What's Ahead For Mortgage Rates This Week : January 7, 2013

07.01.13 04:45 PM By Paul Cantor

Jobs data moves mortgage rates higherMortgage rates in Richmond rose during the first week of 2013. The fiscal cliff crisis was resolved prior to the market's opening Wednesday, when legislators voted to approve a deal. While many tax cuts were extended for taxpayers earning less than $450,000 annually, other facets of the fiscal cliff issue are yet to be addressed, including budget cuts for federal government agencies. Investors were surprised to learn that the Fed may end its third round of quantitative easing (QE3) sometimes in 2013. The FOMC meeting minutes for December 2012 suggested that Fed support for its QE3 program has waned as the economy has improved. First-time jobless claims increased for the week ending December 29, 2012 to 372,000 from the prior week's 350,000, worse than Wall Street's consensus opinion of 360,000 new jobless claims. The December 2012 Non-Farm Payrolls surpassed analyst expectations, posting 155,000 net new jobs for the month. The report also showed the national Unemployment Rate rising one-tenth of one percentage point to 7.8%. When the jobless rate falls to 6.5%, the Federal Reserve is expected to begin raising the Fed Funds Rate from its current target range near zero percent. Overall, mortgage rates rose by as much as 0.25 percentage points last week. However, because the increase occurred wholly between Wednesday and Friday, Freddie Mac's weekly mortgage rate survey failed to include it. Freddie Mac reported the previous week's average rate for a 30-year fixed rate mortgage was 3.34 percent for borrowers paying 0.7 percent discount points plus closing costs. The average rate for a 15-year fixed rate mortgage was 2.64 percent for borrowers paying 0.7 discount points plus closing costs. As this week opens, mortgage rates are considerably higher.
DateTime (ET)StatisticForMarket Expects
01/08/1301:15:00 PM3-year Treasury Note Auction   
01/08/1303:00:00 PMConsumer CreditNov$10.6B
01/09/1301:15:00 PM10-year Treasury Note Auction   
01/10/1308:30:00 AMInitial Claims01/05/13366K
01/10/1310:00:00 AMWholesale InventoriesNov0.10%
01/10/1301:15:00 PM30-year Treasury Note Auction   
01/11/1308:30:00 AMTrade BalanceNov-$41.8B
01/11/1308:30:00 AMExport Prices ex-ag.DecNA
01/11/1308:30:00 AMImport Prices ex-oilDecNA
This week's scheduled economic news includes Treasury auctions on Tuesday, Wednesday and Thursday; weekly Jobless Claims report on Thursday; and not much else. There will be planned speeches, however, from five members of the Federal Reserve, including Richmond Federal Reserve President Jeffrey Lacker.  Fed President Lacker was the lone dissenting vote among voting FOMC members in each of last year's policy votes. US financial markets (stocks and bonds) are due for retrenchments after the rapid changes over the past week. The 10 yr note and MBSs are very oversold in the near term, we expect some improvement this week but it won’t change the bearish outlook for the rate markets. The stock market is equally over-extended on its recent rally, look for some pull-back this week; as with the bond market, any retrenchment won’t likely change the bullish outlook for equities.