This Week’s Market Commentary_April 24, 2012

Monday’s bond market has opened in positive territory due to a weak opening in stocks. The major stock indexes are reacting negatively to renewed concerns about the European economy and debt issues.

This has the Dow down 131 points and the Nasdaq down 47 points. The bond market is currently up 13/32, which should improve this morning’s mortgage rates by approximately .125 of a discount point from Friday’s early pricing.

There is nothing of relevance scheduled for release today, leaving bonds to be driven by stock movement. This is good news at the moment with the stock markets posting sizable losses as it helps make bonds more appealing to investors. If the major stock indexes extend this morning’s losses, we may see improvements to mortgage rates during afternoon hours today.

The rest of the week is extremely active with six relevant economic reports in addition to another FOMC meeting and two fairly important Treasury auctions. The economic reports range from low importance to extremely high importance with the majority of them falling between. Therefore, it is likely that we will see a fair amount of movement in mortgage pricing over the next several days.

The Conference Board will kick off the week’s events by posting April’s Consumer Confidence Index (CCI) late tomorrow morning. This index is a key indicator of future spending by consumers. The group surveys 5000 consumers from across the country about their personal financial situations. If sentiment is strong or rising, it is believed that consumers are more apt to make large purchases in the near future.
However, if they are concerned about issues such as job security and savings, they will probably delay making large purchases. The latter is better for the bond market and mortgage rates because the expected slowdown in spending would keep inflation and economic growth concerns to a minimum. But, a sizable increase could hurt the bond market, pushing mortgage rates higher tomorrow. It is expected to show a reading of 69.5, which would be a decline from March’s 70.2 reading. The lower the reading, the better the news for mortgage rates.

March’s New Home Sales will also be released late tomorrow morning. It gives us an indication of housing sector strength and mortgage credit demand, but is the week’s least important report. Unless it varies greatly from analysts’ forecasts, I am not expecting the data to cause much movement in mortgage rates. Analysts are currently forecasting an increase in sales of newly constructed homes.

Overall, look for plenty of movement in the financial markets and mortgage rates several days this week. Wednesday will likely be the most important day of the week with the FOMC meeting, press conference and fairly important Durable Goods data, but we may also see noticeable changes to rates Friday after the GDP is posted. If this week’s reports reveal weaker than expected economic conditions, the bond market could extend its rally and mortgage rates should fall for the week.

Four Ways to Delay Paying Taxes

 

 

While the due date for taxes is April 17, if you are having trouble scraping up the money, there are ways to stall the taxman. According to a Yahoo article, you must file your tax return by the deadline in order to avoid penalties and interest. However, you can get an extension of up to six months from the IRS. 

Four ways to stall payment:

1. Set up monthly installments

If you owe less that $25,000 in taxes, you can create a monthly payment plan. There are several ways to do this – you can fill out an Online Payment Agreement form, search “installment agreements” at IRS.gov or call 1-800-829-1040.

2. Pay by credit

The IRS accepts payment by credit card, which can be helpful if you don’t have the cash on hand and need more time. There are downsides to paying by credit card, however. You will be charged a transaction fee of 3% by the IRS, and if you can’t keep up with the monthly credit card payments, you will be charged interest.

3. Request an offer in compromise

If you are sure you cannot pay your taxes, you have the option to request an offer in compromise from the IRS. They may agree to settle your tax debt for less than the full amount.

4. Try a partial payment installment agreement

In this agreement, the debtor can pay monthly installments for a set period of time and once the collection period ends, the excess debt is forgiven. It is much more difficult to obtain than a offer in compromise, and for both, consult a tax attorney or professional in regards to your options.

This Week’s Market Commentary_April 16, 2012

March’s Housing Starts is the next report, coming early Tuesday morning. It gives us a measurement of housing sector strength and mortgage credit demand by tracking starts of new home construction and the number of permits issued for future starts. This data usually doesn’t cause much movement in mortgage pricing unless it varies greatly from forecasts. It is expected to show a slight increase in construction starts of new homes. Good news for the bond market and mortgage rates would be a decline in home starts, indicating housing sector weakness.

March’s Industrial Production data will be posted at 9:15 AM ET Tuesday. It gives us a measurement of output at U.S. factories, mines and utilities, translating into an indication of manufacturing sector strength. Current forecasts are calling for an increase in production of 0.2%. This data is considered to be only moderately important to rates, so it will take more than just a slight variance to influence bond trading and mortgage pricing. Signs of manufacturing sector strength are considered negative news for mortgage rates.

Thursday has the remaining two reports scheduled, starting with March’s Existing Homes Sales numbers from the National Association of Realtors at 10:00 AM ET. This report also gives us an indication of housing sector strength and mortgage credit demand. It is considered to be moderately important to the markets, but can influence mortgage pricing if it shows a sizable variance from forecasts. Ideally, the bond market would like to see a drop in home resales because a soft housing sector makes a broader economic recovery difficult. Analysts are expecting to see an increase in sales between February and March. The larger the increase, the worse the news for bonds and mortgage rates.

The final report of the week will also be posted late Thursday morning when the Conference Board releases their Leading Economic Indicators (LEI) for March. This data attempts to measure economic activity over the next three to six months. This is considered to be a moderately important report, so we may see a slight movement in rates as a result of this data. It is expected to show an increase of 0.2%, meaning it is predicting slight growth in economic activity over the next several months. A decline would be considered good news for the bond market and could lead to slightly lower mortgage rates, assuming the housing report doesn’t show a significant surprise.

Overall, it will likely be a moderately active week for mortgage rates. However, unlike many weeks, the most important news comes during the early part of the week. Friday appears to be the best candidate for least active day, but Wednesday may also be fairly quiet. The stock markets will also influence bond trading and mortgage pricing this week as we get more corporate earnings releases. In other words, I expect to see only small changes to mortgage rates, but see them each day. At least once we get past tomorrow’s data.

This Week’s Market Commentary_April 9, 2012

Monday’s bond market has opened in positive territory following early stock weakness. As expected, the stock markets are showing sizable losses as they react for the first time to Friday’s Employment numbers. The Dow is currently down 153 points while the Nasdaq has lost 40 points. The bond market is currently up 7/32, which with Friday’s strength after pricing was issued, should improve this morning’s mortgage rates by approximately .250 of a discount point.

Worth noting is that this morning’s early selling has brought the Dow below 13,000 again. It is early in the day and a lot can happen between now and closing, but closing and staying below 13,000 should bode well for the bond market and mortgage rates. That was a threshold that was difficult to cross, so giving it up could signal further stock losses in the immediate future. This would create a flight-to-safety scenario that would likely bring funds from stocks into bonds.

There is no relevant economic news scheduled for today or tomorrow. The rest of the week brings us the release of five economic reports that are relevant to mortgage rates, in addition to a couple of Treasury auctions that have the potential to be influential on the bond market and mortgage pricing. Corporate earnings season also kicks off this week, which will be instrumental in stock market direction and possibly mortgage rate movement.

The first report of the week comes Wednesday afternoon when the Federal Reserve will post its Fed Beige Book report at 2:00 PM ET. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by Federal Reserve region. Since the Fed relies heavily on the contents of this report during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any significant surprises. Unexpected signs of strong economic growth or rising inflation would be considered negative for bonds and mortgage rates. Slowing economic conditions with little sign of inflationary pressures would be considered favorable for bonds and mortgage pricing.

Overall, look for the most movement in rates the latter part of the week due to the Producer and Consumer Price Indexes being released and the two Treasury auctions that are scheduled, but this morning was a good start. There is also a high probability that the stock markets will also influence bond trading and mortgage rates due to earning releases that could disappoint the markets. I am expecting it to be an active week for the mortgage market, so please maintain contact with your mortgage professional if still floating an interest rate.

This Week’s Market Commentary_April 2, 2012

This week brings us the release of three monthly economic reports in addition to the minutes from the most recent FOMC meeting. While three reports is usually not much of a concern, two of the week’s three are considered to be highly important to the markets and mortgage rates. Thrown in the fact that this is a holiday-shortened trading week and we have the mix for a very interesting week.

The first report comes late tomorrow morning when the Institute for Supply Management (ISM) will release their manufacturing index. This index gives us an important measurement of manufacturer sentiment by surveying trade executives and is one of the more important of this week’s data. A reading above 50 means more surveyed executives felt business improved during the month than those who said it had worsened. This month’s report is expected to show a reading of 53.0, which would be a decline from February’s reading of 52.4. This means that analysts think business sentiment slipped from last month’s level. That would be fairly good news for the bond market and mortgage rates. A noticeable decline would be favorable for rates while an increase would be negative.

February’s Factory Orders will be released early Tuesday morning. This data is similar to last week’s Durable Goods Orders report, except it includes orders for both durable and non-durable goods, giving us a measurement of manufacturing sector strength. It is also the least important of this week’s reports. Unless it varies greatly from forecasts of a 1.4% increase, I suspect that it will be a non-factor in the mortgage market.

The next important event comes Tuesday afternoon when the Fed releases the minutes of their last FOMC meeting. Market participants will be looking at them closely. They give us insight to the Fed’s current thought process and individual Fed member opinions. Any surprises in the 2:00 PM ET release, particularly about inflation or the likelihood of a Fed move to boost economic activity, could cause afternoon volatility in the markets Tuesday and possible changes in mortgage pricing.

Wednesday doesn’t have any economic data scheduled for release from a government agency or reliable source. There are a couple of private sector employment-related reports being posted, but they are not considered highly important to the bond market or mortgage rates. These reports have not been accurate in predicting results of government reports, so they usually do not have much of an impact on bond trading or mortgage pricing. We do see some reaction to them if they reveal a surprisingly significant indication of employment strength or weakness. However, I don’t believe they deserve much concern or attention in regards to mortgage pricing.

The biggest news of the week will come early Friday morning when the Labor Department posts March’s Employment report, giving us the U.S. unemployment rate and the number of jobs added or lost during the month. This is an extremely important report to the financial and mortgage markets. It is expected to show that the unemployment rate remained at 8.3% and that approximately 200,000 payrolls were added during the month. A higher unemployment rate and a smaller than expected payroll number would be good news for bonds and would likely push mortgage rates lower Friday morning because it would indicate weakness in the employment sector of the economy.

Overall, I think it is going to be an active week for the mortgage market. The most important day is Friday, but not only because the almighty monthly Employment report is being posted. Friday is Good Friday, meaning the stock markets will be closed. However, due to the release of the Employment report, the bond market will be open until noon ET Friday. This means that bond trading will take place without the influence of stock gains or losses. Tomorrow is also going to be a big part of whether rates fall or rise for the week, so please maintain contact with your mortgage professional if still floating an interest rate.