Mortgage Rates Are Expecting Poor Data, September 23, 2010

A good cross-section of economic data will be available today to guide markets.  Additionally, comments from investor Warren Buffet and from Chinese Premier Wen Jiabao could impact markets and mortgage rates today.

Mortgage Rate Trend Direction:     Down

Economic Reports/Rate Impact:    Jobless Claims, 8:30 AM ET, High Rate Impact

                                                              Existing Home Sales, 10:00 AM ET, Moderate Rate Impact

                                                              Leading Economic Indicators, 10:00 AM ET, Moderate Rate Impact

Key News:                                           Comments from Warren Buffet, Chinese Premiere

Summary

With three economic reports released today as well as interesting comments from two influencial figures in the global economy, today could be a volatile day in the financial markets.  Based on early market activity, mortgage rates are likely to begin the day lower relative to yesterday's close.

Impact of economic reports

Jobless claims data continue to show that a very difficult economic period is continuing.  Mortgage-backed securities prices reacted immediately to the data by increasing in price.  This means lower mortgage pricing.  I expect any moves to be moderate until the 10:00 AM ET reports are released.  If homes sales and economic indicators are lower than expectations, this move in mortgage pricing could accelerate.

Impact of international or political events

Billionaire investor Warren Buffet, challenging the recent report from an academic group saying that the "Great Recession" ended 15 months ago, stated that by his "common-sense" definition, the US remains in a recession.  He also said he expects the recession to last for "a while". 

Responding to pressure from the US, Chinese Premiere Wen Jiabao stated that higher valuation of his nation's currency would have a significantly negative impact on small businesses in China.  He also stated that he did not believe the impact would be particularly beneficial for US exporters.  The war of words continues to heat up over China's efforts to maintain an artificially low value for its currency.