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Weekly Mortgage Newsletter

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If you are an economic optimist, then last week held some great news for you. Both of the ISM
Week of Indices came in higher than expected. The manufacturing index popped to 60.8, the highest reading
Feb. 6, since 2004, while the services index climbed to 59.4, the highest reading since 2005. If both the
2011 manufacturing and services sectors can keep at this pace, we could see the economy healing a little
faster than many experts previously thought. We also had some good news for the labor market, with
the unemployment rate dropping to 9.0%. However, only 36K new jobs were created last month.
Mortgage Without a doubt, one of these numbers will be adjusted in coming months. Many experts are already
Market predicting a sizable adjustment to the jobs number.
Commentary This week is a bit lighter in terms of economic data for the markets to digest. There likely will be
some upward pressure on mortgage rates from last week’s data. If Fed Chair Bernanke paints a
positive economic picture to Congress in his testimony this week, we may see rates trending upward.
This Week’s Top Economic Reports and Events 30Yr 15Yr 1Yr ARM

Mortgage Rates
Report/Event Date Prior Est. Impact
5.00%
Consumer Credit 2/7 1.3B 2.5B Limited
4.50%
If consumer credit drops instead of climbs, we could see a slightly
elevated level of downward pressure on mortgage rates. 4.00%

Fed Chair Before Congress 2/9 Moderate 3.50%


The more optimism that Bernanke expresses for the economy, the more 3.00%
likely that mortgage and all interest rates will trend upward. 11/18 12/2 12/16 12/30 1/13 1/27
12,250.00
Weekly Jobless Claims 2/10 415K 413K Limited
12,000.00
Dow Jones

After last week’s employment report, a sizeable drop in claims could


generate some strong downward pressure on mortgage rates. 11,750.00

International Trade Balance 2/11 -38.3B -40.7B Limited 11,500.00

A stable gap would be ignored by the market, but an unexpected increase 11,250.00

could create some amount of downward pressure on mortgage rates. 11,000.00


10-Nov 24-Nov 8-Dec 22-Dec 5-Jan 19-Jan 2-Feb
U of Mich. Consumer Sentiment 2/11 74.2 75.5 Moderate
9.00
With the ISM Indices strong showing last week, a jump in Sentiment
Historical Rates

could ignite some more upward pressure on mortgage rates. 6.00

Mortgage Rate Interest Rates and Indexes


3.00
Trends 1 Yr T-Bill 0.260% 11th D. COFI 1.508%
Short-Term ÎÎ 10 Yr T-Note 3.400% COSI 2.220% 0.00
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
Long-Term ÎÎ 6 Month Libor 0.461% CODI 0.312% 1 Yr CMT MTA COFI
CODI Prime
Volatility High Prime Rate 3.250% MTA 0.318%
10 Year Treasury Note Trend
3.75
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