Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com A trio of data points at 8:30 this morning. Weekly jobless claims were up more than expected but not much more, estimates were for 350K as reported claims were up to 368K up 38K on the week. Recent claims data has been somewhat confusing due to technical factors and how the calendar effected claims with the way the holidays fell at the end of last year. The increase followed a combined 45,000 drop in the prior two weeks. The number of people who continue to collect jobless benefits climbed by 22,000 to 3.2 million in the week. Dec personal income was expected to be up 0.7%, as reported income increased 2.6%, Nov income was revised to +1.0% frm +0.6% originally reported. Personal spending for the month was expected up 0.3%, up 0.2% as reported. Spending is a little disappointment since it is a Dec number that suggests consumers didn’t spend as much over the holidays as retailers were expecting at the beginning of Dec. Q4 employment cost index increased 0.5%, right on forecasts; the data generally doesn’t elicit much reaction. Prior to the three 8:30 reports the stock indexes were slightly weaker while the 10 yr note yield was down 2 bp and 30 yr MBSs were +15 bp frm yesterday’s close; after the data there was no initial changes in any market, stock indexes or bonds. With the Jan employment report out tomorrow investors and traders are more concerned about that than the data this morning. The only data that was substantially different than forecasts was personal income increasing quite a bit more than what was thought. At 9:30 the DJIA opened down 16 points, NASDAQ -1, and S&P -2. The 10 yr note unchanged at 1.99% while 30 yr MBS prices up 17 bp frm yesterday’s close. The final data point today, at 9:45 the Chicago purchasing managers’ index was expected at 50.5 frm 51.6 originally reported last month. The index jumped to 55.6 frm De revised to 50.0. A huge unexpected increase when compared to the recent confidence and sentient indexes. The reaction sent stock indexes higher and put some pressure on the mortgage and bond markets. The unexpected jump may cause some to revise their estimates for the employment report to a stronger level. Tomorrow the Jan employment report is out at 8:30. The rest of the day today shouldn’t see much movement ahead of the data. Present estimates are for the unemployment rate at 7.7% down 0.1% frm Dec; private payrolls up 185K, the average hourly earnings +0.1%. While employment trumps most monthly data, there is more to consider tomorrow. The U. of Michigan consumer sentiment index thought to be 71.5 frm 71.3. The Jan national ISM manufacturing index is expected at 50.7 unchanged frm Dec, however with the regional Chicago index better than estimates traders may be re-thinking the index to be higher than what was thought prior to the Chicago report this morning. Dec construction spending tomorrow is forecast up 0.8%. Jan auto and truck sales are seen at 15.3 million down frm 15.4 million in Dec.