Tag: interest rates

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

This could be an interesting week for interest rates. As we expected, last week’s jobs report had very little effect on rates despite the strength of the headline numbers. Markets are focused on overseas events, and it’s one of those events that could make this week interesting.

Wed, the European Court of Justice will announce a preliminary assessment of the European Central Bank’s bond buying plan. If the court rules in favor of the ECB’s position, rates could rise.

Much as they did when the Fed announced quantitative easing, markets are likely to interpret ECB bond buying as reducing the risk of recession for the EU economies. That risk has been much of what’s driving the flight to safety buying of US bonds, which is pushing rates down.

The most significant US economic data this week, retail sales, also falls on Wed. However, I suspect is would take a big departure from trend to make any difference for US rate markets.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The direction of US mortgage rates should be governed by things that happen here in the US, right? Nope. That hasn’t been the case for several months. While the US economy has revealed some unexpected strength, interest rates are hitting 18-month lows. Strong economic data typically pushes rates up.

The problem with that theory is the US economy is an island in a sea of despair at the moment. Europe appears headed for another recession if not depression, China is faltering, and Japan is still a basket case. Money is fleeing these economies for the safety of the US, and that’s keeping a check on rates.

Will it continue? I think odds are it will for the near term. One fly in the ointment is the jobs report this Fri. While the market has mostly ignored the report the last couple months, another particularly strong report could create some ripples.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Last week’s strong jobs report put a fleeting scare in the mortgage market. Maybe rates should be higher? But then the eggnog kicked in, and rates wandered back down towards their recent lows.

So, what’s going on? A strengthening economy usually means higher rates. Well, as we discussed many times, markets seem to have their focus overseas. Europe appears headed for another recession, China may be headed for the dreaded “hard landing,” and Japan – well, it’s still a basket case. Markets figure overseas weakness can’t help but leak into the domestic economy.

How about the week ahead? While markets mostly ignored the jobs report, they may pay more attention to the retail sales report on Thurs. Sales on Black Fri were surprisingly weak, and consumer spending accounts for roughly 70% of GDP. If the report confirms the weakness, mortgage rates could see new lows for the year. If the report is equivocal, which is more typical, I suspect rates will plod along in their current range until world events give them a reason to move.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Holiday weeks can be tricky for mortgage rate watchers. Light trading volume means that a couple big trades can move rates quickly and seemingly without reason. The movement could be in either direction, so if you’re floating your rate, watch for an opportunity to lock this week. As often as not, rates will rebound in the following week.

But if rates wanted a reason to move, this week is full of economic data. Of course, this assumes bond markets care about economic data again. Tomorrow brings an update of 3rd quarter GDP, consumer confidence, and some housing data. If anyone is still working on Wed, the personal income data could be interesting given that many analysts blame the lackluster economic recovery on negligible income growth.

But what’s really important this week is setting your DVR to record conflicting football games and formulating your Black Friday plan. In between, I hope you get some quality time with your family. We’re thankful you watched today and wish you a very happy and safe Thanksgiving holiday.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

If you think you’ve heard this before, well, you have. Mortgage rates last week barely budged, which is okay given that we’re still close to the lowest rates of the year. And the week ahead looks like it could be another snoozer. The only scheduled event really likely to spark market interest is the mid-week release of the minutes from the last Federal Reserve meeting. Markets will look for evidence that the Fed has suppressed feelings about the strength or weakness of the economy. In particular, it will be interesting to see the Fed’s thoughts about how a strengthening dollar and global economic weakness might impact US growth.

So, could rates go any lower? It’s certainly possible, but I suggest caution if you’re betting on this outcome. Most US economic indicators are positive, which tends to push rates up. It seems that the market eye has an unusual focus on overseas issues. Should its gaze return to our shores, rates could bump up rather quickly.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Last week’s jobs report showed that the economy continues to plod along, and rates – well, they got better. This counterintuitive result seems due to two factors.

First, markets bid up rates early in the week based on rumors the jobs report would wildly exceed expectations. When it didn’t, traders had to unwind their positions, which caused rates to fall.

Just as likely an explanation is simply market forces at work. Among these forces is bond traders’ focus overseas. European economies still appear to be weakening as does China. When world growth slows, the US will experience some spillover effect, and that helps keep a lid on interest rates.

The only important US economic data this week, not that the market has paid much attention to data lately, is the retail sales report on Fri. Otherwise, absent a new crisis, market forces probably will continue to dominate the direction of rates, which should translate into relatively benign rate movement.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

After hitting multi-month lows last month, mortgage rates have been leaking slowly upwards. It’s hard to pinpoint exactly why. Maybe rates are following the stock markets, which are hitting record highs again. But the last time stocks rallied, rates were 1/4% higher, so that seems to bust that correlation.

Maybe it’s US economic data, which generally has been positive. However, rates hardly moved on the days when data was released.

Maybe it’s European economic data, which has been stinky. We saw better correlation here when rates were falling.

Maybe markets are uncomfortable that rates dropped so much last month and simply are leaking away some of those gains.

Whatever the cause, it’s a risky market for floating your interest rate with big events this week. The European Central Bank meets Thurs, and the jobs report is Fri. Both have moved rate dramatically in the past. Float safely, my friend.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Last week was a wild ride. In one day, mortgage rates dropped by a quarter-point to start the day only to regain that quarter-point by the end of the day.

If you caught rates at their low point, lucky you. If not, all is not lost. Interest rates still are the lowest they’ve been in over a year with the exception of last Wed.

This week again doesn’t have any scheduled data releases that should affect rates. Rates are likely to meander while the market catches its breath. Could rates head lower again? Bond markets are likely to take their cues from the stock market and events overseas. Uncertainty has given the markets a nervous twitch. A headline that screams of a new crisis or economic weakness could send interest rates on another wild ride.

That said, stock market analysts still are decidedly bullish. A rising stock market generally doesn’t favor lower rates, but as recent experience showed, it also doesn’t necessarily mean higher rates. If the bulls start running again, a return to our flat rate range from earlier in the year could be in order.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Bond markets continue pretty much to ignore US economic data. The data, especially employment data, has been generally positive, which typically would push rates up. Instead, rates have moved to their lowest levels of the year. So what’s driving them?

It seems to be combination of factors. I suspect the most influential is general uncertainty. While the US economy seems to be stable, other world economies, especially those in Europe, are collapsing. The US isn’t an island, and what happens elsewhere will have some spillover effect here at home. Add to that the various military actions and the Ebola scare, and investors have reason to worry a bit. As we’ve discussed before, uncertainty helps keep rates low.

Another factor may be the US housing market. While the rest of the economy seems to be improving slowly, housing is stuck. With mortgage originations very low, it doesn’t take much demand for mortgage securities to keep rates low.

A final factor may be the market itself. Many bond investors bet against falling interest rates, but as rates have fallen, they’ve been forced to buy bonds to cover their positions. Buying bids up bond prices, which means lower rates.

If you’re floating your rate hoping rates will go lower, keep in mind that resistance to lower rates is probably a lot greater than resistance to higher rates. I suggest you decide a bail out point. If rates start to rise, be ready to act quickly.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Markets issued a collective sigh last week after the Federal Reserve meeting. The Fed reassured investors that interest rates will remain low for a considerable time. Interest rates, which had been rising slowly all month, paused and then relaxed a little.

So, what’s next? While this week brings some fairly important economic reports, bond markets seem to be mostly ignoring US economic data. They seem to be waiting for some definitive sign that rates should move higher. Until that sign appears, I suspect rates will remain in the same range where they’ve been all year. They’ll also remain susceptible to volatility from overseas events. If Ukraine or Syria takes an unexpected turn, rates will react. Remember that global uncertainty tends to support lower rates. The flip side is also true. A resolution to seething conflict supports higher rates.