Straight Stats
Mortgage interest rates were generally flat on the week despite high intraweek volatility on continued uncertainty surrounding European sovereign debt issues. At this point, it appears that Greece will receive aid to avoid default on its sovereign debt on October 13. Globally, there is more talk of the world economy falling back into recession. China reported that its manufacturing sector shrank for a third straight month, its longest contraction since 2009. German sales fell the most in more than four years and industrial production in Japan grew less than expected. U.S. economic data was mixed. Weekly jobless claims, the final look at Q2 GDP, Pending Home Sales, the Chicago Purchasing Managers Index, and the University of Michigan Consumer Sentiment Index were better than expected. The September Consumer Confidence Index, August Durable Goods Orders, and August Personal Income were weaker than expected. Also of note, the Treasury auctioned $99 billion of 2 Year Notes, 5 Year Notes, and 7 Year Notes, which were met with strong demand from markets.
Commentary
Take a deep breath. Two. Un-clench your hands. Let loose your shoulders. Look out at a brilliant fall sky. Leaves. Breathe again, but for scent. Put this global financial political… whatever-it-is… put it down. Back away from it, and look at it from a long ways off. Domestic US growth is marginal, but not recession. New weekly unemployment claims are steady near 400,000, no new wave of layoffs. Purchase mortgage applications are too low to work off excess inventory, but they are stable. The Chicago Fed’s national index is a minus-43, below the long-term trend line at zero in their index but far above the minus-70 that would mark recession. Orders for durable goods were flat in August, but held the huge July gain. Flat and soggy, but hardly over the cliff that you’d think from listening to media, and especially people in financial markets. These are normally the Pollyannas of the airwaves: upon any devastating flood, nuclear accident, or outbreak of war, they’ve got a loopy grin and a new investment for you to buy.
Gale Boonstra, CPA, MBA, is a Senior Mortgage Consultant at Premier Lending Group in Boulder. Feel free to contact her at 303.302.3932 or gboonstra@pmglending.com.
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