Weekly Mortgage Market Overview: 7/30/12

This week is one of the busiest in months with most attention on Central Banks in the US and Europe. The FOMC meets on Tuesday and Wednesday with the policy statement Wednesday afternoon. It is widely believed in markets that the Fed will start another QE the question at the moment isn’t will they but when. Some believe the Fed will announce an easing move on Wednesday while others are saying at the Sept FOMC meeting. The European Central Bank will meet on Thursday, an even more important event than the FOMC meeting. Last week interest rate markets were rocked when the President of the ECB said in a speech the bank will do whatever it takes to save the euro. Since then Germany and Italy in talks over the weekend sounded upbeat. Last week on the Draghi comments the 10 yr note and mortgage rates jumped; the 10 yr yield up 14 basis point since Wednesday and mortgage rates up 7 to 9 basis points in rates.

 

Adding to the importance of the week; the July employment report on Friday, early estimates call for private job growth of 105K with unemployment rate unchanged at 8.2%. The two key ISM reports also out this week, manufacturing index expected about unchanged at 49.9 and the services sector at 52.2 frm 52.1 in June. Easing from the Fed and the ECB meeting are the dominant focus this week but the data also important. We expect an increase in market volatility this week; technically the US interest rate markets are trading at critical levels.