The mortgage market is being pounded by profit-taking this morning as investors react to news indicating overall economic growth in the second-quarter was not as weak as many had anticipated. Comments from Fed Chairman Bernanke indicating the Fed is prepared to take additional action if need be to restart the nation’s economic engines simply added a little fuel to the fire.
The current mindset among mortgage investors toward today’s revised second-quarter Gross Domestic Product appears to revolve around the idea that while the component numbers weren’t particularly good – they were at least better than most had expected. Real GDP increased at an annualized rate of 1.6% in the second quarter – revised down from first estimates for growth of 2.4% -- but ahead of the consensus forecast calling for a headline GDP number of 1.4%. The stir the revised second-quarter GDP numbers are creating in the mortgage market will probably fade pretty quickly as calmer, cooler heads point out that until labor market weakness shows signs of improving; overall economic growth will remain desperately anemic. But that is a story for another day.
Looking ahead to next week every scheduled report – from Monday’s July Personal Income and Spending data through the late-week release of the Institute of Supply Management’s Manufacturing and Service Sector Index values will take a backseat to the August Nonfarm Payroll figures scheduled to hit the newswires Friday morning at 8:30 a.m. ET. Mortgage investors have already priced in expectations for a headline nonfarm payroll decline of 100,000 – a number likely sufficient to nudge the nation’s unemployment rate up to 9.6%. Numbers that match or fall below the consensus estimate for these two major components of the August jobs report will tend to support steady to perhaps fractionally higher mortgage interest rates. Should one or both components exceed the consensus estimate -- look for mortgage investors to respond by pressing note rates a bit lower.
www.McDougallMortgages.com
No comments:
Post a Comment