Mortgage Rate Forecast
I think it is fair to say we had an interesting week last week, and one that was full of surprises, but we may end up being less surprised than we thought. Only time will tell for sure, but one thing that is coming is change in the format of this report. More on that later, but I am excited about what is coming up for my weekly mortgage rate forecasts.
Last week had some data plays in it, as well as the Treasury Auctions that were announced the week prior. Overall, data was generally unfavorable for mortgage backed securities, and even the FOMC Meeting Announcement was benign at best. However, Treasury Auctions were met with generally strong results, even if some yields did creep slightly higher. Certainly one of the driving forces was the downgrades of several countries’ debt, starting with Greece, followed by Portugal, and then Spain. Couple of that with the tremendous uncertainty over what will happen here in the US and you can see why traders flowed money into mortgage backed securities and other so-called quality investments. We certainly have a different looking chart pattern for the short-term, but the long-term downtrend may not have actually been broken, at least not yet.
So what lies ahead? Well, some data has already been released today and MBS prices have already fallen today, which was not surprising. I will break down data as I normally do on my daily reports at Florida Mortgage Daily and MBS Commentary, but let’s go through the week’s currently scheduled events…
- Monday: Core PCE (8:30), Personal Income (8:30), Consumer Spending (8:30), ISM Manufacturing Index (10:00), Construction Spending (10:00), 3-month T-Bill Auction (11:30), 6-month T-Bill Auction (11:30)
- Tuesday: Factory Orders (10:00), Pending Home Sales Index (10:00), 4-week T-Bill Auction (11:30), 52-week T-Bill Auction (11:30)
- Wednesday: MBA Purchase Applications (7:00), ADP Employment Report (8:15), 3-year T-Note Announcement (9:00), 10-year T-Note Announcement (9:00), 30-year T-Bond Announcement (9:00), ISM Services Index (10:00), Crude Inventories (10:03), Eric Rosengren Speaks (7:30)
- Thursday: Jobless Claims (8:30), Productivity and Costs (8:30), Ben Bernanke Speaks (9:30), Treasury STRIPS (3:00), Money Supply (4:30)
- Friday: Nonfarm Payrolls (8:30), Unemployment Rate (8:30), Average Work Week (8:30), Hourly Earnings (8:30), Charles Plosser Speaks (11:30), Consumer Credit (3:00)
As you can see, the week is full of market-moving data, starting with this morning’s Fed Favorite, the Core PCE report. Even the ISM Manufacturing Index has been released, but MBS prices have only recovered some ground, begging to question whether or not they can keep pushing higher.
Looking at the charts, as I mentioned before, the short-term picture has changed as MBS prices pushed to new heights in recent history, breaking their recent multi-top pattern. They were also successful in piercing through several layers of resistance, which included the 50-day, 100-day and 200-day moving averages, but have already fallen back below their 200-day MA. Momentum is currently in their favor, but there are some warning signs to be seen, one of which is stochastics have turned lower and are currently in the overbought spectrum signaling a need for a move lower in MBS prices. Additionally, looking at the long-term, a downtrend remains in place if MBS prices cannot muster the strength to break higher still.
The bottom line for this week is to take it very cautiously again. While we have had a nice run this past week, that run may be coming to an end. While lower mortgage rates may yet materialize, I am still unhappy with the way the charts look. As with any week, don’t hesitate to follow my daily commentary at Florida Mortgage Daily and MBS Commentary.
—OK, as promised, here is what is coming up. I have been considering not just writing my weekly reports, but rather televising them on the web. I have also been contemplating, as you may remember, a radio show each week. Well, the reason this report was delayed today was I was working on the initial broadcast, but didn’t get it done, so likely it will launch next week. I am still working out the radio show and you can email me if you would like to be a guest as I want the show to be at least a half hour and I cannot talk about mortgage rate forecasts for that whole time, though I will allow Q & A. Look for more announcements on my daily reports.
May 3, 2010 by Robert D. Ashby · 2 Comments
Comments
2 Responses to “Mortgage Rate Forecast”Trackbacks
[...] finished with my weekly report at Lenderama and we are already seeing changes in the markets. Data this week will hit hard and fairly [...]
[...] find out what’s going on in the mortgage world and the mortgage rate forecast check out [...]