This morning, mortgage backed securities continue their downward slide which is causing mortgage rates to increase. Not much to report in the way of positive news for mbs'. It appears the global sell off of everything continues and investors are going into cash to meet margin calls and redemption requests. The only winner today are treasuries.
Today we had the release of some positive news on housing. Economists where expecting new home sales to come in at 450,000, which would have been a drop of 14,000 from the month before. The actual number came in higher at 464,000 which is an increase of 2.7% over the prior month. The median home price is currently at $218,400 which is a drop of 9% from last year at this time.
This week does bring us many economic reports which could impact mortgage rates. The big news will be the fed meeting and accompanying announcement on interest rates. The fed fund futures are pricing in a 100% chance of a .50% cut to the fed fund rate and some are even speculating a .75% cut. In the wake of every fed fund cut this year, mortgage rates increased. A cut to the fed fund rate does not mean mortgage rates come down.
Here are the upcoming reports
Tuesday - Consumer Confidence, estimates are for a 54.0 reading, prior month came in at 59.8.
Wednesday - Durable Goods Orders, estimates are for a -.5% drop after lasts months drop of -4.5%. We also get the fed announcement.
Thursday- Jobless claims, estimates are for 473,000 after last months 478,000
- GDP Chain Deflator for quarter 3, estimates are calling for a 4.0% increase after last months 1.1% increase
- Gross Domestic Product for quarter 3, estimates call for a -.5% contraction after last quarters 2.8% growth
Friday- Personal spending, estimates call for a -.1% drop after last months 0.0% readin
- Chicago PMI, estimates call for a 47.0 reading after last months 56.7
- Consumer Sentiment, estimates call for a 67.0 after last months 57.5
- Personal income, estimates call for a .1% increase after last months .5% increase
We also get this week news on inflation with the Personal Consumption Expenditure. These reports give us a guage into inflation on the conumser level and is the feds favorite measure of inflation. With the huge declines in oil and other commodities, these reports should continue to show that inflation is moderating which gives the fed the go ahead to cut rates.