Rates Hit 7 Month Low on Economic Data
Last week, we saw several reports that were less than optimistic for economic growth. The negative data more than offset any positive outlook from Greece and Europe as a whole, helping maintain a low outlook on interest rates for the time being. In fact, the 10 year Treasury hit a 7-month low of 2.85, with mortgage rates hovering at lows for 2011. Despite the economy reporting growth in the first quarter, the growth is sluggish, employment is not growing fast enough, and both consumer and producer spending remains tight. Reports today show little change from last week’s trend, with Personal Income & Spending reports coming in slightly worse than expected.
This week marks the final week for the Federal Reserve’s second Quantitative Easing program of purchasing Treasuries and Mortgage-Backed Securities. Mortgage rates seen today should already have this priced this in, but there may be a couple hiccups late in the week as the market digests the actual impact of relying more on investment outside of the government to maintain low rates.
Attention this week will continue to focus on Greece and whether legislation is approved to allow their bailout to proceed. The U.S. Debt Ceiling also continues to be a looming cloud that will gain more attention in the near future. As for upcoming economic news, many are looking toward the Consumer Confidence numbers due tomorrow, along with Pending Home sales, Manufacturing, and Auto sales later this week.
S&P will release their Case-Schiller index tomorrow on home prices for Apr, which is expected to show continued modest declines as the market works through excess housing inventory. Articles continue to circulate around the housing opportunity in the marketplace with this rare combination of lower home prices and low interest rates.