This past week we experienced a bump up in mortgage bonds due in part to the bettern than expected Jobs Report for June. The June Jobs Report showed 288,000 new jobs were created, while the figures for April and May were revised higher by a total of 29,000. All in all, the first half of the year showed a 19 percent increase in job creations compared to the same period in 2013.
Also noteworthy was the Pending Home Sales Report. This report is in regards to home sales in which a contract has been signed but the sale has not yet closed. Pending Home Sales reported a rise by 6.1 percent from April to May. This was the largest monthly gain since April 2010, when home buyers were taking advantage of the homebuyer’s tax credit.
These two strong economic reports was quite a boost to stocks at the expense of bonds, as investors shifted their money from safer assets like bonds to take advantage of riskier gains. Since home loan rates are tied to mortgage bonds, both bonds and home loan rates worsened this past week. However, home loan rates remain very attractive and near some of the best levels we’ve experienced this year.
There are still tons of buyers in the Dallas/Fort Worth market and there are no signs of any slowdown on the radar. Mortgage interest rates are still near historic lows so the buying power of the consumer is strong.
For the upcoming week there is not any major economic reports being reported. On Wednesday, the June Federal Open Market Committee Meeting Minutes will be released. This will provide insight into the Feds strategy on its massive bond buying program later this year. Also on Thursday we will have the Weekly Initial Jobless Claims. Recent number have been around the 300,000 mark which is in line with market expectations.
Keep in mind that weak economic news normally causes money to flow out of stocks and into bonds, helping bonds and home loan rates improve.