This Week In Intrest Rates!

What happened last week?

Mortgage backed securities (MBS) improved from last Friday's close which caused 30 year fixed rates to move lower. This marks the second straight week of over +100 BPS gains in the benchmark mortgage backed security and therefor, lower mortgage rates.

We focused on Fed Chairman Ben Bernanke who testified before the House and Senate last week as part of his semi-annual monetary policy report. Traders are watching for signs of when the Federal Reserve will begin to reduce the amount of monthly Treasury and MBS bond purchases. Indeed the MBS rallied as traders speculated that Bernanke's most recent comments pointed to the Fed was going to be waiting longer to "taper" their monthly purchases. The prior speculation was that this tapering would begin in September and as a result had sent interest rates soaring on what was just a rumor.

Bernanke's commented that tapering will occur once the economic data (with particular focus on the labor market) shows enough of an improvement. Traders do not perceive that there is enough economic improvement yet for this to happen and so, project the timing of the “tapering” is shifting later on down the road. Of course, this sentiment could change next week.

MBS also received renewed interest from foreign investors as concerns mounted about Italy and Greece being able to meet their latest round of bailout requirements.

 

Sooooo what is on the agenda for this week?

 

The bond market will get a breather from Bernanke this week as he is not appearing in public.

The biggest reports of the week will be Initial Jobless Claims and Durable Goods Orders.

Last month, MBS sold off sharply (worse rates for you) in direct reaction to a very strong reading in Durable Goods.

So, a variance from market expectations can really move your pricing.

We do have three U.S. Treasury auctions this week:
07/23 - 2 year note
07/24 - 5 year note
07/25 - 7 year note - most important of the three

ate	Time (ET)	Economic Release	Actual	Market Expects	Prior
22-Jul	10:00 AM	Existing Home Sales	-	5.28M	5.18
23-Jul	9:00 AM	FHFA Housing Price Index	-	NA	0.70%
24-Jul	7:00 AM	MBA Mortgage Index	-	NA	NA
24-Jul	10:00 AM	New Home Sales	-	481K	476K
24-Jul	10:30 AM	Crude Inventories	-	NA	-6.902M
25-Jul	8:30 AM	Initial Claims	-	328K	334K
25-Jul	8:30 AM	Continuing Claims	-	2990K	3114K
25-Jul	8:30 AM	Durable Orders	-	1.50%	3.70%
25-Jul	8:30 AM	Durable Goods -ex transportation	-	0.40%	0.50%
25-Jul	10:30 AM	Natural Gas Inventories	-	NA	58 bcf
26-Jul	9:55 AM	Michigan Sentiment - Final	-	84.2	83.9

Information Provided by Craig Inglis with Vandyke Mortgage
http://wyarnall.kwrealty.com