Mortgage Times

[Adam in CO]

Mortgage Market News for the week ending February 1, 2008

Events This Week:

Employment Fell
GDP Lower
Inflation Steady
Manufacturing Mixed

Events Next Week:

Mon 2/4
Factory Orders

Tues 2/5
ISM Services

Wed 2/6
Productivity
Treasury Auction

Thur 2/7
Pending Sales

Economic Data Moves Rates Lower

Weaker than expected economic data moved mortgage rates modestly lower during the week. Slower economic growth reduces concerns for future inflation, which generally leads to lower mortgage rates. Indications of decreased economic growth were found in Friday's Employment report. While the consensus was for a gain of 75K new jobs in January, the economy instead lost 17K jobs. Looking at a 3-month average, the pace of job growth remained far below the level one year ago. This followed a major shortfall in Wednesday's Gross Domestic Product (GDP) report. Fourth quarter GDP, the broadest measure of economic growth, came in at a slim 0.6%, below the consensus of 1.2%, and far below the 4.9% seen in the third quarter. Investor expectations for a recession, defined as two consecutive quarters of negative economic growth, rose significantly during the week.

Wednesday, the Fed lowered short term interest rates by one half point, as most investors expected. The Fed's statement pointed out that downside risks to economic growth remain, and the action was generally seen as an attempt to stimulate the economy. This could have been bad for mortgage rates had the Fed not stated they expect inflation to moderate later in the year. The week's inflation data was consistent with this view, as the Core PCE price index, the Fed's preferred inflation measure, came in on target. The wage growth component of Friday's Employment report came in lower than expected, easing future wage inflation concerns. The economic weakness and tame inflation make additional Fed rate cuts more likely.

• Also Notable:
• In January, the US economy experienced its first monthly loss of jobs since August 2003
• The Unemployment Rate edged lower to 4.9% from 5.0% in January
• The refinancing activity index increased by 22% last week, according to the Mortgage Bankers Assoc.
• December New Home Sales fell short of expectations

Average 30 yr fixed rate:
Last week:+0.08%
This week:-0.05%

Stocks (weekly):
Dow:12,687+342
NASDAQ:2,391+31

Week Ahead

After a busy week overflowing with major economic news, the Economic Calendar will be thinner next week. Factory Orders will come out on Monday and ISM Services on Tuesday. Productivity will be released on Wednesday and will be the most highly anticipated economic data of the week. Pending Home Sales, a leading indicator of future housing market activity, is on the schedule for Thursday. Treasury auctions and an announcement on interest rates from the European Central Bank will round out the light week.

adam@corefinancegroup.com.

[CO Hummer]

Did you read this blurb:

Additional Mortgage Market News for the week ending February 1, 2008

Events This Week:

Adam's phones go down and $millions are lost in opportunity cost!

[Adam in CO]

Originally Posted by CO Hummer

Did you read this blurb:

Additional Mortgage Market News for the week ending February 1, 2008

Events This Week:

Adam's phones go down and $millions are lost in opportunity cost!

Phones (and everything else) was last week. Only email this week.