This Morning…Monday, August 31, 2009:
Today is the Chicago Purchasing Manager’s Index. With no news yet, the bond market is seeing a slight rally. At 9:30 the DJIA opened -75 and mortgage rates were slightly lower.
Last Week:
It was a little better in the rate markets. Choppy trade once again characterized the action last week. Treasury had little trouble selling $109B of notes while new home sales increased in July. July durable goods orders had the biggest monthly increase since July 2007, consumer confidence increased, and weekly jobless claims declined. Nice week but the stock market barley held on and interest rates fell; significant in that with the confirming economic data recently supporting stock markets, the equity market may be running out of energy. Once the stocks finally tip over the bond and mortgage markets will experience a nice rally.
This Week:
The week ahead is filled with key economic readings. Tomorrow we’ll have Construction Spending, Pending Home Sales, and the ISM Index; Wednesday Factory Orders, the minutes from the Fed meeting, and the always-questionable ADP Employment Survey; Thursday Jobless Claims,; and then on Friday, when everyone is trying to leave town (whatever town they happen to be in), all of the Nonfarm Payroll data. This could possibly be a rough trading week. You’ll want to stay tuned!
EconomicIndicator
Construction Spending
Tuesday, Sept. 1,10:00 am, et
Down 0.2%
Low importance. An indication of economic strength. Significant weakness may lead to lower rates.
ISM Index
Tuesday, Sept. 1,10:00 am, et
50.2
Important. A measure of manufacturer sentiment. A larger decline may lead to lower mortgage rates.
ADP Employment
Wednesday, Sept. 2,8:30 am, et
-246k
Important. An indication of employment. A larger decrease in payrolls may bring lower rates.
Revised Q2 Productivity
Wednesday, Sept. 2,8:30 am, et
Up 6.1%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Factory Orders
Wednesday, Sept. 2,10:00 am, et
Up 1.5%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Fed Minutes
Wednesday, Sept. 2,2:00 pm, et
None
Important. Details of the last Fed meeting will be thoroughly analyzed.
Employment
Friday, Sept. 3,8:30 am, et
9.5%,-225k
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Market Forecast:
The employment report Friday will be the most important data this week. ISM Index data and revised productivity data may also move the market. Continued stock strength may also pressure rates. Technically the rate markets are in good shape; all of our analysis points to lower rates. Problem is however, there is a high degree of uncertainty and with volatility on the high side any sustained reversal could easily turn the markets around. Timing is based on when the equity markets actually sustain selling for more than a day or tow as has been the case all summer.
Some Humor:
A US Congressman is up for re-election and out on the campaign trail. He's driving by an Indian reservation and decides to stop in and stump for votes. A crowd of tribe members surrounds him as he gets started.
"I will lower your taxes, get you good jobs, and make sure your kids are healthy and educated", said the Congressman.
"Oom Galla Galla", answered the tribe.
"I'll make sure you have more money so you can purchase a new F150 truck!" said the Congressman.
"Oom Galla Galla", cheered the tribe.
"Together, we can bring the casinos in so your tribe will enjoy perpetual wealth!" said the Congressman.
"Oom Galla Galla", thundered the tribe.
After a few more grand promises and louder cheers of "Oom Galla Galla" from the crowd, the Congressman is offered a tour of the reservation, which he readily accepts.
He notices a herd of fat and healthy cattle and asks, "Chief, May I go take a closer look at your heifers and steers?" to which the Chief smilingly replied, "Sure, but don't step in the Oom Galla Galla".
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, August 31, 2009
Friday, August 28, 2009
8/28/09
Today we had Personal Income and Personal Consumption, and later this morning we’ll have the University of Michigan Consumer Confidence figures. Consumer spending (“Personal Consumption”) was up .2%, as expected, in July, mostly attributed to the "cash-for-clunkers" program. Unfortunately for people earning incomes, Personal Income was unchanged in July, and thus with spending rising faster than incomes, the personal savings rate fell in June. These numbers, combined with what looks like another day of improving stocks, have worsened bond prices slightly.
8/27/09
Good morning. New Homes Sales were up almost 10% in July, the biggest jump since early 2005 and was the fifth increase in seven months. Two other statistics to note: the number of houses on the market dropped to its lowest level in 16 years, but median prices are down 12% from a year ago. Yesterday’s sale of 5-yr Treasury notes went pretty well, as did Tuesday’s auction.
In addition to the 7-yr sale today, we’ve already had the GDP numbers for the 2nd quarter, along with Jobless Claims. Jobless Claims fell last week to 570,000, which is about as expected and still a large number, and those collecting long-term unemployment benefits dropped to the lowest level since April. And the Commerce Department said GDP (total goods and services output) fell at a 1 percent annual rate, unchanged from last month's estimate, slightly better than expected. After the news we find mortgage prices worse this morning by about .125.
In addition to the 7-yr sale today, we’ve already had the GDP numbers for the 2nd quarter, along with Jobless Claims. Jobless Claims fell last week to 570,000, which is about as expected and still a large number, and those collecting long-term unemployment benefits dropped to the lowest level since April. And the Commerce Department said GDP (total goods and services output) fell at a 1 percent annual rate, unchanged from last month's estimate, slightly better than expected. After the news we find mortgage prices worse this morning by about .125.
8/26/09
Good morning. Yesterday’s 2-yr auction did relatively well. Most believe that today’s 5-yr auction, and tomorrow’s 7-yr auction, will be a better thermometer of general demand for debt. But in addition to a decent auction we had the S&P Case-Shiller US Home Price Index. “ Fifteen out of twenty metropolitan areas posted price declines of more than 10% from a year earlier, and according to the index many areas are back to 2003 price levels. There were some areas that improved from the month prior: Cleveland (+4.2%) and San Francisco (+3.8%). For the last year, both Las Vegas and Phoenix were down over 31%. To balance that news out, Consumer Confidence saw its first gain in three months, coming in better than expected at 54.1. (Rock-bottom was in February at 25.3.)
Today, as I mentioned, we have the 5-yr auction, Durable Goods and New Home Sales. After the news we find 30-yr mortgage prices slightly better this morning.
RIP…Ted Kennedy.
Today, as I mentioned, we have the 5-yr auction, Durable Goods and New Home Sales. After the news we find 30-yr mortgage prices slightly better this morning.
RIP…Ted Kennedy.
8/25/09
Good morning. In news that was not news, President Obama announced he will re-appoint Ben Bernanke to another four year term as head of the Fed. The stock market likes the re-appointment and the DJIA futures index at 9:00 +51 points. At 10:00 the Conference Board released its consumer confidence index. All components in the data were better than expected; current conditions and expectations were up from July. The reaction was as one would expect, the 10 yr and mortgage prices declined and the DJIA jumped higher.
Treasuries and mortgage rates are presently stuck in a very narrow range. We expect a nice move lower in the rate markets in Sept; the timing based on when we get that long awaited equity market pullback----and we will see it. The higher up the ladder, the bigger the fall. To finally trigger the start will take a market wake up call, so far that hasn't happened. Let me know if you have any questions.
Treasuries and mortgage rates are presently stuck in a very narrow range. We expect a nice move lower in the rate markets in Sept; the timing based on when we get that long awaited equity market pullback----and we will see it. The higher up the ladder, the bigger the fall. To finally trigger the start will take a market wake up call, so far that hasn't happened. Let me know if you have any questions.
Monday, August 24, 2009
Mortgage Market Review - 8/24/09
Good morning all! I guess that the economy is not doing that badly if someone wants to pay $4.5 million for a gravesite. You can check it out on eBay, but the bidding started at $500k and has skyrocketed. The lady is selling the crypt out from under her dead husband, who is resting in peace above Marilyn Monroe, and will use the money to pay off her $1.6 million Beverly Hills mansion. According to the news, the lady has lived in her place for 50 years and just refinanced, has “somewhat recognized the fact that she’s going to run out of money in the next couple of years,” said Steve Miller, a real-estate broker and family friend who’s handling the sale of the crypt for the family. So there you go!!!! Let me know if you have any questions and thanks for taking the time to look this over.
Fred
This Morning…Monday, August 24, 2009:
There are no economic releases today, but this morning, mortgages are slightly improved after some deterioration on Friday. At 9:00, stock indexes were aiming for a better open, after a run of 156 points on Friday. Expect more volatility today as trading volumes remain very thin. With no data to think about the rate markets will move with equity market trading. Tomorrow Treasury will start the borrowing with $42B of 2 yr notes. Over the past two months Treasury has had little trouble selling new notes, demand from indirect bidders continues to be strong.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. Inflation data remained bond friendly with the Producer Price Index data coming in lower than expected across the board. Rates seesawed with stocks. Severe stock weakness last Monday helped mortgage bonds start the week on a positive note. Unfortunately, a stock rebound Tuesday erased Monday’s gains and this pattern continued throughout the week. Fortunately, the Fed continued to purchase billions of dollars of mortgage-backed securities in an effort to keep rates relatively low. For the week, interest rates rose about 1/8.
This Week:
The main focus this week for treasury and mortgage markets is Treasury auctioning $109B of notes (2 yr, 5 yr, and 7 yr). If signs of foreign demand falter, rates will likely suffer. Consumer confidence data may also move the market. Supply from Treasury generally keeps interest rates under pressure. Not only supply, but the stock market is playing against treasuries and mortgages as it continues to defy traders, technicals and fundamentals as it resists any sustained selling. Traders are being ripped up daily trying to short equity markets, with the high majority of market participants (including the most bullish) expecting a big retracement. It just won't happen as long as that is what is widely anticipated.
EconomicIndicator
Consumer Confidence
Tuesday, Aug. 25,8:30 am, et
48.00
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction
Tuesday, Aug. 25,1:30 pm, et
None
Important. 42-billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders
Wednesday, Aug 26,8:30 am, et
Up 3.2%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
New Home Sales
Wednesday, Aug 26, 10:00 am, et
390k
Important. An indication of economic strength and credit demand. A decrease may lead to lower rates.
5-year Treasury Note Auction
Wednesday, Aug 26, 1:00 pm, et
None
Important. 39-billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
7-year Treasury Note Auction
Thursday, Aug 27, 1:00 pm, et
None
Important. 28-billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Personal Income and Outlays
Friday, Aug. 28,8:30 am, et
Up 0.1%Up 0.2%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
U of Michigan Consumer Sentiment
Friday, Aug. 28,10:00 am, et
64.8
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates
Market Forecast:
This week, the Treasury auctions will once again take center stage as record debt issuance continues. If signs of foreign demand falter, rates will likely suffer. Consumer confidence data may also move the market. Look for stocks to play a role as well.
Over the weekend at Jackson Hole; Bernanke and ECB Trichet were on the same page, saying the global economies are coming out of the deep recession. Not what the rate markets like as the outlook for a better economy will force interest rates higher. That said, I am not abandoning my outlook that the stock market will pull back in Sept and push interest rates to what will likely be the lowest we will see for the foreseeable future. Not sure how long and how deep the stock market will retrace, the deeper, the lower rate markets will go. The period between now and the end of the year may be the best and lowest mortgage rates in the next year. There is one huge wild card that stock markets have pushed well under the rug; the residential and commercial real estate markets. Consumers will have little appetite to increase discretionary spending as long as the housing markets are soft----and we expect them to be soft through the majority of next year.
Some Humor:
My neighbor found out her dog could hardly hear so she took him to the veterinarian. She found that the problem was hair in his ears! The veterinarian cleaned both ears and the dog could hear fine.
The vet then proceeded to tell my neighbor that if she wanted to keep this from reoccurring she should go to the store and get some 'Nair' hair remover and rub it in the dog's ears once a month. So my neighbor went to the drug store and gets some 'Nair' hair remover.At the register, the druggist tells her, “If you're going to use this under your arms don't use deodorant for a few days.”The lady says, “I'm not using it under my arms.”The druggist says, “If you're using it on your legs don't shave for a couple of days.”The lady says, “I'm not using it on my legs either; I'm using it on my schnauzer.”The druggist says, “Stay off your bicycle for a week.”
The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only 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.
Fred
This Morning…Monday, August 24, 2009:
There are no economic releases today, but this morning, mortgages are slightly improved after some deterioration on Friday. At 9:00, stock indexes were aiming for a better open, after a run of 156 points on Friday. Expect more volatility today as trading volumes remain very thin. With no data to think about the rate markets will move with equity market trading. Tomorrow Treasury will start the borrowing with $42B of 2 yr notes. Over the past two months Treasury has had little trouble selling new notes, demand from indirect bidders continues to be strong.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. Inflation data remained bond friendly with the Producer Price Index data coming in lower than expected across the board. Rates seesawed with stocks. Severe stock weakness last Monday helped mortgage bonds start the week on a positive note. Unfortunately, a stock rebound Tuesday erased Monday’s gains and this pattern continued throughout the week. Fortunately, the Fed continued to purchase billions of dollars of mortgage-backed securities in an effort to keep rates relatively low. For the week, interest rates rose about 1/8.
This Week:
The main focus this week for treasury and mortgage markets is Treasury auctioning $109B of notes (2 yr, 5 yr, and 7 yr). If signs of foreign demand falter, rates will likely suffer. Consumer confidence data may also move the market. Supply from Treasury generally keeps interest rates under pressure. Not only supply, but the stock market is playing against treasuries and mortgages as it continues to defy traders, technicals and fundamentals as it resists any sustained selling. Traders are being ripped up daily trying to short equity markets, with the high majority of market participants (including the most bullish) expecting a big retracement. It just won't happen as long as that is what is widely anticipated.
EconomicIndicator
Consumer Confidence
Tuesday, Aug. 25,8:30 am, et
48.00
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction
Tuesday, Aug. 25,1:30 pm, et
None
Important. 42-billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders
Wednesday, Aug 26,8:30 am, et
Up 3.2%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
New Home Sales
Wednesday, Aug 26, 10:00 am, et
390k
Important. An indication of economic strength and credit demand. A decrease may lead to lower rates.
5-year Treasury Note Auction
Wednesday, Aug 26, 1:00 pm, et
None
Important. 39-billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
7-year Treasury Note Auction
Thursday, Aug 27, 1:00 pm, et
None
Important. 28-billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Personal Income and Outlays
Friday, Aug. 28,8:30 am, et
Up 0.1%Up 0.2%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
U of Michigan Consumer Sentiment
Friday, Aug. 28,10:00 am, et
64.8
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates
Market Forecast:
This week, the Treasury auctions will once again take center stage as record debt issuance continues. If signs of foreign demand falter, rates will likely suffer. Consumer confidence data may also move the market. Look for stocks to play a role as well.
Over the weekend at Jackson Hole; Bernanke and ECB Trichet were on the same page, saying the global economies are coming out of the deep recession. Not what the rate markets like as the outlook for a better economy will force interest rates higher. That said, I am not abandoning my outlook that the stock market will pull back in Sept and push interest rates to what will likely be the lowest we will see for the foreseeable future. Not sure how long and how deep the stock market will retrace, the deeper, the lower rate markets will go. The period between now and the end of the year may be the best and lowest mortgage rates in the next year. There is one huge wild card that stock markets have pushed well under the rug; the residential and commercial real estate markets. Consumers will have little appetite to increase discretionary spending as long as the housing markets are soft----and we expect them to be soft through the majority of next year.
Some Humor:
My neighbor found out her dog could hardly hear so she took him to the veterinarian. She found that the problem was hair in his ears! The veterinarian cleaned both ears and the dog could hear fine.
The vet then proceeded to tell my neighbor that if she wanted to keep this from reoccurring she should go to the store and get some 'Nair' hair remover and rub it in the dog's ears once a month. So my neighbor went to the drug store and gets some 'Nair' hair remover.At the register, the druggist tells her, “If you're going to use this under your arms don't use deodorant for a few days.”The lady says, “I'm not using it under my arms.”The druggist says, “If you're using it on your legs don't shave for a couple of days.”The lady says, “I'm not using it on my legs either; I'm using it on my schnauzer.”The druggist says, “Stay off your bicycle for a week.”
The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only 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, August 21, 2009
8/21/09
Nothing on the wires early on but at 10:00 we got July existing home sales. They were expected to be +2.2%, but sales were up 7.2% to 5.24 mil units. The sales are the highest since Aug 2007. The median sales price was down to $178,400 and there is a 9 month supply based on present sales. The inventory level increased 7.3%. The initial reaction to the strong sales sent mortgage prices slightly higher.
A cloud on the horizon is the auction next week. The Treasury will be selling $109 billion in 6-month bills, 5-yr notes, 1-yr T-bills, 2-yr notes, 3-month T-bills, and 7-yr notes. This, by anyone’s measure, is a lot of supply. Currently mortgages are about unchanged from Thursday afternoon. Have a great weekend and let me know if you have any questions.
A cloud on the horizon is the auction next week. The Treasury will be selling $109 billion in 6-month bills, 5-yr notes, 1-yr T-bills, 2-yr notes, 3-month T-bills, and 7-yr notes. This, by anyone’s measure, is a lot of supply. Currently mortgages are about unchanged from Thursday afternoon. Have a great weekend and let me know if you have any questions.
8/20/09
Good morning. Unfortunately yesterday, as the stock market improved, the bond market worsened. Though this is not always the case, it is a general rule of thumb. Today we'll get the announcement of next week’s treasury auctions. Jobless Claims already came out this morning: claims unexpectedly rose last week. The number of people collecting long-term unemployment benefits edged up to 6.24 million in the week ended Aug. 8 (that’s a lot of people), but the four-week moving average declined 2,500 to 6.27 million. For weekly claims, the four-week moving average for new claims climbed 4,250 to 570,000 last week.
Later today the Philly Fed Survey is released. In other news, oil prices have moved up again, and Asian stock markets improved. Tomorrow the only news out is Existing Home Sales. With all of that in mind, mortgages are roughly unchanged.
Later today the Philly Fed Survey is released. In other news, oil prices have moved up again, and Asian stock markets improved. Tomorrow the only news out is Existing Home Sales. With all of that in mind, mortgages are roughly unchanged.
8/19/09
There is no economic news today, aside from whatever the equities markets might be up to. Yesterday rates worsened slightly in spite of the Fed buying their usual allotment of securities – this time mostly 5% and 5.5% securities. This morning, the stock market opened weaker and mortgage rates have gained backed some of yesterday’s losses. As long as stocks fall, bonds and mortgage markets will benefit. Let me know if you have any questions.
8/18/09
Good morning. Mortgage prices are unchanged this morning after a pretty good day yesterday. July Producer Price Index was weaker than expected but that didn’t have much impact as inflation isn't a front burner these days so it isn't the rocker it normally can be. July housing starts were expected to be up, but were down 1.0%. The initial reaction to the 8:30 reports helped the bond and mortgage markets somewhat but didn't take much away from the better trading in stock index futures.
The rest of the session will focus on how the stock market does; after the 186 drop in the DJIA yesterday that sent interest rates down, this morning there is no follow-through. Equity markets are rock solid and refuse to buckle in the face of obvious consumer contraction. As long as that conviction remains, interest rates are not likely to fall much.
No direct economic releases now until Thursday when we see weekly jobless claims and the August Philly Fed business index. Thursday Treasury will announce the details for more supply next week; 2 yr, 5 yr and 7 yr notes will be auctioned. As long as the deficit is growing Treasury will be going to the markets every other week as it has for the past few months, a pressure point for the level of rates.
Oh yes…Sugar is at a 28 year high. I’m not sure what that means exactly, but thought you’d want to know.
The rest of the session will focus on how the stock market does; after the 186 drop in the DJIA yesterday that sent interest rates down, this morning there is no follow-through. Equity markets are rock solid and refuse to buckle in the face of obvious consumer contraction. As long as that conviction remains, interest rates are not likely to fall much.
No direct economic releases now until Thursday when we see weekly jobless claims and the August Philly Fed business index. Thursday Treasury will announce the details for more supply next week; 2 yr, 5 yr and 7 yr notes will be auctioned. As long as the deficit is growing Treasury will be going to the markets every other week as it has for the past few months, a pressure point for the level of rates.
Oh yes…Sugar is at a 28 year high. I’m not sure what that means exactly, but thought you’d want to know.
Monday, August 17, 2009
Mortgage Market Review - 8/17/09
Good morning. I hope you had a nice weekend. Last week was a grim week in mortgage lending. First, Taylor, Bean and Whitaker ceased operations. They are a very large conventional and government lender. They had offices nationwide and many, many people lost their jobs. Then more banks failed on Friday, lead by Colonial BancGroup being taken over by BB&T. Community Bank of Las Vegas, Dwelling House Savings and Loan Association in Pittsburgh, Union Bank and Community Bank both in Arizona were taken over by MidFirst Bank of Oklahoma City. The total number of bank failures this year is now at 77. These failures are more blows for small non-bank lenders that rely on lenders for warehouse funds and keep the major banks competitive in the marketplace. There is hope that other lenders will come into the market to take their place. In the meantime…keep watching.
This Morning…Monday, August 17, 2009:
A global sell-off in stock markets overnight has fed into the US markets this morning. As long as stocks are being hit the bond and mortgage markets will find support. Safe haven moves out of stocks will help lower mortgage rates as long as stocks fall; as the key indexes slip expect an increase of negative economic sentiment although not much has or will change for the more bullish outlook. First up for the DJIA will likely be a test of the 9K level. The rest of the day has nothing but the stock market to watch.
Last Week:
Continued market volatility; the mortgage market regained the losses from the week before as interest rate markets swing wildly from one economic report to the next. Last week three auctions went generally OK, evidence that investors are still willing to step up at these low interest rates. The Fed left rates unchanged and continued to purchase billions of dollars worth of mortgage-backed securities in an effort to keep rates relatively low. July retail sales were much worse than market expectations and the consumer price index came in unchanged and the core, which excludes volatile food and energy prices, rose as expected. As is the case these days however, the equity markets swept the obvious under the rug and kept going; although the DJIA did end the week lower for the first time in a month.
This Week:
No Treasury borrowing to concern traders, so this week, as summer vacation season continues, we’ll see the usual rash of economic releases. Today we have the Empire State Manufacturing number, tomorrow New Residential Construction and the Producer Price index, nada on Wednesday, on Thursday the usual Jobless Claims and the Philly Fed, and then on Friday we wrap up with Existing Home Sales. This week will likely see continued intraday and interday volatility that have characterized the markets for the past two months.
EconomicIndicator
Producer Price Index
Tuesday, Aug. 18,8:30 am, et
Down 0.2%,Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.
Housing Starts
Tuesday, Aug. 18,8:30 am, et
Up 2.7%
Important. A measure of housing sector strength. Weakness may lead to lower rates.
Leading Economic Indicators
Thursday, Aug. 20,10:00 am, et
Up 0.6%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey
Thursday, Aug. 20,10:00 am, et
Down 2.0
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Existing Home Sales
Friday, Aug. 21,10:00 am, et
Up 2.2%
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
Market Forecast:
The producer price index Tuesday will be the most important release this week setting the tone for trading ahead. If signs of inflation emerge at the producer level rates will likely suffer. Housing starts and leading economic indicators data may also move the market.
As you can imagine, the greatest difficultly in a volatile market is its analysis. As you can imagine, I am constantly asked “what do you think will happen with rates?” “Will they get lower?” “Is now the right time?”
The two traditional approaches to market forecasting are fundamental and technical analysis. Fundamental analysis is an attempt to predict future price movements based on the most current economic data. In contrast, technical analysis is an attempt to predict future market movements based on past price movement patterns. Another important factor is market sentiment. Market sentiment measures the emotions and expectations of investors in the market. Sentiment, like most emotions, change often in a short span of time and is impossible to predict accurately.
The inability of anyone to accurately predict the future makes a cautious approach necessary to protect against market volatility. The fact remains that mortgage interest rate are historically favorable. It is difficult to justify the risk in floating when the low rates currently available are a sure thing. Timing is one of the most important factors in success. Unfortunately, knowing the perfect time to lock in a loan is impossible until after the fact. While analysts constantly try to predict the future, the bottom line is they continually fall short in terms of accuracy. The good news is that the Fed has done a relatively good job of keeping rates favorable, but not without some serious spikes here and there. Without the Fed pouring billions into mortgage bonds, rates would surely be higher.
In other words…Nobody Knows!
Some Humor:
Three brothers married wives from different states. The first brother married a girl from Illinois. He told her that she was to do the dishes and house cleaning. It took a couple of days, but on the third day, he came home to see a clean house and dishes washed and put away.
The second brother married a girl from Florida. He gave his wife orders that she was to do all the cleaning, dishes and the cooking. The first day he didn't see any results, but the next day he saw it was better. By the third day, he saw his house was clean, the dishes were done and there was a huge dinner on the table.
The third brother married a lady from Washington. He ordered her to keep the house cleaned, dishes washed, lawn mowed, laundry washed, and hot meals on the table for every meal. He said the first day he didn't see anything, the second day he didn't see anything but by the third day, some of the swelling had gone down and he could see a little out of his left eye, and his arm was healed enough that he could fix himself a sandwich and load the dishwasher.
The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only 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, August 17, 2009:
A global sell-off in stock markets overnight has fed into the US markets this morning. As long as stocks are being hit the bond and mortgage markets will find support. Safe haven moves out of stocks will help lower mortgage rates as long as stocks fall; as the key indexes slip expect an increase of negative economic sentiment although not much has or will change for the more bullish outlook. First up for the DJIA will likely be a test of the 9K level. The rest of the day has nothing but the stock market to watch.
Last Week:
Continued market volatility; the mortgage market regained the losses from the week before as interest rate markets swing wildly from one economic report to the next. Last week three auctions went generally OK, evidence that investors are still willing to step up at these low interest rates. The Fed left rates unchanged and continued to purchase billions of dollars worth of mortgage-backed securities in an effort to keep rates relatively low. July retail sales were much worse than market expectations and the consumer price index came in unchanged and the core, which excludes volatile food and energy prices, rose as expected. As is the case these days however, the equity markets swept the obvious under the rug and kept going; although the DJIA did end the week lower for the first time in a month.
This Week:
No Treasury borrowing to concern traders, so this week, as summer vacation season continues, we’ll see the usual rash of economic releases. Today we have the Empire State Manufacturing number, tomorrow New Residential Construction and the Producer Price index, nada on Wednesday, on Thursday the usual Jobless Claims and the Philly Fed, and then on Friday we wrap up with Existing Home Sales. This week will likely see continued intraday and interday volatility that have characterized the markets for the past two months.
EconomicIndicator
Producer Price Index
Tuesday, Aug. 18,8:30 am, et
Down 0.2%,Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.
Housing Starts
Tuesday, Aug. 18,8:30 am, et
Up 2.7%
Important. A measure of housing sector strength. Weakness may lead to lower rates.
Leading Economic Indicators
Thursday, Aug. 20,10:00 am, et
Up 0.6%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey
Thursday, Aug. 20,10:00 am, et
Down 2.0
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Existing Home Sales
Friday, Aug. 21,10:00 am, et
Up 2.2%
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
Market Forecast:
The producer price index Tuesday will be the most important release this week setting the tone for trading ahead. If signs of inflation emerge at the producer level rates will likely suffer. Housing starts and leading economic indicators data may also move the market.
As you can imagine, the greatest difficultly in a volatile market is its analysis. As you can imagine, I am constantly asked “what do you think will happen with rates?” “Will they get lower?” “Is now the right time?”
The two traditional approaches to market forecasting are fundamental and technical analysis. Fundamental analysis is an attempt to predict future price movements based on the most current economic data. In contrast, technical analysis is an attempt to predict future market movements based on past price movement patterns. Another important factor is market sentiment. Market sentiment measures the emotions and expectations of investors in the market. Sentiment, like most emotions, change often in a short span of time and is impossible to predict accurately.
The inability of anyone to accurately predict the future makes a cautious approach necessary to protect against market volatility. The fact remains that mortgage interest rate are historically favorable. It is difficult to justify the risk in floating when the low rates currently available are a sure thing. Timing is one of the most important factors in success. Unfortunately, knowing the perfect time to lock in a loan is impossible until after the fact. While analysts constantly try to predict the future, the bottom line is they continually fall short in terms of accuracy. The good news is that the Fed has done a relatively good job of keeping rates favorable, but not without some serious spikes here and there. Without the Fed pouring billions into mortgage bonds, rates would surely be higher.
In other words…Nobody Knows!
Some Humor:
Three brothers married wives from different states. The first brother married a girl from Illinois. He told her that she was to do the dishes and house cleaning. It took a couple of days, but on the third day, he came home to see a clean house and dishes washed and put away.
The second brother married a girl from Florida. He gave his wife orders that she was to do all the cleaning, dishes and the cooking. The first day he didn't see any results, but the next day he saw it was better. By the third day, he saw his house was clean, the dishes were done and there was a huge dinner on the table.
The third brother married a lady from Washington. He ordered her to keep the house cleaned, dishes washed, lawn mowed, laundry washed, and hot meals on the table for every meal. He said the first day he didn't see anything, the second day he didn't see anything but by the third day, some of the swelling had gone down and he could see a little out of his left eye, and his arm was healed enough that he could fix himself a sandwich and load the dishwasher.
The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only 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, August 14, 2009
8/14/09
As summer winds down, with vacations increasing and “out of office” replies multiplying, we had the Consumer Price Index news this morning. The CPI was unchanged in July, as expected, and over the last year has fallen by over 2% - the most since 1950. Ex-food and energy, since no one uses either of those, the core rate was +.1%, as expected. The bond market liked the news, and is rallying: mortgage prices are better this morning. Expect a typical summer Friday in the financial markets…
8/13/09
It was another crazy market yesterday. Mortgage backed security prices at 9:30 +4/32, at 10:15 -3/32, at 1:10 -20/32, at 3:00 -2/32. Volatility sent lenders re-pricing then doing it again in some cases; but so far have left the come back alone----no price improvement. Don't blame lenders; volatility is a huge problem for them also.
Yesterday we learned that the Trade Gap increased 4% in May, but widening less than was forecast. Exports were up, with imports up a tad more due to the cost of oil. Most of the increase in imports and exports in June was driven by higher prices, not higher volumes, but in inflation-adjusted terms the trade deficit fell to the lowest level in nearly 10 years! Yesterday’s FOMC minutes did…not much. “Economic activity is leveling out...inflation is subdued…conditions in financial markets have improved…household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit…businesses are still cutting back on fixed investment and staffing but are making progress…The statement goes on to say that Fed Funds will stay between 0-.25% for an extended period, To promote a smooth transition in markets as these purchases of Treasury securities are completed, the Committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October.”
Before the Fed meeting, the government debt market grappled with buying several billion of 10-yr. notes. Today is the $15 billion 30-yr bond auction. Currently the question is, what the demand will be like for investors who want to tie their money up for 30 years at today’s yield.
We already had Jobless Claims and Retail Sales. Retail Sales unexpectedly dropped. Import Prices were also down. In addition, Jobless Claims rose, whereas analysts expected them to drop. The number of folks collecting benefits fell to its lowest level since April, but the 4-week moving average rose – the first increase in almost two months.
Volatility continues at a high level; prices for mortgages and treasuries are churning around, but the path has been unpredictable. Technically the 10 yr note and mortgages remain slightly bearish as the economic outlook is improving. That said, there is little real solid conviction on the economic outlook. Lots of bullish talk to support equity market buying but the actual data so far hasn't matched the expectations. As always, it’s wait and see.
Yesterday we learned that the Trade Gap increased 4% in May, but widening less than was forecast. Exports were up, with imports up a tad more due to the cost of oil. Most of the increase in imports and exports in June was driven by higher prices, not higher volumes, but in inflation-adjusted terms the trade deficit fell to the lowest level in nearly 10 years! Yesterday’s FOMC minutes did…not much. “Economic activity is leveling out...inflation is subdued…conditions in financial markets have improved…household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit…businesses are still cutting back on fixed investment and staffing but are making progress…The statement goes on to say that Fed Funds will stay between 0-.25% for an extended period, To promote a smooth transition in markets as these purchases of Treasury securities are completed, the Committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October.”
Before the Fed meeting, the government debt market grappled with buying several billion of 10-yr. notes. Today is the $15 billion 30-yr bond auction. Currently the question is, what the demand will be like for investors who want to tie their money up for 30 years at today’s yield.
We already had Jobless Claims and Retail Sales. Retail Sales unexpectedly dropped. Import Prices were also down. In addition, Jobless Claims rose, whereas analysts expected them to drop. The number of folks collecting benefits fell to its lowest level since April, but the 4-week moving average rose – the first increase in almost two months.
Volatility continues at a high level; prices for mortgages and treasuries are churning around, but the path has been unpredictable. Technically the 10 yr note and mortgages remain slightly bearish as the economic outlook is improving. That said, there is little real solid conviction on the economic outlook. Lots of bullish talk to support equity market buying but the actual data so far hasn't matched the expectations. As always, it’s wait and see.
8/12/09
Today we have $23 billion of 10-yr notes to sell (tomorrow $15 billion of 30-yr bonds). It doesn’t hurt that Treasury buying by the central bank is helping to support the market. I am not smart enough to know how, if the US Government is both selling and buying securities, it helps rates. Most of today's focus is on the FOMC meeting, concluding at 2:15 with the very short policy statement. We wish the FOMC would have more info but it has always been an exercise in interpretation. The economy has improved faster than what the fed had expected at the last FOMC meeting but the Fed is not about to increase interest rates with little inflation and a recovery very fragile. Still jobs being lost and the residential housing market in shambles.
Interest rates will likely remain flat through the morning with the stock market still the overriding driver for the rate markets. The FOMC meeting and the 10 yr note auction should keep markets fairly quiet through the morning session. The stock market opened slightly better at 9:30 and is gaining a little ground at 10:00.
Interest rates will likely remain flat through the morning with the stock market still the overriding driver for the rate markets. The FOMC meeting and the 10 yr note auction should keep markets fairly quiet through the morning session. The stock market opened slightly better at 9:30 and is gaining a little ground at 10:00.
8/11/09
Good morning. We saw some improvement in rates yesterday – although many feel that mortgage rates are going to stay near here for quite some time. Although the economic data is varying from one day to the next, for the most part it is “less bad” then before, leading to some optimism about the economy. But a stronger economy leads to higher rates, right? Remember, however, that the data is not all pointing to strength, so stay tuned…
For example, this week, starting today, we have $75 billion of Treasury supply to absorb. ($37 billion today, $23 billion of 10-yr Notes tomorrow, and $15 billion in 30-yr bonds will be sold Thursday.) On top of this, we have the FOMC's two day meeting which begins today, although no one is looking for any changes in the overnight Fed Funds rate. With no other economic news, we find today’s mortgage prices about the same.
For example, this week, starting today, we have $75 billion of Treasury supply to absorb. ($37 billion today, $23 billion of 10-yr Notes tomorrow, and $15 billion in 30-yr bonds will be sold Thursday.) On top of this, we have the FOMC's two day meeting which begins today, although no one is looking for any changes in the overnight Fed Funds rate. With no other economic news, we find today’s mortgage prices about the same.
Monday, August 10, 2009
Mortgage Market Review - 8/10/09
Good morning. I hope you had a nice weekend. As you know, there has been a substantial amount of legislation that has impacted the mortgage industry. The president of Sterling Financial in Southern California said this weekend, “With the new rules, I have to liken the mortgage industry to a seriously ill patient being diagnosed by a multitude of doctors - none of whom are talking to each other, and some are still interns. The doctors are all prescribing medicines to fix the problem with no consideration given to how their drugs may interact with the drugs being given to the patient by the other doctors. The end result of this is usually is not good…” I totally agree with him. Much of the new legislation though well intended, is cumbersome and in many cases adds expense, time and stress for the borrower. It is seemingly “closing that barn door after the farm animals have escaped.” Most of the villains who created, originated and profited from the bad loans have long ago left the business, leaving us to sweep up the mess. OK, I feel better now… Let me know if you have any questions and thanks for taking the time to look this over. I hope you find it informative.
This Morning…Monday, August 10, 2009:
This morning, stocks are weak which brings a little support for the bond and mortgage markets. No economic data today so watching stocks will be the focus. We are not looking for anything substantive for either market through the day. This morning mortgage prices are slightly better than Friday afternoon.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. Stronger than expected data and positive stock movements pressured rates. The Institute for Supply Management (ISM), factory orders, weekly jobless claims, and employment report all came in stronger than expected (the unemployment rate, expected to be up to. 9.7% fell to 9.4%). Combined, they were blows to the gut for the rate markets, and manna for the stock market. The personal income and outlays data was the only release that was even near expectations. Signs of recovery in the economy with continued record debt had many traders concerned about inflation implications. Inflation erodes the value of fixed income securities. Throughout the week interest rates rose almost every day.
This Week:
This week the markets will be seeking more directional hints, especially with $75 billion of securities to auction off. There is no news of substance today or tomorrow, but on the 12th we have the Trade Balance figures. On Thursday we’ll see Import and Export Prices, Jobless Claims, and Retail Sales. Friday we have a slew of data with the Consumer Price Index, Industrial Production and Capacity Utilization, and the University of Michigan Consumer Sentiment Survey.
EconomicIndicator
Preliminary Q2 Productivity
Tuesday, Aug. 11,8:30 am, et
Up 4.9%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
3-year Treasury Note Auction
Tuesday, Aug. 11,1:30 pm, et
None
Important. $37 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Wednesday, Aug. 12,8:30 am, et
$28.5 billion deficit
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
10-year Treasury Note Auction
Wednesday, Aug. 12,1:30 pm, et
None
Important. $23 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Fed Meeting Adjourns
Wednesday, Aug. 12,2:15 pm, et
No change
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Retail Sales
Thursday, Aug. 13,8:30 am, et
Up 0.3%
Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
30-year Treasury Bond Auction
Thursday, Aug. 13,1:30 pm, et
None
Important. $15 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Consumer Price Index
Friday, Aug. 14,8:30 am, et
Unchanged,Core up 0.2%
Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates.
Industrial Production
Friday, Aug. 14,9:15 am, et
68.1%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Capacity Utilization
Friday, Aug. 14,9:15 am, et
Up 0.1%
Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.
Market Forecast:
The record debt auctions will continue to pressure mortgage interest rates. If foreign demand does not falter then mortgage interest rates will likely stay neutral or improve. However, weak foreign demand would likely have the opposite effect.
Down the line however, we are likely to see a strong rally in the rate markets when the stock market cracks and flips in a major correction. The difficulty is anticipating when it will occur, but make no mistake it will. When it does we can expect a big safe haven run to treasuries and in turn a drop in mortgage rates. It will not last long however, so to take advantage of it will require discipline and timing. The long term macro view doesn't look good for interest rates as the economic decline ends, inflation concerns increase, and deficits increasing forcing Treasury to continue borrowing at record amounts.
Some Humor:
A REDNECK LOVE POEM
SUSIE LEE DONE FELL IN LOVE, SHE PLANNED TO MARRY JOE.
SHE WAS SO HAPPY 'BOUT IT ALL, SHE TOLD HER PAPPY SO.
PAPPY TOLD HER, SUSIE GAL, YOU'LL HAVE TO FIND ANOTHER.
I'D JUST AS SOON YO' MA DON'T KNOW, BUT JOE IS YO' HALF BROTHER.
SO SUSIE PUT ASIDE HER JOE AND PLANNED TO MARRY WILL.
BUT AFTER TELLING PAPPY THIS, HE SAID, 'THERE'S TROUBLE STILL.'
YOU CAN'T MARRY WILL, MY GAL, AND PLEASE DON'T TELL YO' MOTHER.
BUT WILL AND JOE, AND SEVERAL MO', I KNOW IS YO' HALF BROTHER.
BUT MAMA KNEW AND SAID, MY CHILD, JUST DO WHAT MAKES YO' HAPPY.
MARRY WILL OR MARRY JOE; YOU AIN'T NO KIN TO PAPPY.
The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only 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, August 10, 2009:
This morning, stocks are weak which brings a little support for the bond and mortgage markets. No economic data today so watching stocks will be the focus. We are not looking for anything substantive for either market through the day. This morning mortgage prices are slightly better than Friday afternoon.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. Stronger than expected data and positive stock movements pressured rates. The Institute for Supply Management (ISM), factory orders, weekly jobless claims, and employment report all came in stronger than expected (the unemployment rate, expected to be up to. 9.7% fell to 9.4%). Combined, they were blows to the gut for the rate markets, and manna for the stock market. The personal income and outlays data was the only release that was even near expectations. Signs of recovery in the economy with continued record debt had many traders concerned about inflation implications. Inflation erodes the value of fixed income securities. Throughout the week interest rates rose almost every day.
This Week:
This week the markets will be seeking more directional hints, especially with $75 billion of securities to auction off. There is no news of substance today or tomorrow, but on the 12th we have the Trade Balance figures. On Thursday we’ll see Import and Export Prices, Jobless Claims, and Retail Sales. Friday we have a slew of data with the Consumer Price Index, Industrial Production and Capacity Utilization, and the University of Michigan Consumer Sentiment Survey.
EconomicIndicator
Preliminary Q2 Productivity
Tuesday, Aug. 11,8:30 am, et
Up 4.9%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
3-year Treasury Note Auction
Tuesday, Aug. 11,1:30 pm, et
None
Important. $37 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Wednesday, Aug. 12,8:30 am, et
$28.5 billion deficit
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
10-year Treasury Note Auction
Wednesday, Aug. 12,1:30 pm, et
None
Important. $23 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Fed Meeting Adjourns
Wednesday, Aug. 12,2:15 pm, et
No change
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Retail Sales
Thursday, Aug. 13,8:30 am, et
Up 0.3%
Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
30-year Treasury Bond Auction
Thursday, Aug. 13,1:30 pm, et
None
Important. $15 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Consumer Price Index
Friday, Aug. 14,8:30 am, et
Unchanged,Core up 0.2%
Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates.
Industrial Production
Friday, Aug. 14,9:15 am, et
68.1%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Capacity Utilization
Friday, Aug. 14,9:15 am, et
Up 0.1%
Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.
Market Forecast:
The record debt auctions will continue to pressure mortgage interest rates. If foreign demand does not falter then mortgage interest rates will likely stay neutral or improve. However, weak foreign demand would likely have the opposite effect.
Down the line however, we are likely to see a strong rally in the rate markets when the stock market cracks and flips in a major correction. The difficulty is anticipating when it will occur, but make no mistake it will. When it does we can expect a big safe haven run to treasuries and in turn a drop in mortgage rates. It will not last long however, so to take advantage of it will require discipline and timing. The long term macro view doesn't look good for interest rates as the economic decline ends, inflation concerns increase, and deficits increasing forcing Treasury to continue borrowing at record amounts.
Some Humor:
A REDNECK LOVE POEM
SUSIE LEE DONE FELL IN LOVE, SHE PLANNED TO MARRY JOE.
SHE WAS SO HAPPY 'BOUT IT ALL, SHE TOLD HER PAPPY SO.
PAPPY TOLD HER, SUSIE GAL, YOU'LL HAVE TO FIND ANOTHER.
I'D JUST AS SOON YO' MA DON'T KNOW, BUT JOE IS YO' HALF BROTHER.
SO SUSIE PUT ASIDE HER JOE AND PLANNED TO MARRY WILL.
BUT AFTER TELLING PAPPY THIS, HE SAID, 'THERE'S TROUBLE STILL.'
YOU CAN'T MARRY WILL, MY GAL, AND PLEASE DON'T TELL YO' MOTHER.
BUT WILL AND JOE, AND SEVERAL MO', I KNOW IS YO' HALF BROTHER.
BUT MAMA KNEW AND SAID, MY CHILD, JUST DO WHAT MAKES YO' HAPPY.
MARRY WILL OR MARRY JOE; YOU AIN'T NO KIN TO PAPPY.
The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only 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, August 7, 2009
8/7/09
This morning showed good news for the economy, but bad news for the interest rate markets. The bond market was “weighted down” yesterday with decent economic numbers and a decent stock market. This morning we had the Unemployment data. It was a surprise: instead of Nonfarm Payroll dropping 325k, employers cut “only” 247,000 jobs in July, the least in any month since last August. The Unemployment Rate actually dropped to 9.4% in July from 9.5% the prior month, the first time the jobless rate had fallen since April 2008. And the government revised job losses for May and June to show 43,000 fewer jobs lost than previously reported. After the news, we find the mortgage prices worsened.
The reaction this morning to the better employment report covers a wide range of thinking; some see it as everything is go, while others are seeing it as good but still point to the reality that jobs are still being lost. No longer 650K a month, a pace of decline that had to slow. 6.7 mil have lost jobs since the recession began, and more jobs are being cut each month. Inflation chatter and worries will not dissipate on this data but we do not see the Fed tightening for quite a while. One month of better, but still negative employment, isn't going to light any fires at the Fed. However, anyone that was expecting more from the Fed should forget it; no more easing moves.
Consumers are still not likely to increase spending; job losses may be coming down but not many new jobs are on the near term horizon. The outlook for employment, while momentarily looking better based on this morning's data, remains negative. Tim Geithner and Larry Summers, both key Administration officials, continue to expect the unemployment rate to increase and not flatten until mid- 2010. Nevertheless the data this morning will keep pressure on interest rates and run stock indexes higher at least through the rest of the day.
The reaction this morning to the better employment report covers a wide range of thinking; some see it as everything is go, while others are seeing it as good but still point to the reality that jobs are still being lost. No longer 650K a month, a pace of decline that had to slow. 6.7 mil have lost jobs since the recession began, and more jobs are being cut each month. Inflation chatter and worries will not dissipate on this data but we do not see the Fed tightening for quite a while. One month of better, but still negative employment, isn't going to light any fires at the Fed. However, anyone that was expecting more from the Fed should forget it; no more easing moves.
Consumers are still not likely to increase spending; job losses may be coming down but not many new jobs are on the near term horizon. The outlook for employment, while momentarily looking better based on this morning's data, remains negative. Tim Geithner and Larry Summers, both key Administration officials, continue to expect the unemployment rate to increase and not flatten until mid- 2010. Nevertheless the data this morning will keep pressure on interest rates and run stock indexes higher at least through the rest of the day.
8/6/09
This morning the news has pretty much consisted of Jobless Claims. Workers filing claims dropped more sharply than expected last week. Initial Claims were down and came in lower than expected. The number of people collecting long-term unemployment benefits, however, rose by 69,000 to 6.31 million in the week ended July 25th. (Continuing claims had dropped for three straight weeks.) And the four-week moving average for new claims fell 4,750 to 555,250 in the week ended August 1, which is the 6th consecutive week of dropping. After the news mortgage rates are slightly worse this morning. Not much else going on today. Tomorrow's employment report will tell the story for the week.
8/5/09
Yesterday we had the Personal Income and Consumption numbers, which in turn are used in helping calculate the savings rate here in the US. The savings rate is closely monitored by economists, and, although last month it dropped, lately it has been increasing. If savings rates continue to increase, however, the economic recovery will be slower than the forecasts.
What is going on with interest rates? Well, rates began yesterday in decent shape, but once the Pending Home Sales numbers came out, and rates sagged (i.e., prices worsened). There is some speculation that the unemployment data that is announced on Friday will be weaker than expected, although it is not really helping us rate-wise. (Non-farm Payroll is expected to be down about 325k.) For economic news, later this morning we’ll see the ISM Non-Manufacturing Index, along with Factory Orders. We will also have the Treasury Department announced their auction totals for next week, when they’ll be selling 3, 10, and 30-yr securities. As always, stay tuned.
What is going on with interest rates? Well, rates began yesterday in decent shape, but once the Pending Home Sales numbers came out, and rates sagged (i.e., prices worsened). There is some speculation that the unemployment data that is announced on Friday will be weaker than expected, although it is not really helping us rate-wise. (Non-farm Payroll is expected to be down about 325k.) For economic news, later this morning we’ll see the ISM Non-Manufacturing Index, along with Factory Orders. We will also have the Treasury Department announced their auction totals for next week, when they’ll be selling 3, 10, and 30-yr securities. As always, stay tuned.
8/4/09
Good morning. Yesterday things were pretty bad rate-wise, with rates shooting up the most in over two months. Fixed-rate prices improved slightly overnight as the market settled down. We will see some pending home sale numbers later today, but for now the market is digesting the Personal Income and Consumption numbers. Consumer spending rose slightly more than expected in June, in spite of incomes having their biggest drop in four-and-a-half years. Personal Income was -1.3%, and Personal Consumption (Spending) was +.4% after a revised 0.1% increase in May. Adjusted for inflation, however, spending fell 0.1 percent after being flat in May. Personal Income was worse than market expectations of -1.0%, and the two numbers combined (remember, if you’re spending more than you are making, you’re not saving!) led to a decrease in savings during the month. Savings fell to an annual rate of $505 billion, with the saving rate slipping to 4.6 percent versus 6.2 percent in May.
Monday, August 3, 2009
Mortgage Market Review - 8/3/09
This Morning…Monday, August 3, 2009:
In early trading, the 10 year note was under pressure and the 30 year bond was down over 1 full point. As a result, mortgage prices opened up weaker. Overseas, Barclays and HSBC reported stronger earnings results beating the forecasts. This added to the strength in equities. The DJIA opened up about 40 points and bonds and mortgages were still down about the same as in early trading. Commodity prices are surging as China reported strong manufacturing results for July and as demand in Asia remains robust. The dollar is also getting slammed this morning and is trading at new lows for 2009. Crude oil futures are up about $2 sending the cost of a barrel over $70. Investor news has been light as the end of summer is nearing.
Last Week:
Mortgage bond prices rallied Thursday afternoon and Friday pushing mortgage interest rates lower. Bond friendly Core PCE inflation data came in lower than expected. The Fed’s most recent estimates call for an increase in this figure by the end of the year. The fact that the data showed lower inflation helped mortgage bonds rally. June home sales were up 11.0% and got a lot of ink. but sales increasing 11.0% from these very low levels, while a step in the right direction, isn't likely to light a fire in the housing markets, it must keep going. Consumer confidence came in at a weaker than expected mark. The Treasury auctions were mixed. The 2 and 5 year note auctions received poor foreign demand while the 7 year auction showed strong foreign demand.
This Week:
The economic calendar has a number of important items; June personal income and spending, the two ISM surveys (manufacturing and services), weekly jobless claims. Friday is the big one with the July employment statistics; early estimates are for job losses to be down 333K after 467K jobs lost in June, the unemployment rate at 9.6%, up from 9.5% in June. Undoubtedly there will be some re-thinking the estimates as we approach Friday. On Wednesday the ADP jobs report is estimated at 345K job losses, ADP however does not calculate government jobs. Late Friday afternoon June consumer credit data hits, in normal times it doesn't generate much attention, these times we pay a lot of attention to it as it provides another peek into consumer spending.
EconomicIndicator
Construction Spending
Monday, Aug. 3,10:00 am, et
Down 0.6%
Low importance. An indication of economic strength. A significant decrease may lead to lower rates.
ISM Index
Monday, Aug. 3,10:00 am, et
46.5
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Personal Income and Outlays
Tuesday, Aug. 4,8:30 am, et
Down 1.0%,Up 0.3%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
ADP Employment
Wednesday, Aug. 5,8:30 am, et
Down 340k
Important. An indication of employment. A larger decrease in payrolls may bring lower rates.
Factory Orders
Wednesday, Aug. 5,10:00 am, et
Up 0.5%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Employment
Friday, Aug. 7,8:30 am, et
9.6%,Down 333k
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Consumer Credit
Friday, Aug. 7,2:00 pm, et
Down $4.1 billion
Low importance. A significantly larger than expected increase may lead to lower mortgage interest rates.
Market Forecast:
The employment report will be the most important release this week. With so many data releases expect the market to be very volatile. I will definitely stay in touch.
Some Humor:
A little guy is sitting at the bar just staring at his drink for half an our when this big trouble-making biker steps next to him, grabs his drink, gulps it down in one swig and then turns to the guy with a menacing stare as if to say “What cha gonna do about it?”
The poor little guy starts crying.
“Come on man I was just giving you a hard time,” the biker says. “I didn't think you'd CRY. I can't stand to see a man crying.”
“This is the worst day of my life,” says the little guy between sobs. “I can't do anything right. I overslept and was late to an important meeting, so my boss fired me. When I went to the parking lot, I found my car was stolen and I don't have any insurance. I left my wallet in the cab I took home. I found my wife in bed with the gardener and my dog bit me. So I came to this bar trying to work up the courage to put an end to my life, --- and then you show up and drink the damn poison.”
In early trading, the 10 year note was under pressure and the 30 year bond was down over 1 full point. As a result, mortgage prices opened up weaker. Overseas, Barclays and HSBC reported stronger earnings results beating the forecasts. This added to the strength in equities. The DJIA opened up about 40 points and bonds and mortgages were still down about the same as in early trading. Commodity prices are surging as China reported strong manufacturing results for July and as demand in Asia remains robust. The dollar is also getting slammed this morning and is trading at new lows for 2009. Crude oil futures are up about $2 sending the cost of a barrel over $70. Investor news has been light as the end of summer is nearing.
Last Week:
Mortgage bond prices rallied Thursday afternoon and Friday pushing mortgage interest rates lower. Bond friendly Core PCE inflation data came in lower than expected. The Fed’s most recent estimates call for an increase in this figure by the end of the year. The fact that the data showed lower inflation helped mortgage bonds rally. June home sales were up 11.0% and got a lot of ink. but sales increasing 11.0% from these very low levels, while a step in the right direction, isn't likely to light a fire in the housing markets, it must keep going. Consumer confidence came in at a weaker than expected mark. The Treasury auctions were mixed. The 2 and 5 year note auctions received poor foreign demand while the 7 year auction showed strong foreign demand.
This Week:
The economic calendar has a number of important items; June personal income and spending, the two ISM surveys (manufacturing and services), weekly jobless claims. Friday is the big one with the July employment statistics; early estimates are for job losses to be down 333K after 467K jobs lost in June, the unemployment rate at 9.6%, up from 9.5% in June. Undoubtedly there will be some re-thinking the estimates as we approach Friday. On Wednesday the ADP jobs report is estimated at 345K job losses, ADP however does not calculate government jobs. Late Friday afternoon June consumer credit data hits, in normal times it doesn't generate much attention, these times we pay a lot of attention to it as it provides another peek into consumer spending.
EconomicIndicator
Construction Spending
Monday, Aug. 3,10:00 am, et
Down 0.6%
Low importance. An indication of economic strength. A significant decrease may lead to lower rates.
ISM Index
Monday, Aug. 3,10:00 am, et
46.5
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Personal Income and Outlays
Tuesday, Aug. 4,8:30 am, et
Down 1.0%,Up 0.3%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
ADP Employment
Wednesday, Aug. 5,8:30 am, et
Down 340k
Important. An indication of employment. A larger decrease in payrolls may bring lower rates.
Factory Orders
Wednesday, Aug. 5,10:00 am, et
Up 0.5%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Employment
Friday, Aug. 7,8:30 am, et
9.6%,Down 333k
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Consumer Credit
Friday, Aug. 7,2:00 pm, et
Down $4.1 billion
Low importance. A significantly larger than expected increase may lead to lower mortgage interest rates.
Market Forecast:
The employment report will be the most important release this week. With so many data releases expect the market to be very volatile. I will definitely stay in touch.
Some Humor:
A little guy is sitting at the bar just staring at his drink for half an our when this big trouble-making biker steps next to him, grabs his drink, gulps it down in one swig and then turns to the guy with a menacing stare as if to say “What cha gonna do about it?”
The poor little guy starts crying.
“Come on man I was just giving you a hard time,” the biker says. “I didn't think you'd CRY. I can't stand to see a man crying.”
“This is the worst day of my life,” says the little guy between sobs. “I can't do anything right. I overslept and was late to an important meeting, so my boss fired me. When I went to the parking lot, I found my car was stolen and I don't have any insurance. I left my wallet in the cab I took home. I found my wife in bed with the gardener and my dog bit me. So I came to this bar trying to work up the courage to put an end to my life, --- and then you show up and drink the damn poison.”
Subscribe to:
Posts (Atom)
