Mortgage rates are poised to fall this morning as the world awaits President Obama’s much anticipated “jobs speech” this evening to a rare joint session of Congress. Concerns are being voiced this morning that the plan the President will outline does not have the ability to fundamentally alter the trajectory of the US economy and has little chance of being enacted. Yet, as I write this article a Presidential advisor is on TV suggesting there may be surprises in the speech that have not been publically aired previously. It will be interesting theater and will impact current mortgage rates today.
In other news today, US trade balance and the weekly jobs report were released this morning. Expectations were for both reports to show results very close to last month. Jobless claims were close to last month, but did tick higher while the trade deficit came in lower than expectations. Taken together we didn’t learn anything new about our economy that will alter the direction of mortgage rates.
In European news several developments have occurred since yesterday. First the Bank of England and the European Central Bank (ECB )have decided to leave interest rates unchanged. The Bank of England stated it would not be pursuing any asset purchases (quantitative easing) at this time to stimulate the English economy. For its part, the ECB stated that growth in Europe declined significantly in the 2nd quarter and that prospects for next year’s growth ranged from .4% to 2.2%. Frankly, this last estimate, despite being ridiculously large between the high and low, is higher than most economist expect. Was ECB President Jean-Claude Trichet simply trying to quell talk of a recession or does he truly see a more optimistic picture?
Tomorrow’s mortgage rates will mostly be determined by reaction to the President’s speech tonight. Here are the major proposals we expect to hear about from the President:
• Continuing 2% payroll tax cut, perhaps adding cut for businesses
• Extending unemployment benefits
• Infrastructure repair and construction
• Aid to States for teacher jobs
• Training for long-term unemployed
• Enhancing mortgage refinancing program
I am going to be listening for the surprises—because this list of policies alone won’t change the economic landscape.
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