Tucson Mortgages Home Loan News 9-9-2019

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of September 2, 2019
  • Economic Calendar – week of September 9, 2019
  • Mortgage Rate Forecast with Chart

Weekly Review

The major stock market indexes notched a second consecutive week of solid returns as investor optimism was boosted by news of progress being made in the U.S. – China trade war.  Although investors reacted negatively to news that U.S. trade officials had rejected a request from China to delay tariffs on its goods that went into effect the prior weekend, negative sentiment was erased on reports U.S. and Chinese negotiators agreed to meet in Washington in early October to resume trade talks.

The week’s economic news was mostly favorable but “mixed” with U.S. Productivity increasing more than expected during the second quarter and Factory Orders soaring 1.4% in July, their best gain in nearly a year.  The Institute for Supply Management’s (ISM) Non-Manufacturing (Services) Index also increased more than forecast.  On the not so positive side of economic news, the ISM’s Manufacturing Index slid into negative territory in August for the first time since 2016 with a reading below “50” at 49.1.  The forecast had called for a reading of 51.3.  The August Jobs Report released Friday also disappointed.  Overall Nonfarm Payrolls increased by 130,000 versus consensus expectations for a gain of 171,000, while Nonfarm Private Payrolls increased by only 96,000 jobs vs. a consensus forecast of 145,000.  However, Average Hourly Earnings increased by a healthy 0.4% during August, double the consensus forecast of a 0.2% increase.

In housing news, CoreLogic reported last Tuesday that home prices increased 0.5% month-over-month in July and were 3.6% higher year-over-year.  The year-over-year increase surpassed last month’s reading of 3.4% and remains at a very sustainable and meaningful level for wealth creation.

Weekly Review

The major stock market indexes notched a second consecutive week of solid returns as investor optimism was boosted by news of progress being made in the U.S. – China trade war.  Although investors reacted negatively to news that U.S. trade officials had rejected a request from China to delay tariffs on its goods that went into effect the prior weekend, negative sentiment was erased on reports U.S. and Chinese negotiators agreed to meet in Washington in early October to resume trade talks.

The week’s economic news was mostly favorable but “mixed” with U.S. Productivity increasing more than expected during the second quarter and Factory Orders soaring 1.4% in July, their best gain in nearly a year.  The Institute for Supply Management’s (ISM) Non-Manufacturing (Services) Index also increased more than forecast.  On the not so positive side of economic news, the ISM’s Manufacturing Index slid into negative territory in August for the first time since 2016 with a reading below “50” at 49.1.  The forecast had called for a reading of 51.3.  The August Jobs Report released Friday also disappointed.  Overall Nonfarm Payrolls increased by 130,000 versus consensus expectations for a gain of 171,000, while Nonfarm Private Payrolls increased by only 96,000 jobs vs. a consensus forecast of 145,000.  However, Average Hourly Earnings increased by a healthy 0.4% during August, double the consensus forecast of a 0.2% increase.

In housing news, CoreLogic reported last Tuesday that home prices increased 0.5% month-over-month in July and were 3.6% higher year-over-year.  The year-over-year increase surpassed last month’s reading of 3.4% and remains at a very sustainable and meaningful level for wealth creation.

Mortgage Rate Forecast with Chart – UMBS 30-Year 3.0% Coupon Bond

The UMBS 30-year 3.0% coupon bond ($101.906; -7.80 bp) traded within a slightly wider 53.1 basis point range between a weekly intraday high of $102.250 on Wednesday and a weekly intraday low of 101.719 on Thursday before closing the week at $101.906 on Friday.

In a holiday shortened week, mortgage bonds moved higher on Tuesday and Wednesday above the 23.6% Fibonacci retracement level ($101.904) before reversing direction to close the week just above this level.  The bond is “overbought” currently and trading on a sell signal generated last Thursday so we will likely see a move toward the next support level at $101.681 before the bond entertains a bounce higher.  Therefore, we could see mortgage rates drift a few basis points higher this week but should not see any major movements in rates.