You all know by now that I like to keep you well informed on the goings on of the mortgage market by keeping you posted with what Monica Jones, Certified Mortgage Planner with RPM Mortgage, has to say about it. Below you’ll find her notes on the market for this week.
From the first time home buyer to the savvy investor – from the seller with equity to the seller underwater and needing options – I am here for you.
Last Week in Review: Our hearts and minds – as well as the markets – were moved by the tsunami in Japan and unrest in Saudi Arabia. Read how both impacted Bonds and home loan rates!
Forecast for the Week: Double dose after double dose hits the news wires this week. Find out what to watch and why!
View: Discover the pros, cons, and interesting tidbits about Daylight Saving Time, which begins this week.
Last Week in Review ![]() |
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“And now… the rest of the story” – Paul Harvey. With his famous line, Paul Harvey pointed out for years that there’s more to every story – and often those hidden details influence what happened. With that in mind, let’s look at the “rest of the story” behind last week’s news items, which had alternating impacts on Bond prices and home loan rates.
One would think that US Treasuries and Mortgage Bonds would have traded much higher, as often is the case with devastating natural events that drive money into “safe haven” trades. But that wasn’t the case. Why? The answer is that buying of Treasuries and Mortgage Bonds as a safe haven trade was offset by the Japanese selling some of their own massive holdings of Treasuries and Mortgage Bonds, in order to repatriate money back to their country during the time of emergency. Considering that Japan is the second largest holder of U.S. debt at $877 Billion, selling just a tiny position of their holdings has an impact on Bond prices. In addition, Bond prices traded in very volatile fashion last week after getting jockeyed around on news out of Saudi Arabia that police had opened fire on protesters with rubber bullets. Let’s look at how this influenced the markets in a different way than one might at first imagine. Like other recent uprisings in the Middle East, Saudi protesters are looking for more democracy, the right to elect public officials, greater civil rights, freedom of expression, more women’s rights and a higher minimum wage. Interestingly, however, oil fell last week, despite the news. Why? Shouldn’t unrest in Saudi Arabia – the world’s largest oil producer, push prices higher? Yes, but that news was offset by the earthquake in Japan. That’s because Japan is a huge importer of oil… and the market senses that the earthquake and subsequent tsunami may create an economic slowdown and diminish the demand for oil. Seeing that Mortgage Bonds are lower – even in the face of weak Stocks and enormous uncertain global news – tells us that the gains in Bonds are not coming with a lot of conviction and Traders are selling into this strength. This is because a lot of headwinds remain for Bonds – like inflation abroad, rising government debt and continued QE2 purchases. This is a good example of why it is important to work with a mortgage professional that understands not only what was reported in the news, but also how the many cross currents may have alternating effects on everything from Bonds, Stocks, Oil to the US Dollar. |
Forecast for the Week ![]() |
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Sping Forward Beginning March 13 ![]() |
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Daylight Saving Time (DST) begins on Sunday, March 13, 2011. The way we refer to time zones also changes. For example, Eastern Standard Time (EST) becomes Eastern Daylight Time (EDT).
But remember, some areas of the United States don’t use DST, such as Arizona, Puerto Rico, Hawaii, the US Virgin Islands and American Samoa.
Benefits of Daylight Saving Time
Despite some concerns, Americans overwhelmingly like Daylight Saving Time. There is simply more sunlight in the evenings to enjoy the outdoors and get things done. Plus, additional hours of daylight can help save energy on a national scale – as much as 100,000 barrels of oil per day according to some estimates.
And brighter is safer. Studies have shown that the DST shift reduces traffic accidents. Additionally, a study by the US Law Enforcement Admin also determined that crime is consistently lower during DST, with violent crimes down as much as 10% to 13%. For many crimes, like mugging, darkness is a factor–so more light in the evening hours reduces these types of crimes.
Cons of Daylight Saving Time
Not everyone benefits from DST. For example, many farmers say that DST has a negative impact on their livestock’s natural schedules. The airline industry also reports that it costs millions of dollars to adjust time schedules – and even then, airlines report numerous problems with international flight connections during the transition time since DST isn’t followed uniformly around the world.
Interesting DST Facts
- A man was actually able to avoid the draft for the Vietnam War using a Daylight Saving Time loophole. When he was born, it was just after midnight, DST. When he was drafted, he successfully argued that in his home state of Delaware, standard time – not DST – was the official time for recording births. So he was technically born on the previous date – which had a much higher draft lottery number – and he was able to avoid being drafted.
- In September 1999, the West Bank was on Daylight Saving Time, while Israel had switched back to standard time. A group of West Bank terrorists prepared some timed bombs. Unfortunately for them, they misunderstood the time change and the bombs exploded early – killing the terrorists themselves rather than the intended victims, two busloads of innocent citizens.
- In the 1950s and 60s, each state and locality was permitted to choose start and end DST dates as they desired. During 1965, Minneapolis and St. Paul – which are considered one metropolitan area – didn’t agree on start dates, and for a period of time, these Twin Cities had a one hour time change between them. And on one Ohio to Virginia bus route, passengers technically had to change their watches seven times in 35 miles!
- To keep to their published timetables, Amtrak trains cannot leave a station before the scheduled time. So when the clocks “fall back” in the fall, all trains that are running on time actually stop at 2 am – the official time of DST change – and wait one hour before resuming their routes. In the spring, the routes instantaneously become one hour behind schedule, but they just keep going and do their best to make up the time.
Finally, since many electronic devices and computer programs are set to adjust to DST based on the old dates, they may not change automatically on March 13. So, you’ll want to double-check all of your devices and confirm that the time is correct.
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Economic Calendar for the Week of March 14-18, 2011
Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.
Economic Calendar for the Week of March 14 – March 18
Date
|
ET
|
Economic Report
|
For
|
Estimate
|
Actual
|
Prior
|
Impact
|
Tue. March 15 |
08:30
|
Empire State Index |
Mar
|
17.0
|
15.43
|
Moderate
|
|
Tue. March 15 |
02:15
|
FOMC Meeting |
Mar
|
HIGH
|
|||
Wed. March 16 |
08:30
|
Housing Starts |
Feb
|
551K
|
596K
|
Moderate
|
|
Wed. March 16 |
08:30
|
Building Permits |
Feb
|
570K
|
562K
|
Moderate
|
|
Wed. March 16 |
08:30
|
Producer Price Index (PPI) |
Feb
|
0.6%
|
0.8%
|
Moderate
|
|
Wed. March 16 |
08:30
|
Core Producer Price Index (PPI) |
Feb
|
0.2%
|
0.5%
|
Moderate
|
|
Thu. March 17 |
10:00
|
Index of Leading Econ Ind (LEI) |
Feb
|
0.9%
|
0.1%
|
Low
|
|
Thu. March 17 |
09:15
|
Capacity Utilization |
Feb
|
76.5%
|
76.10%
|
Moderate
|
|
Thu. March 17 |
09:15
|
Industrial Production |
Feb
|
0.6%
|
-0.1%
|
Moderate
|
|
Thu. March 17 |
08:30
|
Core Consumer Price Index (CPI) |
Feb
|
0.1%
|
0.2%
|
HIGH
|
|
Thu. March 17 |
08:30
|
Consumer Price Index (CPI) |
Feb
|
0.4%
|
0.4%
|
HIGH
|
|
Thu. March 17 |
08:30
|
Jobless Claims (Initial) |
3/12
|
387K
|
397K
|
Moderate
|
|
Thu. March 17 |
10:00
|
Philadelphia Fed Index |
Mar
|
28.0
|
35.9
|
HIGH
|