Rate Watch
As posted last week, interest rates were up at the close of last week. Due to a bad treasury auction and an expected Fed hike, the 30 year fixed was up to 6.12 percent slightly above the previous weeks 6.10 percent. This puts the skids on a 6-week spree of falling rates. There is consensus among Bankrate.com's mortgage experts that rates will continue to rise throughout the week. 60 percent of the contributors to the survey believe rates are on their way up.
We’ve got a busy economic calendar this week. It started with a Personal Income and Outlays report this morning. Personal Income grew a modest 0.4 percent and personal outlays were up a sharp 0.9 percent (contributing to the lowest annual savings rate since 1933). The report met market expectations and there was little reaction in the bond market.
Tomorrow, the Fed's Federal Open Market Committee (FOMC) will meet to discuss possible changes in monetary policy direction. It is expected that the Fed will again raise rates a quarter of a point to 4.5 percent and there by raising the US Prime Rate to 7.5 percent. The more interesting market implication will come in the FOMC report, as we will get a glimpse into their judgments about future rate hikes. This will be Alan Greenspan's last meeting as Ben Bernanke moves to replace him as Chairman of the Federal Reserve. Mr. Greenspan is retiring and has served in this role for the past 18 years.
Another potentially market moving development will come with release of the Employment Report on Friday. If the report shows a more significant increase in jobs created than the 250,000 expected, it could cause a sell-off in the bond market causing increased rates. When the economy is creating a lot of jobs in a short time frame, interest rates tend to rise.
It is a good idea to lock rates as quickly as possible. We will most likely see moderate increases in rates through out the week.
posted by Vincent Biondillo @ 8:51 AM
0 Comments:
Post a Comment
<< Home