This Week and Mortgage Rates


Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com


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Monday, October 31, 2011


This Week; two things dominate. Wednesday Bernanke will hold a press conference at the conclusion of the two day FOMC meeting, and Friday the October employment report. Interest rates have increased from the 21st of Sept FOMC meeting at which the Fed Started Operation Twist, buying long dated treasuries and MBSs with the intent of keeping long term (mortgage rates) low in an effort to help the housing sector. Bernanke said he expected the Twist would push the 10 yr note rte down 50 basis points. It worked for one day but at the moment the 10 yr note is 30 basis points higher than the day the Twist was announced. The Fed has to be concerned, there are no real fiscal efforts in place and lower interest rates have had little positive impact.

The employment report on Friday is expected to be weaker than last month, non-farm jobs up 88K (last month +103k), non-farm private jobs +114K (last month (+137K), the unemployment rate at 9.1% unchanged. There has been no improvement in the unemployment rate this year, Congress and the Administration are impotent and it doesn't seem to phase them as politicians are now only concerned whether they can keep their cushy jobs and huge retirement benefits.

Europe's problems persist but this week likely not much of substance will come out of the region. That said, any news from Europe has a direct impact on US markets. While employment and the FOMC meeting are hardliners this week, there are also a number of key data points to consider. Expect volatility with only minor changes in the bond and mortgage markets with wide swings. Technically the bond market is bearish but somewhat over sold while the stock market is technically bullish but also overbought.