WeeklyBasis 01/19/04: Corporate Earnings Could Affect Bond Market, Good for Rates

Rates/commentary for the week of January 19, 2004. Tuesday should kick off with rates about .125% higher than last Friday, but still hovering around all-time record lows set last May. The main reason for a higher open is from Treasury and mortgage-backed bond investors selling to take profits after a week-long rally and before the holiday weekend. This week is light in terms of economic data, but heavy on corporate earnings, with more than 500 companies reporting. As such, bond markets (and rates) will bounce around with stock movement. The Dow, NASDAQ and S&P are up 1.4%, 7% and 2.5% respectively for the year. These increases have already priced in this quarter’s earnings expectations, and many on Wall Street think this means we will see some disappointment and a general stock market correction as earnings season continues.

This would be good for the bond market, good for continued low rates, and great for buyers looking to use lower monthly expenses to qualify.

Conforming ($50K – $333,700K) – NO POINTS
30 Year: 5.5% (5.64% APR)
15 Year: 4.75% (4.89% APR)
5/1 ARM: 4.5% (4.65% APR)

Jumbo ($333,701 – $650,000) – NO POINTS
30 Year: 5.875% (6.015% APR)
15 Year: 5.25% (5.39% APR)
5/1 ARM: 4.625% (4.775% APR)