Good morning. Tomorrow morning the headlines will all read, “Unemployment Rate hits 26 year high at 10.2%”. Nonfarm Payroll was worse than expected and payrolls have declined for 22 consecutive months now – and even many who are back at work are either “under-employed” – working part time, or not making as much as they were. Manufacturing employment fell, construction was down, the service-providing sector cut 61k and goods-producing industries cut 129k. How will we have a recovery with those numbers? As one would expect, stocks fell on the news and bonds have rallied: Mortgage prices are a bit better this morning.
Yesterday the House voted 403-12 to extend and expand the tax credit to include many buyers who already own homes. The Senate approved the measure Wednesday, and the White House said President Barack Obama would sign it today. “Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30. The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.”
http://www.google.com/hostednews/ap/article/ALeqM5hJJraNRE6DjWj2orF7SYJ12PADEAD9BPISHG0
Have a great weekend.
Friday, November 6, 2009
11/5/09
Good morning. The Senate passed the bill extending the home buyers tax credit and adding 14 weeks to unemployment insurance; it goes to the House for quick passage then to Obama for a TV extravaganza signing event.
As was expected, the FOMC kept its central message and the Fed Funds rate unchanged, noting that "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." What are Fed Funds? These are cash balances held by banks with their local Federal Reserve Bank, typically involved in an “inter-bank sale” of a Fed fund deposit for one business day - overnight. And the Fed Funds Rate is the overnight interest rate charged by those banks with excess reserves on hand. Why would this impact the mortgage rate that you pay on your mortgage? They don’t, since the credit profile of a borrower, or house, is more complicated and riskier than a bank with excess funds, and an overnight rate is obviously different than a 30 year rate.
Yesterday, however, in addition to the Fed announcement, Treasury officials announced a record refunding package for next week. Sales include $40 billion in 3-year notes, $25 billion 10-year notes, and a $16 billion 30- year bonds to be held on Monday, Tuesday and Thursday. (Wednesday is a holiday.) For economic news we had Jobless Claims. Claims for jobless insurance hit a 10-month low. Tomorrow, of course, the Labor Department is expected to report that the decline in employment is slowing and that payrolls fell in October, compared to September. Currently mortgage prices are about the same as yesterday. With employment tomorrow look for generally quiet trade today in both stocks and bonds
As was expected, the FOMC kept its central message and the Fed Funds rate unchanged, noting that "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." What are Fed Funds? These are cash balances held by banks with their local Federal Reserve Bank, typically involved in an “inter-bank sale” of a Fed fund deposit for one business day - overnight. And the Fed Funds Rate is the overnight interest rate charged by those banks with excess reserves on hand. Why would this impact the mortgage rate that you pay on your mortgage? They don’t, since the credit profile of a borrower, or house, is more complicated and riskier than a bank with excess funds, and an overnight rate is obviously different than a 30 year rate.
Yesterday, however, in addition to the Fed announcement, Treasury officials announced a record refunding package for next week. Sales include $40 billion in 3-year notes, $25 billion 10-year notes, and a $16 billion 30- year bonds to be held on Monday, Tuesday and Thursday. (Wednesday is a holiday.) For economic news we had Jobless Claims. Claims for jobless insurance hit a 10-month low. Tomorrow, of course, the Labor Department is expected to report that the decline in employment is slowing and that payrolls fell in October, compared to September. Currently mortgage prices are about the same as yesterday. With employment tomorrow look for generally quiet trade today in both stocks and bonds
11/4/09
Good morning. The markets saw some volatility yesterday, with the stock market coming off its lows. Nonetheless, both the DOW and the bond market finished the day down. Factory Orders were up in September, the fifth increase in a row. One area of concern is obviously the Fed’s continued purchase of mortgage securities, thus keeping prices high, rates low. The government is slated to end its purchases of mortgage securities in the first quarter of 2010 and some analysts are predicting that this will add as much as a full percentage point to mortgage rates.
Today could be interesting. Not only will the Treasury announce how much it plans a rise in note and bond sales next week, but we hear the results of the FOMC meeting. Overnight rates are expected to stay the same, but watch the language for the Fed’s future plans. Friday’s employment data is still where most of the focus is. Expectations for Friday’s employment report include a rise in the unemployment rate to 9.9%. With all this in mind, mortgage prices are slightly worse this morning. Let me know if you have any questions.
Today could be interesting. Not only will the Treasury announce how much it plans a rise in note and bond sales next week, but we hear the results of the FOMC meeting. Overnight rates are expected to stay the same, but watch the language for the Fed’s future plans. Friday’s employment data is still where most of the focus is. Expectations for Friday’s employment report include a rise in the unemployment rate to 9.9%. With all this in mind, mortgage prices are slightly worse this morning. Let me know if you have any questions.
11/3/09
Good morning. Yesterday we saw Construction Spending rise .8% in September, the biggest gain in a year, the ISM Factory Index come in well above forecasts, and Pending Sales of existing homes here in the US rise over 6% in September. These “pending sales” are up almost 20% versus a year ago, which many attribute to the tax credit and “really good” prices on the low end. The FOMC meeting begins today, with the announcement tomorrow at 2:15PM EST with no change expected rates, but perhaps they tweak the language. The Fed may try to find a way of talking about what the conditions are under which interest rates would rise rather than simply pretending that there are no conditions under which rates would go up." So far this morning mortgages rates are a smidge better. We are expecting another quiet day for the bond and mortgage markets.
Monday, November 2, 2009
Mortgage Market Review - 11/2/09
Good morning. Although there is widespread support in Congress for extending the life of a home-buyer tax credit scheduled to expire at the end of this month, there is still nothing to report. Hopefully the entire industry doesn’t hinge on the result, but an extension is expected soon as Congress still hasn't finished work on the legislation. As many who have survived because of it know, the credit amount is 10% of a home's purchase price, with a maximum of $8,000 for a single taxpayer and a married couple filing a joint return. Eligible taxpayers will get the credit even if they don't owe any tax, or if the credit is more than the tax they owe for 2008 or 2009. Please let me know if you have any questions about this. Thanks for taking the time to read this over. I hope you find it useful and informative.
This Morning…Monday, November 2, 2009:
Treasuries and mortgages opened a little softer this morning after the strong rally Friday. There were three economic readings this morning. The most significant, Oct manufacturing index was better than expected, Sept construction spending was up more than expected and Sept pending home sales jumped 6.1%, the eighth month in a row pending sales have increased. As a result, treasury and mortgage rates are slightly higher this morning.
Last Week:
It was a good week for the interest rate markets after a number of tough days. Treasury once again successfully sold $123B of notes in four auctions. Consumer confidence measured by The Conference Board declined more than expected, implying consumers may not be as convinced of a recovery as the equity markets. Personal spending in Sept declined, new home sales were expected to be up slightly in Sept but declined 3.6%. Finally the stock market ended the week on what looks like the beginning of the long over-due correction that even the most bullish have been expecting for the past month. The DJIA declined 259 points last week and the rate markets benefited.
This Week:
We have yet another full slate of economic news this week. We begin slowly with "second tier" numbers like Construction Spending and the ISM Index today and Factory Orders tomorrow. Thursday we have the ISM services number, along with the Employment Cost Index and Jobless Claims. The biggest economic event this week will either be the Fed meeting on Wednesday or the unemployment data on Friday. So although overnight rates, which don’t directly impact mortgage rates, should stay put, the Fed may indicate future changes in monetary policy. Nonfarm Payroll is expected to drop 165K jobs for October. ISM Services will be released on Wednesday. Productivity, Construction Spending, and Factory Orders will round out the busy schedule. The Treasury will announce the size of upcoming auctions on Wednesday as well. Stay tuned.
EconomicIndicator
ISM Index
Monday, Nov. 2,10:00 am, et
53.0
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Factory Orders
Tuesday, Nov. 3,10:00 am, et
Up 1.0%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
ADP Employment
Wednesday, Nov. 4,8:30 am, et
Down 190k
Important. An indication of unemployment. A larger decrease in payrolls may bring lower rates.
Fed Meeting Adjourns
Wednesday, Nov. 4,2:15 pm, et
No rate change
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Preliminary Q3 Productivity
Thursday, Nov. 5,8:30 am, et
Up 5.8%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Employment
Friday, Nov. 6,8:30 am, et
Unemp. @ 9.9%,Payrolls -166k
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Market Forecast:
The likeliness of mortgage interest rate volatility this week is very high considering the abundance of important economic releases. The Fed meeting on Wednesday will be the most important event this week. Productivity and employment figures are likely to move the market.
Each piece of data this week has the ability to cause volatility in the financial markets. It is possible for interest rates to improve if the data shows weakness in the economy with few price pressures. However, any surprises will likely be bad for mortgage interest rates. The important thing to remember is that even the Treasury officials trying to shore the economy do not know exactly what the future holds. With this in mind, be cautious during these times of economic uncertainty and be ready in the event interest rates start to spike higher.
Some Humor:
A small zoo in Arkansas obtained a very rare species of gorilla. Within a few weeks the gorilla, a female, became very difficult to handle. Upon examination, the veterinarian determined the problem. The gorilla was in heat. To make matters worse, there was no male gorilla available. Thinking about their problem, the Zoo Keeper thought of Billy Bob Burnett, a redneck part-time worker responsible for cleaning the turtle cages. Billy Bob, had little sense but possessed ample ability to satisfy a female of any species. The Zoo Keeper thought they might have a solution. Billy Bob was approached with a proposition. Would he be willing to mate with the gorilla for $500?
Billy Bob showed some interest, but said he would have to think the matter over carefully. The following day, he announced that he would accept their offer, but only under five conditions: "First", Billy Bob said, "I ain't gonna kiss her on the lips." The keeper quickly agreed to this condition.
"Second", he said, "She must wear a 'Dale Earnhardt Forever' T-Shirt." The keeper again readily agreed to this condition.
"Third", he said, "you can't never tell no one about this." The keeper again readily agreed to this condition.
"Fourth", Billy Bob said, "I want all the children raised Southern Baptist." Once again it was agreed.
"And last," Billy Bob said, "I'll need another week to come up with the $500.00."
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.
This Morning…Monday, November 2, 2009:
Treasuries and mortgages opened a little softer this morning after the strong rally Friday. There were three economic readings this morning. The most significant, Oct manufacturing index was better than expected, Sept construction spending was up more than expected and Sept pending home sales jumped 6.1%, the eighth month in a row pending sales have increased. As a result, treasury and mortgage rates are slightly higher this morning.
Last Week:
It was a good week for the interest rate markets after a number of tough days. Treasury once again successfully sold $123B of notes in four auctions. Consumer confidence measured by The Conference Board declined more than expected, implying consumers may not be as convinced of a recovery as the equity markets. Personal spending in Sept declined, new home sales were expected to be up slightly in Sept but declined 3.6%. Finally the stock market ended the week on what looks like the beginning of the long over-due correction that even the most bullish have been expecting for the past month. The DJIA declined 259 points last week and the rate markets benefited.
This Week:
We have yet another full slate of economic news this week. We begin slowly with "second tier" numbers like Construction Spending and the ISM Index today and Factory Orders tomorrow. Thursday we have the ISM services number, along with the Employment Cost Index and Jobless Claims. The biggest economic event this week will either be the Fed meeting on Wednesday or the unemployment data on Friday. So although overnight rates, which don’t directly impact mortgage rates, should stay put, the Fed may indicate future changes in monetary policy. Nonfarm Payroll is expected to drop 165K jobs for October. ISM Services will be released on Wednesday. Productivity, Construction Spending, and Factory Orders will round out the busy schedule. The Treasury will announce the size of upcoming auctions on Wednesday as well. Stay tuned.
EconomicIndicator
ISM Index
Monday, Nov. 2,10:00 am, et
53.0
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Factory Orders
Tuesday, Nov. 3,10:00 am, et
Up 1.0%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
ADP Employment
Wednesday, Nov. 4,8:30 am, et
Down 190k
Important. An indication of unemployment. A larger decrease in payrolls may bring lower rates.
Fed Meeting Adjourns
Wednesday, Nov. 4,2:15 pm, et
No rate change
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Preliminary Q3 Productivity
Thursday, Nov. 5,8:30 am, et
Up 5.8%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Employment
Friday, Nov. 6,8:30 am, et
Unemp. @ 9.9%,Payrolls -166k
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Market Forecast:
The likeliness of mortgage interest rate volatility this week is very high considering the abundance of important economic releases. The Fed meeting on Wednesday will be the most important event this week. Productivity and employment figures are likely to move the market.
Each piece of data this week has the ability to cause volatility in the financial markets. It is possible for interest rates to improve if the data shows weakness in the economy with few price pressures. However, any surprises will likely be bad for mortgage interest rates. The important thing to remember is that even the Treasury officials trying to shore the economy do not know exactly what the future holds. With this in mind, be cautious during these times of economic uncertainty and be ready in the event interest rates start to spike higher.
Some Humor:
A small zoo in Arkansas obtained a very rare species of gorilla. Within a few weeks the gorilla, a female, became very difficult to handle. Upon examination, the veterinarian determined the problem. The gorilla was in heat. To make matters worse, there was no male gorilla available. Thinking about their problem, the Zoo Keeper thought of Billy Bob Burnett, a redneck part-time worker responsible for cleaning the turtle cages. Billy Bob, had little sense but possessed ample ability to satisfy a female of any species. The Zoo Keeper thought they might have a solution. Billy Bob was approached with a proposition. Would he be willing to mate with the gorilla for $500?
Billy Bob showed some interest, but said he would have to think the matter over carefully. The following day, he announced that he would accept their offer, but only under five conditions: "First", Billy Bob said, "I ain't gonna kiss her on the lips." The keeper quickly agreed to this condition.
"Second", he said, "She must wear a 'Dale Earnhardt Forever' T-Shirt." The keeper again readily agreed to this condition.
"Third", he said, "you can't never tell no one about this." The keeper again readily agreed to this condition.
"Fourth", Billy Bob said, "I want all the children raised Southern Baptist." Once again it was agreed.
"And last," Billy Bob said, "I'll need another week to come up with the $500.00."
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, October 30, 2009
10/30/09
Good morning. Most of the United States begins Daylight Saving Time at 2:00 a.m. on the second Sunday in March and reverts to standard time on the first Sunday in November. So by my calculations, that means that this Sunday here in the U.S. most of us “fall back” and it will dark by dinner time.
There is a great deal of news today, so we could see some continued volatility. We have already seen Personal Income and Consumption (Spending). U.S. consumer spending, as expected, fell in September for the first time in five months. Personal income was flat last month after rising slightly in August, also as expected. Later we have the Chicago Purchasing Manager’s Survey, along with a revision to the Michigan Consumer Sentiment numbers. After the news we find mortgages a shade better.
Have a great weekend
There is a great deal of news today, so we could see some continued volatility. We have already seen Personal Income and Consumption (Spending). U.S. consumer spending, as expected, fell in September for the first time in five months. Personal income was flat last month after rising slightly in August, also as expected. Later we have the Chicago Purchasing Manager’s Survey, along with a revision to the Michigan Consumer Sentiment numbers. After the news we find mortgages a shade better.
Have a great weekend
10/29/09
Good morning. Early this morning mortgage rates started slightly weaker after two strong days of price gains as the stock market improved. At 9:30 the DJIA opened +60 and mortgage prices were slightly worsened.
Weekly jobless claims were down this morning, but not as much of a decline as expected. Declining continuing claims would normally be a positive for the employment outlook if this were a normal recession. Not the case; continuing claims are likely declining as unemployment benefits are ending for many that lost jobs six months ago with no extension from the Obama administration. The take away from the claims data today, as is the case every week, 500K+ a week are losing jobs and has been going on for all of this year. Job losses at 2 mil a month isn't a building block for economic recovery no matter how it is spun. Lipstick on the pig isn't enough to take it to the prom. Also at 8:30 the first look at Q3 GDP was better than expected. The better growth triggered buying in the stock index futures and drove the stock market to a better open at 9:30.
Weekly jobless claims were down this morning, but not as much of a decline as expected. Declining continuing claims would normally be a positive for the employment outlook if this were a normal recession. Not the case; continuing claims are likely declining as unemployment benefits are ending for many that lost jobs six months ago with no extension from the Obama administration. The take away from the claims data today, as is the case every week, 500K+ a week are losing jobs and has been going on for all of this year. Job losses at 2 mil a month isn't a building block for economic recovery no matter how it is spun. Lipstick on the pig isn't enough to take it to the prom. Also at 8:30 the first look at Q3 GDP was better than expected. The better growth triggered buying in the stock index futures and drove the stock market to a better open at 9:30.
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