Brief note from the desk of Miguel
Velazco, Sr. MBA
Week of: Monday, November 28, 2011
Present Market Conditions
Monday’s bond market has opened down sharply due to a very strong
opening in stocks. The stock markets are reacting favorably to encouraging news
from overseas and strong preliminary sales figures from Black Friday, pushing
the Dow higher by 315 points and the Nasdaq up 85 points. The bond market is currently
down ( higher mortgage rates) as investors shift funds away from safety and
into stocks. This will likely push this morning’s mortgage rates higher by
approximately .250 percent.
Watch the major stock indexes for mortgage rates direction today.
If they give back a good portion of this morning’s gains, we could see bond
prices improve from current levels and mortgage rates revise slightly lower.
The rest of the week brings us few more pieces of economic news that may affect
mortgage rates, some of which is considered highly important to the financial
and mortgage markets. This means we have other forces to drive bond trading and
mortgage pricing other than stock strength or weakness. As the week progresses,
the data gets more important, so it is quite possible that the most movement in
rates has yet to come.
November's Consumer Confidence Index (CCI) will be released late
tomorrow morning by the Conference Board. It gives us a measurement of consumer
willingness to spend. If consumer confidence is rising, analysts believe that
consumers are more apt to make larger purchases, essentially fueling economic
growth. This makes long-term securities such as mortgage-related bonds less
attractive to investors and usually leads to higher mortgage rates. Analysts
are expecting to see a sizable increase in confidence from last month's level,
meaning consumers were more optimistic about their own financial situations
this month than they were last month. A weaker reading than the 44.0 that is
expected would be good news for mortgage rates, while a stronger reading could
push mortgage rates higher tomorrow.
the most important day of the week is Friday with monthly employment figures
being released, but we may also see sizable movement in rates Thursday.
Friday's employment data could cause a significant change in rates, but
Thursday's ISM index is also one of the more important reports we see each
month. If Friday's data reveals stronger than expected results, we may see
rates spike higher after its release, possibly erasing any gains from the week.
It will probably be the key to rates moving lower or higher for the week. I
suspect it will be a fairly active week for the markets and mortgage pricing,
especially the latter part, so it would be prudent to maintain contact with us
as your Real Estate professional.
Free: 888MIGUEL8 [1(888)644-8358]