Feds Cut Rate 2%
April 30, 2008
The Feds cut the Federal Funds Rate by .25%. They will be monitoring inflation. Mortgage Bonds were initially down -25bp on the news. Now Mortgage Backed Securities are up +16bp, hopefully better rates will be ahead.
Feds Cut Rate coming soon…
April 30, 2008
FOMC Meeting | Reported [1:15pm Central] | ELEVATED
ADP Employment Report | Reported +10,000 | Est -55,000 | Prior 8,000 | MODEST
Employment Cost Index | Reported 0.7% | Est 0.8% | Prior 0.8% | ELEVATED
GDP | Reported 0.6% | Est 0.4% | Prior 0.6% | MODEST
GDP Chain Deflator | Reported 2.6% | Est 3.o% | Prior 2.4% | ELEVATED
Chicago PMI | Reported 48.3 | Est 48.5 | Prior 48.2 | ELEVATED
Crude Inventories | Reported [10:30E] | Prior 2,421,000 | MODEST
The markets appear to be anxiously awaiting the Feds Cut Rate announcement today. The notoriously misleading ADP report came in much better than expectations signally job growth. Friday we will see the real Employment Report to gauge the economy more accurately. The employment cost index, GDP, and GDP Chain Deflator all come in better than the revised expectations. GDP Chain Deflator is an important inflation index, so it coming in better than expectations is actually a good thing for Mortgage Backed Bonds. If the Fed has decided to hold off on rate cuts because they believe the economy has shown signs of recovery, that will reassure bonds traders that inflation will not continue to be ignored and should be good for Mortgage Rates.
Consumer Confidence worse than expected for April 2008
April 29, 2008
Consumer Confidence | Reported 62.3 | Est 63.2 | Prior 64.5 | MODEST
Consumer Confidence was worse than expectations at 62.3. So far the bond market has reacted favorably to the news. Mortgage Backed Securities are up +12bp on the day. With the 2 day FOMC meeting beginning today and a week packed with economic news, we can expect to see increased volatility.
This is going to be a huge week for Mortgage Rates
April 28, 2008
This is going to be a huge week for mortgage rates. The economic reports include consumer confidence tomorrow, the Fed meeting on Wednesday, PCE Thursday, and the Employment Report on Friday. These are all ELEVATED market movers. The Feds Cut Rate is expected to be lowered -.25% tomorrow. It is also important to note that Traders will be anxiously deciphering the Feds statements to see if they hint to further Fed rate cuts. The Feds rate cuts stimulate the economy and increase inflation, the enemy of mortgage bonds.
Now would be a good time to lock in an interest rate ahead of all this upcoming volatility if the rate and program you want are available. There is a good chance though that we see 30 fixed rates in the 5’s again by the end of this week. In January, when rates dropped down to the low 5’s, they came and went quickly, so be prepared to lock.
Mortgage Rates for April 28th, 2008
30 Year Fixed/apr | 6.125%/6.225%
15 Year Fixed/apr | 5.625%/5.725%
3/1 Interest Only [1%]/apr | 5.125%/5.388%
5/1 Interest Only [1%]/apr | 5.375%/5.575%
7/1 Interest Only [1%]/apr | 5.625%/5.825%
Economic Reports Week of April 28th
April 28, 2008
Consumer Confidence | Reported [Tue 4.29] | Est 63.2 | Prior 64.5 | MODEST
FOMC Meeting | Reported [Wed 4.30] | ELEVATED
ADP Employment Report | Reported [Wed 4.30] | Est -55,000 | Prior 8,000 | MODEST
Employment Cost Index | Reported [Wed 4.30] | Est 0.8% | Prior 0.8% | ELEVATED
GDP | Reported [Wed 4.30] | Est 0.4% | Prior 0.6% | MODEST
GDP Chain Deflator | Reported [Wed 4.30] | Est 2.4% | Prior 2.4% | ELEVATED
Chicago PMI | Reported [Wed 4.30] | Est 48.5 | Prior 48.2 | ELEVATED
Crude Inventories | Reported [Wed 4.30] | Prior 2,421,000 | MODEST
Personal Spending | Reported [Thu 5.1] | Est 0.2% | Prior 0.1% | MODEST
Personal Consumption | Reported [Thu 5.1] | Est 0.1% | Prior 0.1% | ELEVATED
Initial Jobless Claims | Reported [Thu 5.1] | Prior 342,000 | MODEST
PCE | Reported [Thu 5.1] | Prior 2.0% | ELEVATED
Personal Income | Reported [Thu 5.1] | Est 0.4% | Prior 0.5% | MODEST
ISM Index | Reported [Thu 5.1] | Est 48.0 | Prior 48.6 | ELEVATED
Non-Farm Payrolls | Reported [Fri 5.2] | Est -80,000 | Prior -80,000 | ELEVATED
Unemployment Rate | Reported [Fri 5.2] | Est 5.2% | Prior 5.1% | ELEVATED
Average Work Week | Reported [Fri 5.2] | Est 33.7 | Prior 33.8 | ELEVATED
Hourly Earnings | Reported [Fri 5.2] | Est 0.3% | Prior 0.3% | ELEVATED
Economic Reports
April 25, 2008
Existing Home Sales | Reported 4,930,000 | Est. 4,920,000 | Prior 5,030,000 | MODEST
Crude Inventories | Reported 2,421,000 | Prior -2,356,000 | MODEST
Durable Goods Orders | Reported -0.3% | Est. 0.1% | Prior -1.7% | MODEST
Initial Jobless Claims | Reported 342,000 | Est. 375,000 | Prior 372,000 | MODEST
New Home Sales | Reported 526,000 | Est. 585,000 | Prior 590,000 | MODEST
Consumer Sentiment | Reported 62.6 | Est. 64.2 | Prior 63.2 | MODEST
Economic Reports 4.21 - 4.25
April 22, 2008
Existing Home Sales | Reported 4,930,000 | Est. 4,920,000 | Prior 5,030,000 | MODEST
Crude Inventories | Reported [Wed 4.23] | Prior -2,356,000 | MODEST
Durable Goods Orders | Reported [Thu 4.24] | Est. 0.1% | Prior -1.7% | MODEST
Initial Jobless Claims | Reported [Thu 4.24] | Est. 375,000 | Prior 372,000 | MODEST
New Home Sales | Reported [Thu 4.24] | Est. 585,000 | Prior 590,000 | MODEST
Consumer Sentiment | Reported [Fri 4.25] | Est. 64.2 | Prior 63.2 | MODEST
Philly Fed Index dismal | Mortgage Backed Bonds still -16bp
April 17, 2008
Philly Fed Index | Reported -24.0 | Est -14.0 | Prior -17.4 | ELEVATED
The Philadelphia Fed Index is an important index that is current reflecting extreme contraction in the Manufacturing Sector. For months almost every report has been signally a damaged economy. This report unfortunately has not helped the bonds market. Until the Stock Market steps into reality, I would still recommend LOCKING in this volatile market.
Initial Jobless Claims pretty rough…
April 17, 2008
Inital Jobless Claims | Reported 372,000 | Est 375,000 | Prior 357,000 | MODEST
LEI | Reported [4.17 10:00am] | Est 0.1% | Prior -0.3% | MINIMAL
Philly Fed Index | Reported [4.17 10:00am] | Est -14.0 | Prior -17.4 | ELEVATED
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April 16, 2008
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