Mortgage Market News for the week ending January 25, 2013.
An improving outlook for global economic growth caused investors to shift assets from bonds to stocks, reducing demand for long-term fixed-rate assets including mortgage-backed securities (MBS). As a result, mortgage rates ended the week a little higher.
The global economic data released this week was encouraging. Important manufacturing reports in Europe and China exceeded expectations. In the US, Jobless Claims surprised investors for the second straight week. There is also a growing sense that the worst of the debt troubles for the European Union have passed. Stock markets around the world are hitting multi-year highs.
The Housing data released this week reflected solid year over year improvement. December Existing Home Sales were 13% higher than one year ago, to the highest level since 2007. Even though the total inventory of existing homes available for sale fell to the lowest level in years, the National Association of Realtors forecasts that Existing Home Sales will increase another 9% in 2013. December New Home Sales were nearly 20% higher than one year ago.
Also Notable:
• Weekly Jobless Claims dropped to the lowest level since January 2008
• The House passed a bill to extend the debt ceiling until May 19
• The S&P 500 index crossed above 1,500 for the first time since December 2007
• The Treasury will auction $99 billion in 2-yr, 5-yr, and 7-yr securities next week
Average 30 yr fixed rate:
Last week: +0.02%
This week: +0.03%
Stocks (weekly):
Dow: 13,850 +250
NASDAQ: 3,150 +25
Week Ahead
Next week will be packed with major economic news. The biggest story will be Wednesday’s Fed meeting, as investors watch for hints about the duration of the Fed’s bond-buying program. The biggest economic report next week will be the important Employment data on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before the employment data, Durable Orders and Pending Home Sales will be released on Monday. Fourth quarter GDP will come out on Wednesday. Personal Income, Core PCE inflation, and Chicago PMI will be released on Thursday. ISM Manufacturing and Construction Spending are scheduled for Friday. In addition, there will be Treasury auctions on Monday, Tuesday, and Wednesday.
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