Posts Tagged ‘market preview’

Market recap for week ending 8/2/2013

Posted on: August 3rd, 2013 by Fred Bohman No Comments

This week’s two big events were the Federal Reserve’s (FED) meeting and employment report.

On Wednesday the FED had their meeting and afterwards they are leaving interest rates where they are at for now. They also added that they will continue to monitor the economy and adjust their asset purchase program accordingly. Under the current asset purchase program The FED is currently keeping interest rates low by purchasing 45 Billion dollars of mortgage bond on a monthly basis. If the economy shows signs of improving they will lower this number and rates will increase.

Today job creation numbers were released. The report was expected to be good based on the ADP numbers released earlier in the week. Instead the numbers came in below estimates with the economy only adding 162,000 jobs in July. This was good news for interest as employment is one of the most important factors the FED looks at when deciding what to do with interest rates.

Market recap for week ending 7/19/2013

Posted on: July 19th, 2013 by Fred Bohman No Comments

This week’s big event was the Federal Reserve’s (FED) President Ben Bernanke’s biannual testimony in front of Congress and the Senate. The reason this is so important is that the FED has been keeping interest rates low in order to stimulate the economy. The Fed has been doing this by spending 40 billion dollars a month buying mortgage backed securities in a program called Quantitative Easing (QE). Bernanke’s testimony was centered on whether the FED will continue QE at its present levels or if they will start winding it down.

As you might recall over the last few week’s interest rates have been very volatile making big swings up and down. This was all caused by remarks made by Bernanke and other Fed members about when QE will start winding down. Our financial markets during the last few weeks have seen trillions of dollars disappear and reappear based on these comments and rumors surrounding them.

In my opinion Bernanke did the right thing in his testimony this week. Instead of trying to set a time frame as has in the past he said the future of the QE program will depend on how our economy is doing. If the economy appears strong over the next few months then they will begin tapering down QE, and if the economy recovery slows or stops then they will continue with the QE program. This returns interest rates and our financial markets to reacting to actual financial news rather than comments and rumors.

Looking forward the most important upcoming economic report is the July employment figures that are released two weeks from today.

Market recap for week ending 7/12/2013

Posted on: July 12th, 2013 by Fred Bohman No Comments

This week the markets finally seem to be returning to normal after the last few week’s wild ride. It all started back on 6/19 when the Federal Reserve Board (FED) President Ben Bernanke announced that the economy is showing signs of improving and because of this the FED is thinking about winding down their Quantitative Easing(QE) program. The QE program is what the FED has been using to keep rates low and the thought that they may be slowing it down freaked investors out and sent interest rates through the roof.

On Wednesday Ben Bernanke held a press conference where he attempted to calm down the markets by stating that the FED will not be slowing QE now. Bernanke’s comments seem to have worked as we have seen rates drop over the last few days. However, rates are not back down to where they were before 6/19 and personally I don’t believe they will ever return to those lows. The markets over reacted on Bernanke’s initial comments, but the economy is showing signs of improving and as long as it continues to do so the long term trend for rates will be up.

Market recap for week ending 5/017/2013

Posted on: May 17th, 2013 by Fred Bohman No Comments

At the time I am writing this, mortgage interest rates are less than 1/8th of a percent higher than they were last Friday.

Most economic reports that came out this week were negative. This seems to point to that that the stronger than expected employment report we had a couple weeks back was more of fluke than a start to a new trend. Yesterday the unemployment claims report was released and claims came in higher than expected. In Europe the Euro zone GDP was released and it confirmed that Europe is still in a recession with overall economy shrinking .01% in the first quarter. As long as the negative economic reports continue to come out it will be good news for rates, and we will hopefully regain what we lost when the last employment report came out.

All of the negative economic news has not been able to stop the stock market which I personally think is bad sign. When people are ignoring economic data and just buy stocks on emotion they are setting themselves up for failure. The stock market is long overdue for a correction and when/if that happens I think it will be good day for rates.

Market recap for week ending 5/10/2013

Posted on: May 10th, 2013 by Fred Bohman No Comments

At the time I am writing this, mortgage interest rates are 1/8th of a percent higher than they were last Friday.

This week was a slow week in terms of relevant economic reports. Markets were still digesting last Fridays better than expected employment report for most of this week. Last Friday we saw a big spike in the 10 year Treasury bond yield(10yr) following the employment report. Traditionally the 10yr and mortgage rates are closely tied, but in this case mortgage rates increased but not nearly as much at the 10yr.

Looking forward we have to monitor the economic reports closely to see if last Fridays employment report was fluke or it was beginning of a new trend. If more strong economic reports continue to come out look for interest rates to start climbing. On the flip side if economic outlook returns to negative, rates will stabilize where they are now.

Market recap for week ending 5/03/2013

Posted on: May 3rd, 2013 by Fred Bohman No Comments

At the time I am writing this, mortgage interest rates are less than 1/8th of a percent higher than they were last Friday.

There was a lot of financial news this week. The Federal Reserve Board (FED) had their Federal Open Market Committee (FOMC) on Tuesday and Wednesday. After the meeting they came out with a policy statement. Their statement said that the economy is still not growing at the pace they want to see so they will continue their assets purchase program to try and stimulate the economy. This is good news for interest rates since they are purchasing mortgage bonds which causes interest rates to stay low. Another topic brought up in their statement was deflation. Up until this point there has been concern that the continued printing of money would cause inflation, but now that concern has flipped. Deflation means that goods are becoming less expensive compared to the dollar. This might sound like a good thing, but it can actually cause problems in the economy.

Yesterday the European Central Bank(ECB) lowered their base lending rate from 0.75% to 0.5%. At this point most of the Euro zone is back in a recession and the lowering of the rate is an attempt to stimulate the economy.

This week was employment week with the unemployment claims on Thursday and the employment report on Friday. The unemployment claims figure showed that claims dropped 18K. The employment report showed that unemployment rate dropped to 7.5% from 7.6% rate. The job creation numbers were stronger than expected especially since the ADP estimates earlier in the week were low. The report was a surprisingly strong report compared to most other economic report lately that have been showing the economy softening. This was a setback for rates, but I believe we might see more negative reports next week which will help out rates again.

Market recap for week ending 4/26/2013

Posted on: April 26th, 2013 by Fred Bohman No Comments

At the time I am writing this, mortgage interest rates are less than 1/8th of a percent lower than they were last Friday.

This week was a slow week in terms of important economic reports. Mortgage rates have been stuck in a narrow range for the past 3 weeks with not much change. The 10 year Treasury bond yield has tested the resistance at 1.70% several times but has not managed to close below it. The jobless claims report was released yesterday and claims were down 16k. This report was in line with analyst estimates and thus not much of a market mover.

Today the advanced Q1 Gross Domestic Products (GDP) report came out. The report is an early indicator of what the actual report will look like and is used as tool to measure the growth of our economy. The numbers came in lower than what was expected by analysts, but it did not have much impact on the markets. In order to break out of this narrow range we have been stuck in we will need some big economic news, either positive or negative. Until that time expect rates to stay stable at current levels.

Market recap for week ending 4/12/2013

Posted on: April 12th, 2013 by Fred Bohman No Comments

At the time I am writing this, mortgage interest rates are less than 1/8th of a percent higher than they were last Friday.

This week was a slow week in terms of important economic reports. Yesterday unemployment claims came out and it showed that claims dropped 42K, but last weeks were revised 28k higher. The big swing in the numbers was blamed on the Easter holiday. As I mentioned last week our current system of measuring unemployment is not very accurate as it does not included people who are under employed and have given up on looking. As far as interest rates goes unemployment is still the most important economic indicator to keep an eye on.

Another report that came out today was March retail sales which showed that consumer spending has slowed. This is good news for rates as our economy is driven by consumer spending. Not much news out of Europe this week compared to the last few weeks. Looking forward I think rates will still increase, but in the short run I would urge consumers to take advantage of this dip we are currently seeing.

Market recap for week ending 4/4/2013

Posted on: April 5th, 2013 by Fred Bohman No Comments

At the time I am writing this, mortgage interest rates are less than 1/8th of a percent lower than they were last Friday.

This week was employment week with ADP employment estimates on Wednesday and the official numbers today. The unemployment figures released today showed that the unemployment rate had dropped, but the job creation numbers were only about half of the estimates. The drop in the unemployment rate was most likely to people giving up or taking part time jobs thus decreasing the rate. The way we calculate the unemployment rate is widely known for being flawed and the actual rate is much higher. Also on Thursday the unemployment claims figures were released and claims increased for the first time in a few months.
The Federal Reserve (FED) president Ben Bernanke has stated that they will continue to keep rates low as long as unemployment rate is above 6%. During the last few months unemployment had actually been going down, but this week’s reversal is good news for interest rates.

Also in the news this week has been North Korea and their threats of nuclear war. I don’t think many people other than the media are taking them seriously, but it still might cause some investors to get nervous and move money to bonds which will be good for rates.

For the last few months it has looked like our economy was getting back on track and the outlook for rates was higher. With all the negative news over the last 2 weeks that trend has reversed and it appears that we will be able to enjoy these low rates for a while longer. I would caution those borrowers looking for even lower rates to not wait too long and miss the boat on these low rates.

Market recap for week ending 03/29/2013

Posted on: March 29th, 2013 by Fred Bohman No Comments

The markets are closed today for Easter, but at the time I am writing this, mortgage interest rates are less than 1/8th of a percent lower than they were last Friday.

The Euro zone continued to shake up the markets this week. During the last weekend Cyprus was able to secure a bail out by raiding banks accounts with balances over 100k from the 2 banks that were in trouble. Most of the large account holders were Russian nationals that used Cyprus as a tax haven. The banks opened up yesterday after a 2 week bank freeze. The banks are open but there is a 300 Euro a day withdrawal limit to prevent a bank rush.

Even though it seems that the Cyprus Bank crisis has been avoided for now investors fear that similar problems are brewing in Spain, Portugal, and Italy which has sent those countries bonds tumbling. With money flowing out of risky government bonds it is going into “safe” investment such as US bonds causing US interest rates to fall.

There has been much negative news over in Europe, but the US stock market continues to set new highs. Many people are calling for a pull back since the stock market seems overbought, but every time it starts selling off it quickly rebounds. This week we saw a slight dip in rates, but unless we start seeing enough negative economic news here in the US to slow down the stock market I think the long term outlook for rates is still higher.