Mortgage rate outlook and market preview for the week starting March 5th 2012.
At the end of last week we saw a run up in the 10 year US Treasury yield and mortgage rates due to positive news coming out of Europe and also some positive reports out of the US. The 10 year yield is now back under 2% which is good for mortgage rates. China which has been on a strong 8% growth since 2005 announced today that it cut its target growth rate to 7.5%. Also announced was that European manufacturing output slowed in February and January’s numbers were revised lower showing more proof of an economic slowdown in Europe.
There are 2 major events this week that can shake up the market. Private investors that are holding Greek bonds are voting on whether to accept the mandated debt writes-downs. The terms of the write- downs according to the current bailout plan is that current investors will forgive 53.5 percent of their principal balance in exchange for new Greek bonds and notes from the European Financial Stability Facility. If investors don’t accept the write-downs then the entire Greek bailout plan will be derailed. The other major event this week is Friday’s unemployment numbers which are expected to show 207K non-farm jobs and 220K no farm private jobs. If the report varies substantially from estimates it could shake up the markets. Both mortgage backed securities and the 10 year yield has been contained in a tight range for the last 3 months and look for this trend to continue unless we see any major shocking news out of Europe or the US.
Tags: Europe debt crisis, Greek bailout, market preview, mortgage rates outlook