THE BASIS POINT

WeeklyBasis 12/4/09: Record Rates, Positive Jobs Report Hurts Bonds, Holiday Sales Next

After touching the lowest levels on official record before Thanksgiving (see link), rates are now about .1% higher than that. Rates change daily as mortgage bonds trade. Rates held lows coming into this week due to scares about Dubai’s ability to service their debt, and as that subsided, we end the week with the best jobs report since the recession began in December 2007: only 11,000 private sector jobs were lost in November and unemployment decreased from 10.2% to 10%. Still a staggering unemployment rate, but a move down is significant, as is the decrease in job losses. Of course bond markets sell off on positive economic news like this, and when that happens, yields (or rates) rise.

The biggest scheduled news next week is November Retail Sales on Friday which will capture Black Friday figures and confirm whether initial holiday shopping reports are high or low. The initial National Retail Federation report showed that more people spent less to kick off holiday season: 195m shoppers visited stores and websites vs. 172m last year, but average spending dropped to $343.31 per person from $372.57 last year. Total spending reached an estimated $41.2 billion. This key measure of consumer strength carries a lot of weight with investors this time of year, so stock and bond/rate markets will surely swing on this data.

CONFORMING RATES ($200,000 – $417,000) – 1 POINT
30 Year: 4.875% (5.02% APR)
FHA 30 Year: 4.875% (5.08% APR)
5/1 ARM: 4.0% (4.13% APR)

SUPER-CONFORMING RATES ($417,001 to $729,750 cap by county) – 1 POINT
30 Year: 5.25% (5.39% APR)
FHA 30 Year: 5.125% (5.25% APR)
5/1 ARM: 4.5% (4.63% APR)

JUMBO RATES ($625,500 – $3,500,000) – 1 POINT
30 Year: 5.625% to 6.0% (5.78% to 6.275% APR)
10/1 ARM: 6.25% (6.39% APR)
5/1 ARM: 5.25% (5.43% APR)