This Morning…Monday, November 30, 2009:
The United Arab Emirates since has come out saying it will lend money to the Dubai banks involved and that has settled things a little this morning. What UAE has not said however, is whether that central bank will stand with Dubai World, the island making venture that has ruin out of buyers. Estimates of the combined debt being default are ranging from $80B to $120B but no one really has a handle yet. The market is volatile this morning.
Last Week:
Interest rates improved slightly last week. The day prior to Thanksgiving, the results of the 7-year note were very strong, New Home Sales were up over 6% in October, much better than the drop that experts had forecast, and inventories shrank to about a 6.7 month supply at the current sales rate. Weekly jobless claims fell and for the first time in months total weekly claims were below 500K. We also had Consumer Spending pick up a little bit, which may give retailers a little hope for the upcoming buying season.
While here in the US we celebrated Thanksgiving the rest of the world went about business as usual; but it wasn't without a problem. Thursday Dubai announced it would ask for a moratorium on its outstanding debt, unable to pay for those grandiose ventures like an indoor snow ski resort in the middle of the desert and Dubai World. One more debt mess hitting. The reaction sent global equity markets down and a flight to safety in sovereign debt. Though US banks are not too involved in the Dubai crisis, most of Dubai's debt is held in Europe and the problem re-lights concern that debt problems are still out there and could re-surface at anytime.
This Week:
There is a heavy economic calendar this week with the Nov employment data bringing up the rear on Friday. Today we have the Chicago Purchasing Manager’s Survey at 9:45 EST. Tomorrow will be Construction Spending and ISM, Wednesday is the Fed’s Beige Book, Thursday Jobless Claims, and then on Friday is all of the unemployment data.
The Fed "Beige Book" is a summary of economic conditions from each of the 12 Federal Reserve regional districts. The release takes place eight times a year approximately two weeks ahead of each of the Federal Open Market Committee meetings. The report is used at the FOMC meetings, which tends to be one of the most influential events in the market. If the "Beige Book" shows signs of inflationary pressures, the Fed’s ability to keep rates lower may be somewhat restricted. However, if the report shows signs of difficulties, the Fed may keep rates low to stimulate the economy.
EconomicIndicator
Construction Spending
Tuesday, Dec. 1,10:00 am, et
Down 0.4%
Low importance. An indication of economic strength. Significant weakness may lead to lower rates.
ISM Index
Tuesday, Dec. 1,10:00 am, et
54.8
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
ADP Employment
Wednesday, Dec. 2,8:30 am, et
-155,000
Important. A measure of employment. Payroll weakness may bring lower rates.
Fed "Beige Book"
Wednesday, Dec. 2, 2:00 pm, et
None
Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
Revised Q3 Productivity
Thursday, Dec. 3,8:30 am, et
8.5%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Q4 Employment Cost Index
Thursday, Dec. 3,8:30 am, et
Up 0.4%
Very important. A measure of wage inflation. Weakness may lead to lower rates.
Employment
Friday, Dec. 4,8:30 am, et
Jobs -120,000Unemp @ 10.2%
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Factory Orders
Friday, Dec. 4,10:00 am, et
+0.2%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Market Forecast:
The employment report will be the most important release this week. This is one of those weeks where there are many economic releases classified as very important or important. The "Beige Book" release on Wednesday should provide market participants with valuable insight into what the Fed will do and how mortgage interest rates will respond in the short-term.
The potential for market volatility is increased when these types of reports are released. Be cautious heading into this and the other important releases this week.
Some Humor:
John was a salesman's delight when it came to any kind of unusual gimmick. One day he came home with another one of his unusual purchases: a robot that John claimed was actually a lie detector.
It was about 5:30 that afternoon when Tommy, their 11 year old son, returned home from school. Tommy was over 2 hours late.
“Where have you been? Why are you over 2 hours late getting home?” asked John.
“Several of us went to the library to work on an extra credit project,” said Tommy.
The robot then walked around the table and slapped Tommy, knocking him completely out of his chair.
“Son,” said John, “this robot is a lie detector, now tell us where you really were after school.”
“We went to Bobby's house and watched a movie,” said Tommy.
“What did you watch?” asked Marsha.
“The Ten Commandments.” answered Tommy. The robot went around to Tommy and once again slapped him, knocking him off his chair once more.
With his lip quivering, Tommy got up, sat down and said, “I am sorry I lied. We really watched a porno tape.'’
“I am ashamed of you son,” said John. “When I was your age, I never lied to my parents.”
The robot then walked around to John and delivered a whack that nearly knocked him out of his chair.
Marsha doubled over in laughter, almost in tears and said, “Boy, did you ever ask for that one! You can't be too mad with Tommy. After all, he is your son!”
With that the robot immediately walked around to Marsha and knocked her out of her chair.
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Monday, November 30, 2009
11/25/09
Good morning. Anyone have gold to sell? It hit another high on dollar weakness, nearing $1,200 per ounce!!! Today there are many economic numbers to digest. Personal Income and Consumption, Durable Goods, Housing Starts and Building Permits and New Home Sales.
Jobless Claims dropped 35,000 last week, which surprised forecasters. The surprising decline in unemployment claims overshadowed two other 8:30 reports; Oct personal income increased slightly and spending was up 0.7%. Oct durable goods orders fell slightly. Without the claims data the decline in orders would be seen as a negative; however durables is a very volatile series so traders tend to pay it less attention.
Finally today (and the rest of the week) Oct new home sales were forecast to be up 0.8%, but sales jumped 6.2%. There is a 6.7 month supply based on current sales, the lowest level since 12/06. The median sales price at $212,200 is 0.5% lower on a yr/yr basis. The report sent stock indexes higher.
To wrap up the week; at 1:00 7 yr notes will be auctioned. Likely won't be as well bid as the 2 and 5 yr notes but shouldn't be a failure either. The market is closed tomorrow and open until 1:00 on Friday but not many will be in place. Yesterday and Monday the volume at the NYSE was extremely low, today will likely be the same as investors and traders are winding down for the rest of the year. Many funds have already buttoned up for the year to protect the profits earned this year.
After all this mortgages rates are about unchanged.
Once again, I would like to wish all of you a very happy Thanksgiving. I hope you have a wonderful holiday. I’ll be in touch on Monday the 30th.
Jobless Claims dropped 35,000 last week, which surprised forecasters. The surprising decline in unemployment claims overshadowed two other 8:30 reports; Oct personal income increased slightly and spending was up 0.7%. Oct durable goods orders fell slightly. Without the claims data the decline in orders would be seen as a negative; however durables is a very volatile series so traders tend to pay it less attention.
Finally today (and the rest of the week) Oct new home sales were forecast to be up 0.8%, but sales jumped 6.2%. There is a 6.7 month supply based on current sales, the lowest level since 12/06. The median sales price at $212,200 is 0.5% lower on a yr/yr basis. The report sent stock indexes higher.
To wrap up the week; at 1:00 7 yr notes will be auctioned. Likely won't be as well bid as the 2 and 5 yr notes but shouldn't be a failure either. The market is closed tomorrow and open until 1:00 on Friday but not many will be in place. Yesterday and Monday the volume at the NYSE was extremely low, today will likely be the same as investors and traders are winding down for the rest of the year. Many funds have already buttoned up for the year to protect the profits earned this year.
After all this mortgages rates are about unchanged.
Once again, I would like to wish all of you a very happy Thanksgiving. I hope you have a wonderful holiday. I’ll be in touch on Monday the 30th.
11/24/09
Good morning. Yesterday’s 2-yr sale didn’t move the markets much. The overall demand for the 2-yr note was lower than last month’s auction.
The Existing Home Sales number was up over 10% and hitting the highest level in almost three years. We all knew that there would be a “first time home buyer tax credit ending” crunch, but it exceeded what experts had forecast. Inventories of previously owned homes decreased by 3.7% - that represented a 7-month supply at the current sales pace, with median prices down 7.1% a year ago. Regionally, sales in October compared to September rose 11.6% in the Northeast, 14.4% in the Midwest, 12.7% in the South, and 1.6% in the West.
We learned this morning that U.S. economy grew more slowly than initially thought in the third quarter. The second reading of 3rd quarter GDP showed 2.8 percent annual increase rather than the 3.5 percent pace it estimated last month and a touch below the 2.9% expected. Although we have another auction ahead of us, after the GDP news we find mortgage prices slightly better.
The Existing Home Sales number was up over 10% and hitting the highest level in almost three years. We all knew that there would be a “first time home buyer tax credit ending” crunch, but it exceeded what experts had forecast. Inventories of previously owned homes decreased by 3.7% - that represented a 7-month supply at the current sales pace, with median prices down 7.1% a year ago. Regionally, sales in October compared to September rose 11.6% in the Northeast, 14.4% in the Midwest, 12.7% in the South, and 1.6% in the West.
We learned this morning that U.S. economy grew more slowly than initially thought in the third quarter. The second reading of 3rd quarter GDP showed 2.8 percent annual increase rather than the 3.5 percent pace it estimated last month and a touch below the 2.9% expected. Although we have another auction ahead of us, after the GDP news we find mortgage prices slightly better.
Monday, November 23, 2009
Mortgage Marketr Review - 11/23/09
This Morning…Monday, November 23, 2009:
At 10:00 Oct existing home sales were up 10.1% which was much higher than expected. 1st time homebuyers accounted for 33% of the sales. Sales according to the data this morning are up 23.5% from October, 2008. There has been no immediate reaction to the 10:00 report in the mortgage markets, but the DJIA jumped about 20 points from pre report levels.
Last Week:
Mortgage rates lowered slightly last week. Mixed data resulted in up and down trading but within a relatively narrow range. Things were going well the first part of the week with rates improving until Wednesday when the consumer price index and the core came in higher than expected. Inflation, real or perceived, erodes the value of fixed income investments causing prices to fall and rates to rise. We saw some of that mid-week. In FED Chief Bernanke's speech on Monday to the NY Economics Club he reiterated he would keep rates low; essentially admitted he has little insight as to how the economic recovery will unfold and remarked "The best thing we can say about the labor market right now is that it may be getting worse more slowly." In layman speak, he isn't sure the unemployment situation is at its bottom.
This Week:
There is a decent amount of economic data to be released this week. Today is Existing Home Sales (see information above). Tomorrow we have GDP, Consumer Confidence, and the FOMC Minutes from the November 4th Fed meeting. Wednesday, when everyone would rather be somewhere else, we have Durable Goods Orders, Personal Income, Core PCE inflation, New Home Sales, and Consumer Sentiment. Add on the Treasury auctions today through Wednesday, and many traders off for the week, and we have a recipe for volatility.
EconomicIndicator
Existing Home Sales
Monday, Nov. 23,10:00 am, et
Down 0.5%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Preliminary 3Q GDP
Tuesday, Nov. 24,8:30 am, et
Up 3.0%
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Consumer Confidence
Tuesday, Nov. 24,10:00 am, et
47.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Personal Income and Outlays
Wednesday, Nov. 25,8:30 am, et
Up 0.2%,Up 0.5%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Inflation
Wednesday, Nov. 25,8:30 am, et
Up 0.1%
Important. A measure of price increases for all domestic personal consumption. Weakness may help rates improve.
Durable Goods Orders
Wednesday, Nov. 25,8:30 am, et
Up 0.5%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Wednesday, Nov. 25,10:00 am, et
66.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales
Wednesday, Nov. 25,10:00 am, et
Up 2.9%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Market Forecast:
Look for increased volatility this week with thin volume. There are a lot of reports due in a shortened week. Plain and simple.
Some Humor:
Recently I received a parrot as a gift. The parrot had a bad attitude and an even worse vocabulary. Every word out of the bird's mouth was rude, obnoxious and laced with profanity.
I tried and tried to change the bird's attitude by consistently saying only polite words, playing soft music and anything else I could think of to "clean up" the bird's vocabulary.
Finally, I was fed up and I yelled at the parrot.
The parrot yelled back.I shook the parrot and the parrot got angrier and even ruder. So, in desperation, I threw up my hands, grabbed the bird and put him in the freezer.
For a few minutes the parrot squawked and kicked and screamed.
Then suddenly there was total quiet.Not a peep was heard for over a minute.
Fearing that I'd hurt the parrot, I quickly opened the door to the freezer.
The parrot calmly stepped out onto my outstretched arms and said, "I believe I may have offended you with my rude language and actions. I'm sincerely remorseful for my inappropriate transgressions and I fully intend to do everything I can to correct my rude and unforgivable behavior."I was stunned at the change in the bird's attitude.
As I was about to ask the parrot what had made such a dramatic change in his behavior, the bird continued,
"May I ask what the turkey did?"
Once again…I hope you have a wonderful Thanksgiving!
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
At 10:00 Oct existing home sales were up 10.1% which was much higher than expected. 1st time homebuyers accounted for 33% of the sales. Sales according to the data this morning are up 23.5% from October, 2008. There has been no immediate reaction to the 10:00 report in the mortgage markets, but the DJIA jumped about 20 points from pre report levels.
Last Week:
Mortgage rates lowered slightly last week. Mixed data resulted in up and down trading but within a relatively narrow range. Things were going well the first part of the week with rates improving until Wednesday when the consumer price index and the core came in higher than expected. Inflation, real or perceived, erodes the value of fixed income investments causing prices to fall and rates to rise. We saw some of that mid-week. In FED Chief Bernanke's speech on Monday to the NY Economics Club he reiterated he would keep rates low; essentially admitted he has little insight as to how the economic recovery will unfold and remarked "The best thing we can say about the labor market right now is that it may be getting worse more slowly." In layman speak, he isn't sure the unemployment situation is at its bottom.
This Week:
There is a decent amount of economic data to be released this week. Today is Existing Home Sales (see information above). Tomorrow we have GDP, Consumer Confidence, and the FOMC Minutes from the November 4th Fed meeting. Wednesday, when everyone would rather be somewhere else, we have Durable Goods Orders, Personal Income, Core PCE inflation, New Home Sales, and Consumer Sentiment. Add on the Treasury auctions today through Wednesday, and many traders off for the week, and we have a recipe for volatility.
EconomicIndicator
Existing Home Sales
Monday, Nov. 23,10:00 am, et
Down 0.5%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Preliminary 3Q GDP
Tuesday, Nov. 24,8:30 am, et
Up 3.0%
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Consumer Confidence
Tuesday, Nov. 24,10:00 am, et
47.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Personal Income and Outlays
Wednesday, Nov. 25,8:30 am, et
Up 0.2%,Up 0.5%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Inflation
Wednesday, Nov. 25,8:30 am, et
Up 0.1%
Important. A measure of price increases for all domestic personal consumption. Weakness may help rates improve.
Durable Goods Orders
Wednesday, Nov. 25,8:30 am, et
Up 0.5%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Wednesday, Nov. 25,10:00 am, et
66.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales
Wednesday, Nov. 25,10:00 am, et
Up 2.9%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Market Forecast:
Look for increased volatility this week with thin volume. There are a lot of reports due in a shortened week. Plain and simple.
Some Humor:
Recently I received a parrot as a gift. The parrot had a bad attitude and an even worse vocabulary. Every word out of the bird's mouth was rude, obnoxious and laced with profanity.
I tried and tried to change the bird's attitude by consistently saying only polite words, playing soft music and anything else I could think of to "clean up" the bird's vocabulary.
Finally, I was fed up and I yelled at the parrot.
The parrot yelled back.I shook the parrot and the parrot got angrier and even ruder. So, in desperation, I threw up my hands, grabbed the bird and put him in the freezer.
For a few minutes the parrot squawked and kicked and screamed.
Then suddenly there was total quiet.Not a peep was heard for over a minute.
Fearing that I'd hurt the parrot, I quickly opened the door to the freezer.
The parrot calmly stepped out onto my outstretched arms and said, "I believe I may have offended you with my rude language and actions. I'm sincerely remorseful for my inappropriate transgressions and I fully intend to do everything I can to correct my rude and unforgivable behavior."I was stunned at the change in the bird's attitude.
As I was about to ask the parrot what had made such a dramatic change in his behavior, the bird continued,
"May I ask what the turkey did?"
Once again…I hope you have a wonderful Thanksgiving!
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, November 13, 2009
11/13/09
Good morning. This morning we found out that the U.S. trade deficit widened in September by an unexpectedly large 18.2%, the most in more than 10 years. Most of the widening was attributed to oil prices (up for the 7th straight month) and imports from China. Both U.S. exports and imports had their best month since December 2008, with imports growing 5.8% and exports rising 2.9% which points to some economic growth here in the US. Moving on to October, U.S. import prices rose for the third straight month, up .7%. After the news we find mortgage rates slightly better.
I’ll be out of the office from Friday afternoon (11/13) and returning on Monday (11/23). I will be available on my Blackberry for email and cell as much as my wife will allow. The number is 425-268-7003. I am hoping to continue the updates while I’m gone, but am uncertain about the internet capability. Thanks
I’ll be out of the office from Friday afternoon (11/13) and returning on Monday (11/23). I will be available on my Blackberry for email and cell as much as my wife will allow. The number is 425-268-7003. I am hoping to continue the updates while I’m gone, but am uncertain about the internet capability. Thanks
11/12/09
Good morning. I hope you had a nice Veteran’s Day holiday. Fixed-income markets, which were closed yesterday in spite of the equity markets being open. The results of the 10-year note were “solid”. The auction came slightly below average.
Today we will have a $16 billion 30-yr bond auction (currently at a yield of 4.40%). We have already found out that Jobless Claims fell for the second week in a row and the four-week moving average of claims was the lowest in nearly a year. After the news we find our friend the mortgage rates roughly unchanged.
Today we will have a $16 billion 30-yr bond auction (currently at a yield of 4.40%). We have already found out that Jobless Claims fell for the second week in a row and the four-week moving average of claims was the lowest in nearly a year. After the news we find our friend the mortgage rates roughly unchanged.
11/10/09
Yesterday (Monday) we saw the equity markets rally nicely. Helping the interest rate markets was a record $40 billion 3-yr Treasury auction that went well.
There is no data but we do get three Fed officials today; Lockhart (Atlanta Fed President) already this morning saying unemployment will stay high for a long time. Not news but reiterating the rationale that the Fed will keep interest rates low for much of 2010. We caution however, not to take the meaning that mortgage rates or long term treasuries will stay low. The Fed will likely keep the Federal Funds rate low but market factors could drive long term rates up while short rates stay firm.
Let me know if you have any questions.
There is no data but we do get three Fed officials today; Lockhart (Atlanta Fed President) already this morning saying unemployment will stay high for a long time. Not news but reiterating the rationale that the Fed will keep interest rates low for much of 2010. We caution however, not to take the meaning that mortgage rates or long term treasuries will stay low. The Fed will likely keep the Federal Funds rate low but market factors could drive long term rates up while short rates stay firm.
Let me know if you have any questions.
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