise is more wishful thinking than anything positive.
Posted in:General
Posted by Lehel S. on July 26th, 2010 12:53 PM



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