Weekly Mortgage Overview: 1/23/2013

By January 23, 2013Mortgage Overview

This week, Congress gets back to business with the House Republicans offering a bill to increase the debt ceiling for three months. The extension is supposed to allow more time to deal with spending cuts; whether the President will go along isn’t known.

Economic releases this week are focused on the housing market with existing and new home sales and the FHFA house price index. Weekly claims fell to 335K last week; this week the early forecast is a rebound to 360K (+25K). Effects from Hurricane Sandy continue to distort the monthly comparison of the four-week average which further clouds the data’s usefulness as a gauge for the monthly employment report. The four-week average is down 6,750 to 359,250, which is about 10,000 below the mid-December level.

For the last 10 sessions the 10-year note yield has been tied into a 5 basis point range on its rate. MBS markets are showing a little more technical bearishness than the 10-year but also are trading in a 50 basis point price range for the last 12 sessions; MBSs slightly falling in favor by investors concerned about early pre-payments and the overall low level of interest rates. There is a strong undercurrent now in the interest rate world that the path going forward is up for rates, slowly as long as the Fed is still buying $85B of treasuries and mortgages each month. Next week the FOMC will meet again; after the minutes from the December meeting rocked markets, the Fed likely will try to soften concerns that the Fed is ready to end the easing moves.