Charleston SC Real Estate Blog

It looks like a promising week with interest rates possibly falling towards the middle to end of the week. The 30yr fixed is right around 6.25% today.
 

The coming week is chock full of economic reports that will likely have a big influence on the financial markets. We start off on Tuesday with a report on Consumer Confidence, and also the beginning of Fed meetings which will culminate in a Rate Decision and Policy Statement on Wednesday afternoon at 2:15pm ET. It is widely believed that the Fed will keep the Fed Funds Rate at 2%…but what will be most interesting is the wording of their carefully crafted Policy Statement. If it gives hints of their intent to hike rates in the near future to help fight inflation, it could actually be good news for Bonds and home loan rates.
A look at sales numbers in the new and existing housing markets will come Wednesday and Thursday, and Friday will wrap up the week with a bang as the Fed’s favorite gauge of inflation, the Core PCE (Personal Consumption Expenditure) data will be released. Since this will be following the Fed’s announcement on Wednesday – will the Fed look smart if they’ve held rates steady, or perhaps come under criticism if the inflation numbers are super-heated? Could be a greasy few days for the Fed, so stay tuned.
Remember that when Bond pricing moves higher, home loan rates move lower – and then take a look at the chart below. You can see how in recent days, Bonds have moved higher, but are now battling an overhead “ceiling” of technical resistance. If Bonds and home loan rates are to improve in the near future, it will take some very Bond-friendly news to help crash through the ceiling that has stopped progress in its tracks for the time being.
Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.  Please visit our website at www.virtualmortgage.biz for more information on qualifying your customer.

 Mathew Mieras

More news by category Topic -: Buy phentermine saturday delivery ohio Tramadol hydrochloride tablets Picture of xanax pills Free shipping cheap phentermine Buying phentermine without prescription Safety of phentermine Pyridium Generic viagra cialis Cialis generic india Pink oval pill 17 xanax identification Buy free phentermine shipping Best price for generic viagra Information about street drugs or xanax bars Ordering viagra Snorting phentermine Hydrocodone overdose Lithium Amiodarone Get online viagra Order viagra prescription Order xanax paying cod Cheap phentermine free shipping Imiquimod Tramadol next day Linkdomain buy online viagra info domain buy onlin Pfizer viagra sperm Vidarabine Cheapest viagra price Prevacid Viagra cialis levitra comparison Dutasteride Lisinopril Thiotepa Female spray viagra Black market phentermine Betamethasone Cialis forums What does xanax look like Loss phentermine story success weight Order xanax overnight Viagra alternative uk Diet online phentermine pill Order xanax cod Mecamylamine Eulexin Cheap hydrocodone Buy cheapest viagra Viagra xenical Phentermine with no prior prescription Xanax in urine Macrodantin Cheap phentermine with online consultation Epivir Buy phentermine epharmacist Ditropan Woman use viagra Cialis erectile dysfunction Xanax withdrawl message boards Viagra online store Atorvastatin Generic ambien Is phentermine addictive Next day delivery on phentermine Buy online viagra Ethanol Natural phentermine Avandamet Xanax long term use Diet page phentermine pill yellow 5 cheap Cheapest secure delivery cialis uk Information medical phentermine Cialis experience Phentermine no perscription Compare ionamin phentermine Viagra cialis levivia dose comparison Noroxin Effects of viagra on women Buy cheap cialis Viagra shelf life Hydroxyurea Phentermine discount no prescription Buy cheap online viagra Dog xanax Online cialis Viagra class action Viagra price Phentermine without prescription and energy pill Hydrocodone cod only Nicoumalone Cheapest viagra Cheap ambien Vicodin without prescription Phentermine prescription online Phentermine snorting Mirtazapine Quazepam Isradipine Buy generic viagra online Xanax look alike Moxifloxacin Viagra experiences Piroxicam Nicorette Free try viagra Sotalol Cash on delivery shipping of phentermine How do i stop taking phentermine Xanax prescriptions Cheapest phentermine 90 day order Niacinamide Phentermine weight loss Phentermine

“THERE IS NO BARRIER TOO HIGH, NO VALLEY TOO DEEP… NO DREAM TOO EXTREME, NO CHALLENGE TOO GREAT” ~ Charles Swindoll And that motivating phrase was a great motto for last week, as both Bonds and home loan rates ended up being greatly challenged as they dreamed of breaking through technical barriers to attempt some improvement. Lots of intra-week action ensued - but when the dust settled, Bonds and home loan rates rallied in the face of challenges and ended the week very close to where they began.
Bond prices and home loan rates started the week to the upside, as Wachovia announced they were removing their CEO and Stocks faced some selling pressure on the news, moving money into Bonds and helping rates improve. But the rally was very short lived, as Wednesday’s “unofficial” Employment Report by giant payroll processor ADP indicated 40,000 new private sector jobs were added in May…and while this good economic news gave Stocks a boost, it pulled money right back out of Bonds and caused home loan rates to worsen. Thursday’s positive economic news that unemployment claims for the week were lower than expected caused Bonds and home loan rates to worsen even further, as traders began to speculate on what the “official” Jobs Report by the Department of Labor would contain.
And on Friday morning, along came the big enchilada, the monthly Jobs Report. The Unemployment Rate increased to 5.50%, up from 5% last month - the largest jump since February of 1986. This was much worse than the market expected. And remembering that bad economic news tends to be bad news for the Stock market, but good news in turn for the Bond market, the news was positive indeed for Bonds and home loan rates - helping them to end the week relatively unchanged.
Forecast for the Week

So we know that employment numbers were the big movers and shakers for the financial markets and home loan rates last week. What’s in store for the week ahead, and what could drive more market action?
Keep your eye out for the Retail Sales Report, which will be released on Thursday. The Retail Sales report is a measure of the total receipts of retail stores, and changes in these numbers are closely followed as a timely indicator of broad consumer spending patterns. Recent numbers haven’t been too bad - consumers seem to still keep spending away. But, will this week’s report show that inflation and high oil prices are finally taking their toll on consumer pocketbooks? A strong Retail Sales Report would be good for the Stock market - which stands to reason, as it would indicate continued consumer confidence and dollars being poured into the economy. But a strong Retail Sales Report would be bad news for Bonds and home loan rates, which benefit from weak economic news.
Sure to be a market mover is Friday’s Consumer Price Index report, which gives a read on inflation at the consumer level - that is, how much more expensive are goods and services this month over last month? CPI is a widely watched inflation indicator, and will definitely make headlines. Inflation tends to be bad news for both Stocks and Bonds, so if the report indicates inflation is heating up, this could cause Bond pricing and home loan rates to worsen in response.
Remember when Bond prices move higher, home loan rates move lower…and vice versa. And as you can see in the chart below, Bonds were challenged to improve and break above a strong technical barrier at the 200-day Moving Average….only to end the week being forced below it once again. This is a very important “line in the sand,” so I’ll be watching closely this coming week - as always - to see if the news of the week will help Bonds break above this important barrier, or remain below it.

“INFLATION IS AS VIOLENT AS A MUGGER, AS FRIGHTENING AS AN ARMED ROBBER, AND AS DEADLY AS A HIT MAN.” ~ Ronald Reagan. And although you might not describe the effects of inflation in such strong terms yourself…rest assured that the effects of inflation have crept into your home, your gas tank and your wallet. And inflation is also the nemesis of Bonds and therefore home loan rates, because just like inflation erodes the value of the dollars you spend, inflation erodes the value of the fixed return a Bond provides. And last week, Bond pricing worsened on news of inflation, causing home loan rates to move higher by about .25% across the board and reaching the highest levels seen in weeks.
The week was shortened by the Memorial Day holiday, but right out of the gates, inflation concerns abounded. The Consumer Confidence Report indicated that consumer inflation expectations are at an all-time high…meaning that consumers are seeing inflation as a real threat to their own financial situation. Rising energy costs and worldwide inflation fears continued to pummel Bonds lower - in fact, so low that they moved below a tough technical floor of support at the 200-Day Moving Average. This is important because Bonds have made a decisive cross over the 200-day Moving Average on only three separate occasions within the past three years. This means that barring a timely reversal, we are likely seeing a shift in the market towards higher home loan rates.
Friday brought a little good news on inflation, as the Core Personal Consumption Expenditure (PCE) Index showed that inflation does remain within the Fed’s comfort zone. While Bonds and home loan rates improved somewhat on the news, the trend for the week was definitely worse overall, as the big picture on inflation cost Bonds and home loan rates some hard earned ground.
Forecast for the Week

This coming week, one economic report in particular bears inflated significance…Friday’s release of the infamous monthly Jobs Report. It will reveal, among many other things, the number of jobs lost or gained during the month of May. Last month’s Jobs Report indicated that 20,000 jobs were lost in April, and while this was better than the expected job losses of 75,000, it is possible that the reported number understated the actual number of jobs lost, due to how the Department of Labor averages their count. And part of each month’s report is “revisions” to the several prior months’ numbers…which this could be quite a wild card for Bonds and home loan rates.
Last month’s Jobs Report, which was indeed more positive than expected, caused Bonds to fall a whopping 134bp in a matter of minutes, and home loan rates worsened quickly. Why? Because even though the news wasn’t great, it sure was better than anticipated…and this caused money to flow out of Bonds, and into Stocks…which caused Bond prices and home loan rates to worsen. This week’s Jobs Report could sure be another mover, and if the report or revisions indicate positive news on the jobs front, home loan rates will likely worsen in response.
Remember when Bond prices move higher, home loan rates move lower…and vice versa. And as you can see in the chart below, Bonds moved lower for most of the week, and actually closed below an important technical level at the 200-day Moving Average. This is a very important level, as it can act as either a very strong floor of support helping Bond prices not to fall below it…or as an equally strong ceiling of resistance, preventing Bonds and home loan rates from improving above it. And with Bonds currently having fallen beneath it, I’ll be watching closely this week to see if Bonds have indeed fallen and can’t get up…or if they can break above that tough level later this week and help home loan rates improve.