Mortgage Rates Get Bumped, July 8, 2010

Mortgage Rates Get Bumped, July 8, 2010               

 

Mortgage Rate Trend Direction:         Up

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

Key News:                                           European Banks, IMF Economic Forecast

 

Summary

 

A big rally in stocks yesterday took mortgage rates higher. Today initial pricing from lenders (9:45 AM – 10:15 AM ET) is likely to be guided by the results of the labor department’s weekly Jobless Claims report. Throughout the day analysts will also be considering the methods European bank regulators will be using to evaluate the strength of close to 100 banks in Europe as well as a new report on global economic activity from the International Monetary Fund. Mortgage rates are expected to get bumped higher at initial pricing from their close yesterday.

 

Impact of economic data released today

 

The Weekly Initial Jobless Claims report showed a larger drop in initial filings than anticipated providing some hope that the jobs picture may be stabilizing. Also throughout the day retail companies will be releasing their earnings for the previous quarter and their outlook for the second half of the year. Most retail analysts expect the earnings to be generally positive but the outlook for the future to be lowered from earlier forecasts.

 

Impact of international or political events

 

European bank regulators released their methodology for evaluating bank strength yesterday but it did not provide the specifics that many analysts were seeking. The regulators are evaluating how the faltering of certain European nation’s economies might impact the banks which are large investors in the bonds (debt) of the trouble nations. Any lack of stability in the European banking sector could spread throughout the world and impact economic growth.

 

The International Monetary Fund (IMF) released its economic outlook for the second-half of 2010. The IMF raised its forecast of global economic growth for the balance of the year despite recent signs of a slowdown. They did, however, warn that the debt crisis in Europe could derail growth there initially and then across the globe.