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JOBS FALL SHORT Delayed by the shutdown, the September Employment data was released on Tuesday. Against a consensus forecast of 180K, the economy added just 148K jobs. The Unemployment Rate unexpectedly dropped from 7.3% to 7.2%, the lowest level since November 2008. The decline was mixed news, though, since it was due to both job gains and to people who left the labor force, meaning that they stopped trying to find a job. Bottom line, the results were weaker than what Fed officials would like to see. Between the ongoing uncertainty about future fiscal policy and the slow pace of improvement in the labor market, investors now expect that the Fed will not begin to taper until at least the March Fed meeting. While the labor market data disappointed investors, the housing market continued to perform well. September Existing Home Sales were just slightly down from the four-year high reached in August, and they were 11% higher than one year ago. Total inventory of existing homes available for sale was unchanged at a five-month supply. Since the Existing Home Sales data is produced by the National Association of Realtors, it was unaffected by the government shutdown. The New Home Sales report, which is produced by the government, is delayed.
WEEK AHEAD |
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Archive for October, 2013
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October 16, 2013MORTGAGE TIME Mortgage Market News for t
October 11, 2013MORTGAGE TIME
Mortgage Market News for the week of Oct. 11, 2013
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PROGRESS IN CONGRESS
With government produced economic reports postponed by the shutdown, the budget and debt ceiling discussions in Congress dominated the economic news again this week. The gridlock in Washington and the signs of progress have caused large movements in the stock market, but the impact on mortgage rates has been much more limited, and mortgage rates ended the week just a little higher.
Of the two, the debt ceiling has much more serious potential consequences for the economy and financial markets than the government shutdown. With the debt limit rapidly approaching, on Thursday the two parties raised investors’ hopes for a deal. It was reported that both sides might agree to a short-term deal which would extend US borrowing authority until November 22. Such a deal would remove the threat of a disruptive default in the short-term, and it would give Congress more time to reach a longer-term compromise. It is not known at this time whether the deal would end the government shutdown. On Thursday, stocks recovered all their losses from earlier in the week and turned positive for the week.
Investors almost universally misread the Fed’s signals leading up to the September 18 Fed meeting, when the Fed decided not to taper its bond purchase program. As a result, investors were very eager to see the detailed Minutes from that meeting, which were released on Wednesday. The vote at the meeting was 9 to 1 in favor of maintaining the current level of bond purchases, but the Minutes revealed that Fed officials had very mixed feelings about whether to taper and that it was a “relatively close call”. Overall, Fed officials wanted to wait for greater improvement in the labor market before reducing monetary stimulus. In addition, they expressed concern that the rise in interest rates that had been seen and the unresolved questions about fiscal policy could slow economic growth.
ALSO NOTABLE
• Consumer Sentiment declined to the lowest reading since January
• Jobless Claims jumped partly due to computer glitches in California
• Results were mixed for the 3-yr, 10-yr, and 30-yr Treasury auctions
• Gold prices dropped below the $1,300 per ounce level
WEEK AHEAD
Investors will continue to follow the budget and debt ceiling discussions next week. If the shutdown is not resolved, most of the economic reports scheduled for next week will be postponed, including the Consumer Price Index, Industrial Production, and Housing Starts. Unaffected by the shutdown, the Fed’s Beige Book will be released on Wednesday and the Philly Fed index will come out on Thursday.
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October 7, 2013Coliseum City
October 7, 2013Mortgage Market News
October 4, 2013| Compliments of: | |||
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NO BUDGET DEAL
Congress failed to reach a budget deal for the new fiscal year, causing a partial government shutdown for the first time in 17 years. The impact on mortgage rates was surprisingly small, though. The reduced number of economic reports released this week also caused little reaction. Mortgage rates ended the week a little lower.
While the shutdown has caused disruptions in the mortgage origination process, the effect on mortgage-backed securities (MBS) prices, and therefore mortgage rates, has been minor. With respect to the shutdown, bond market investors adopted a wait and see attitude. The much more significant issue is the debt ceiling. According to the Treasury, the government will reach its borrowing limit around October 17. If Congress does not raise the limit, there is a risk that the government technically will default on its obligations. The results of this unprecedented event could be severe for the economy and financial markets. At this point, though, few investors believe that Congress would actually allow the US to default.
One consequence of the shutdown is that economic reports produced by government agencies are not being released. The first Friday of each month is usually notable for the reaction to the Employment report, but this month’s data has been delayed. Investors were forced to adjust their outlooks based on the less significant labor market data which did come out during the week, including the ADP forecast and Jobless Claims. These reports showed little change from recent readings, though, and had little impact.
ALSO NOTABLE
| • | ISM Manufacturing rose to the highest level since April 2011 |
| • | The Treasury will auction $64 billion in securities next week |
| • | The European Central Bank made no change in rates |
| • | Euro zone unemployment remained near record levels of 12% |
WEEK AHEAD
Investors will continue to follow the budget and debt ceiling discussions next week. If the shutdown is not resolved, most of the economic reports scheduled for next week will be postponed, including Friday’s Retail Sales and Producer Price index data. Unaffected by the shutdown, the Minutes from the September 18 Fed Meeting will be released on Wednesday. These detailed Minutes provide additional insight into the debate between Fed officials. In addition, Treasury auctions are scheduled for Tuesday, Wednesday, and Thursday.
What’s Influencing a Stall in the Housing Recovery?
October 4, 2013What’s Influencing a Stall in the Housing Recovery?
Posted by RE-Insider on 10/04/13 • Categorized as Industry News
Over the past twelve months, the housing market has been booming with a much anticipated recovery. This rebound was fueled by many factors falling in line at the right time; low prices and low interest rates combined with a small supply of houses available, ultimately prompting many investors and buyers to enter the market resulting creating bidding wars which began to drive prices up.
Now, prices are higher than we’ve seen in years, and mortgage rates have been moving up as well. This has lowered affordability, and the market is starting to cool down because of it, leading to many concerns over a short-term stall.
While it is still hard to tell what the final impact of the recent cooling will be, there are a few key factors playing a role in the market’s cooling and recovery which should be watched.
One factor which should be noted is how quickly affordability has decreased. Prices have moved up at unbelievable rates since a year ago, and now that mortgage rates are increasing, many buyers are being deterred to enter the market. New home orders rose only by 1% in August from the year before, major decline from the 11% increase in July.
Lack of available housing is also having an impact on the recovery. While demand plays a large role in both the amount and price of houses sold, the lack of available housing is still holding back many buyers. Listings were up by 20% in August from the start of the year, but this is still far below the already depressed levels of one year ago.
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