Good morning. Yesterday the Conference Board reported that its Consumer Confidence Index rose to 52.9, up from November. The reading is still far short of the 90 that would signify a solid economy, but it is well above the historic low of 25.3 in February. Also the 5-yr Note auction went pretty well and the S&P/Case-Shiller home price index move up .4% in October, which was the 5th month in a row moving higher. Their index is still down more than 7% from October 2008, but some seasonality is creeping into the numbers – things tend to slow down in the winter.
We have the December Chicago Purchasing Manager’s Survey and the weekly Jobless Claims number tomorrow. Today we have a 7-yr notes auction. There was some improving mortgage pricing yesterday and this morning mortgage prices are slightly better. Have a good one today. Only 2 days to 2010. Where’s my George Jetson car?
Wednesday, December 30, 2009
12/29/09
Rates were up again yesterday, but then improved ever so slightly in spite of a mediocre 2-year note auction. This morning, and this week, we will have the S&P/Case-Shiller index, the Chicago Purchasing Manager’s Survey, Jobless Claims. One thing working in our favor is that the bond market is technically extremely “oversold”, so, like a spring, may be due to head the other way. But there is no bounce-back yet. This morning mortgage rates are worse by another .125.
Monday, December 28, 2009
Mortgage Market Review - 12/28/09
This Morning…Monday, December 28, 2009:
There are no economic reports today, but interest rates are still continuing their slide from last Thursday. There is a Treasury auction today. Many investors will be closely eyeing demand as interest rates are climbing ahead of any Fed moves to tighten. As the dollar improves, there is concern that foreign central bank demand will abate and that higher rates will be demanded.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. The bond market took a beating as stocks surged despite mixed data. Existing home sales in November rose a surprising 7.4%. However, revised gross domestic product figures showed the economy only grew 2.2%, which was weaker than the expected 2.8% mark. Personal income and outlays data came in weaker than expected helping a bit. Unfortunately, the thin trading conditions magnified the earlier losses and made it difficult to recover. For the week interest rates rose by about ¼ to 3/8%.
This Week:
This week, of course, is shortened by the holiday on Friday, but prior to that we have a Treasury auction to get through. If foreign demand falters we will likely see mortgage interest rates head higher. The bond market will close early Thursday in advance of the New Year’s Holiday Friday. The scheduled economic news is pretty light, with the S&P/Case-Shiller price index and Consumer Confidence tomorrow, and the Chicago Purchasing Manager’s Survey on Wednesday. The shortened trading week may result in some market volatility coupled with thin trading conditions likely.
EconomicIndicator
2-year Treasury Note Auction
Monday, Dec. 28,1:00 pm, et
None
Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Consumer Confidence
Tuesday, Dec. 29,10:00 am, et
49.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
5-year Treasury Note Auction
Tuesday, Dec. 29,1:00 pm, et
None
Important. $46 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
7-year Treasury Note Auction
Wednesday, Dec. 30,1:00 pm, et
None
Important. $32 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, Dec. 31,8:30 am, et
470K
Moderately Important. An indication of employment. Higher than expected claims may help rates improve.
New Years Day
Friday, Jan. 1
None
Important. Thin trading conditions and a shortened trading week could result in significant market volatility.
Market Forecast:
This week’s Consumer Confidence release will be eagerly anticipated. It is significant in that it provides a precursor into consumers’ willingness to spend in the months ahead. Look for any variation from estimates to cause mortgage interest rate volatility. Signs of eroding consumer confidence could lead to improvements in mortgage interest rates. However, stronger than expected figures could spike rates higher. With mortgage interest rates relatively low, capitalizing on current levels is recommended to protect against future volatility. Remember, mortgage interest rates tend to trend lower slowly, while increases tend to occur quickly. A cautious approach is necessary to protect from future market volatility.
Some Humor: (I had one more Christmas joke)
There was a man who worked for the Post Office whose job was to process all the mail that had illegible addresses. One day, a letter came addressed in a shaky handwriting to God with no actual address. He thought he should open it to see what it was about.
The letter read: Dear God, I am an 83 year old widow, living on a very small pension. Yesterday someone stole my purse. It had $100 in it, which was all the money I had until my next pension payment.
Next Sunday is Christmas, and I had invited two of my friends over for dinner. Without that money, I have nothing to buy food with, have no family to turn to, and you are my only hope. Can you please help me? Sincerely, Edna.
The postal worker was touched. He showed the letter to all the other workers. Each one dug into his or her wallet and came up with a few dollars.
By the time he made the rounds, he had collected $96, which they put into an envelope and sent to the woman.
The rest of the day, all the workers felt a warm glow thinking of Edna and the dinner she would be able to share with her friends.Christmas came and went.
A few days later, another letter came from the same old lady to God. All the workers gathered around while the letter was opened.
It read:
Dear God, How can I ever thank you enough for what you did for me? Because of your gift of love, I was able to fix a glorious dinner for my friends. We had a very nice day and I told my friends of your wonderful gift. By the way, there was $4 missing. I think it might have been those *&^%’s at the post office.
Sincerely, Edna.
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.
There are no economic reports today, but interest rates are still continuing their slide from last Thursday. There is a Treasury auction today. Many investors will be closely eyeing demand as interest rates are climbing ahead of any Fed moves to tighten. As the dollar improves, there is concern that foreign central bank demand will abate and that higher rates will be demanded.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. The bond market took a beating as stocks surged despite mixed data. Existing home sales in November rose a surprising 7.4%. However, revised gross domestic product figures showed the economy only grew 2.2%, which was weaker than the expected 2.8% mark. Personal income and outlays data came in weaker than expected helping a bit. Unfortunately, the thin trading conditions magnified the earlier losses and made it difficult to recover. For the week interest rates rose by about ¼ to 3/8%.
This Week:
This week, of course, is shortened by the holiday on Friday, but prior to that we have a Treasury auction to get through. If foreign demand falters we will likely see mortgage interest rates head higher. The bond market will close early Thursday in advance of the New Year’s Holiday Friday. The scheduled economic news is pretty light, with the S&P/Case-Shiller price index and Consumer Confidence tomorrow, and the Chicago Purchasing Manager’s Survey on Wednesday. The shortened trading week may result in some market volatility coupled with thin trading conditions likely.
EconomicIndicator
2-year Treasury Note Auction
Monday, Dec. 28,1:00 pm, et
None
Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Consumer Confidence
Tuesday, Dec. 29,10:00 am, et
49.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
5-year Treasury Note Auction
Tuesday, Dec. 29,1:00 pm, et
None
Important. $46 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
7-year Treasury Note Auction
Wednesday, Dec. 30,1:00 pm, et
None
Important. $32 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, Dec. 31,8:30 am, et
470K
Moderately Important. An indication of employment. Higher than expected claims may help rates improve.
New Years Day
Friday, Jan. 1
None
Important. Thin trading conditions and a shortened trading week could result in significant market volatility.
Market Forecast:
This week’s Consumer Confidence release will be eagerly anticipated. It is significant in that it provides a precursor into consumers’ willingness to spend in the months ahead. Look for any variation from estimates to cause mortgage interest rate volatility. Signs of eroding consumer confidence could lead to improvements in mortgage interest rates. However, stronger than expected figures could spike rates higher. With mortgage interest rates relatively low, capitalizing on current levels is recommended to protect against future volatility. Remember, mortgage interest rates tend to trend lower slowly, while increases tend to occur quickly. A cautious approach is necessary to protect from future market volatility.
Some Humor: (I had one more Christmas joke)
There was a man who worked for the Post Office whose job was to process all the mail that had illegible addresses. One day, a letter came addressed in a shaky handwriting to God with no actual address. He thought he should open it to see what it was about.
The letter read: Dear God, I am an 83 year old widow, living on a very small pension. Yesterday someone stole my purse. It had $100 in it, which was all the money I had until my next pension payment.
Next Sunday is Christmas, and I had invited two of my friends over for dinner. Without that money, I have nothing to buy food with, have no family to turn to, and you are my only hope. Can you please help me? Sincerely, Edna.
The postal worker was touched. He showed the letter to all the other workers. Each one dug into his or her wallet and came up with a few dollars.
By the time he made the rounds, he had collected $96, which they put into an envelope and sent to the woman.
The rest of the day, all the workers felt a warm glow thinking of Edna and the dinner she would be able to share with her friends.Christmas came and went.
A few days later, another letter came from the same old lady to God. All the workers gathered around while the letter was opened.
It read:
Dear God, How can I ever thank you enough for what you did for me? Because of your gift of love, I was able to fix a glorious dinner for my friends. We had a very nice day and I told my friends of your wonderful gift. By the way, there was $4 missing. I think it might have been those *&^%’s at the post office.
Sincerely, Edna.
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.
12/23/09
Good morning. So, how glad are you that you don’t live in the Midwest or East Coast? Tuesday was another tough day for mortgage rates due to a lack of buyers. Analysts brought up the fact that mortgage securities are somewhat expensive relative to risk-free Treasury securities and once again wondered what will happen if the Fed buying program comes to an end.
Maybe here today, after 3 days of higher rates, we’ll see a change. We’ve already had some decent numbers from Personal Income and Consumption. Incomes here in the US saw their biggest gain in six months, and consumer spending rose .5% (expected +.6%) for a second straight month in November. At 10AM EST we’ll see New Home Sales, and the University of Michigan survey, and later today we’ll find out how much the government is selling next week in their 2, 5, and 7-yr Treasury auctions. Right now mortgage rates are unchanged from late yesterday afternoon.
Maybe here today, after 3 days of higher rates, we’ll see a change. We’ve already had some decent numbers from Personal Income and Consumption. Incomes here in the US saw their biggest gain in six months, and consumer spending rose .5% (expected +.6%) for a second straight month in November. At 10AM EST we’ll see New Home Sales, and the University of Michigan survey, and later today we’ll find out how much the government is selling next week in their 2, 5, and 7-yr Treasury auctions. Right now mortgage rates are unchanged from late yesterday afternoon.
12/22/09
Good morning. It was not a good day for interest rates yesterday. Some traders blamed a rallying stock market, thin holiday trading done by “the B-team”, few buyers ahead of year-end, or the chance that next week’s auctions will be poorly received.
Today we’ve already had some news out. The final revision to the 3rd Quarter GDP numbers came out which showed that the U.S. economy grew at a much slower pace than initially thought. Is that mortgage rates? Nope. This morning rates are worse by another 1/8%. At 10AM EST we’ll have Existing Home Sales. As they say…”You better watch out…you better not cry…
Today we’ve already had some news out. The final revision to the 3rd Quarter GDP numbers came out which showed that the U.S. economy grew at a much slower pace than initially thought. Is that mortgage rates? Nope. This morning rates are worse by another 1/8%. At 10AM EST we’ll have Existing Home Sales. As they say…”You better watch out…you better not cry…
Monday, December 21, 2009
Mortgage Market Review - 12/21/09
This Morning…Monday, December 21, 2009:
There is no economic data today and as a result the market opened soft this morning. Mortgage rates have worsened as the DOW is currently up over 100 points.
Last Week:
Mortgage bond prices rose last week pushing mortgage interest rates lower. Rates initially spiked higher following higher than expected producer price index figures. Fortunately the consumer price index showed tame inflation on the consumer level and mortgage bonds were able to recover. The Fed kept rates unchanged, indicated they would try to keep rates low for some time, but also warned that long term security purchases would cease at the end of the 1st quarter of 2010. Overall for the week, interest rates fell by about 1/8% from the prior week.
This Week:
Today is quiet, tomorrow we have Existing Home Sales and the final GDP numbers for the third quarter. Wednesday is Personal Income and Consumption, New Home Sales, Consumer Sentiment, and Building Permits – along with the announcement of the size of next week’s Treasury auction. The morning of Christmas Eve we have Durable Goods and Jobless Claims that come out at 8:30AM EST, about 10 minutes before everyone on Wall Street heads home.
The inflation data will be the most important release this week. The recent inflation reports were mixed. The PCE price index will be carefully watched for any signs of inflationary pressures. The shortened trading week may result in some market volatility coupled with thin trading conditions likely.
EconomicIndicator
Q3 GDP
Tuesday, Dec. 22,8:30 am, et
Up 2.7%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Existing Home Sales
Tuesday, Dec. 22,10:00 am, et
Up 3.3%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Personal Income and Outlays
Wednesday, Dec. 23,8:30 am, et
Up 0.5%,Up 0.7%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Price Index
Wednesday, Dec. 23,8:30 am, et
Up 0.5%,Core up 0.1%
Important. A measure of inflation. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Wednesday, Dec. 23,10:00 am, et
73.9
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales
Wednesday, Dec. 23,10:00 am, et
Up 2.3%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Durable Goods Orders
Thursday, Dec. 24, 8:30 am, et
Up 0.4%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
Market Forecast:
The Federal Reserve left interest rates unchanged last week as expected. The remarks were mixed and caused some mortgage market uncertainty. The Fed statement indicated, "subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of their purchases of mortgage-backed securities and agency debt. It anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets.
The Fed’s challenge will be stepping out of the mortgage market without causing mortgage interest rates to spike uncontrollably higher. The housing sector is a vital component of the economy. The last thing the Fed needs is for mortgage interest rates to escalate causing the housing sector to suffer. While the most recent data shows positive housing trends across most of the nation, analysts attribute the positive movements to artificially low mortgage interest rates tied to the Fed buying of mortgage bonds. How this will all play out is still very uncertain. Now is a great time to take advantage of rates at these historically favorable levels.
Some Humor:
It is near the Christmas break of the school year. The students have turned in all their work and there is really nothing more to do. All the children are restless and the teacher decides to have an early dismissal.
Teacher: "Whoever answers the questions I ask, first and correctly, can leave early today."
Little Johnny says to himself "Good, I want to get outta here. I'm smart and will answer the question."
Teacher: "Who said 'Four Score and Seven Years Ago'?"
Before Johnny can open his mouth, Susie says, "Abraham Lincoln."
Teacher: "That's right Susie, you can go home."
Johnny is mad that Susie answered the question first.
Teacher: "Who said 'I Have a Dream'?"
Before Johnny can open his mouth, Mary says, "Martin Luther King."Teacher:
"That's right Mary, you can go."
Johnny is even madder than before.
Teacher: "Who said 'Ask not, what your country can do for you'?"
Before Johnny can open his mouth, Nancy says, "John F. Kennedy."
Teacher: "That's right Nancy, you may also leave."
Johnny is boiling mad that he has not been able to answer to any of the questions.
When the teacher turns her back Johnny says, "I wish these “gals” would keep their mouths shut!"
The teacher turns around: "NOW WHO SAID THAT?"
Johnny: "TIGER WOODS. CAN I GO NOW?"
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.
There is no economic data today and as a result the market opened soft this morning. Mortgage rates have worsened as the DOW is currently up over 100 points.
Last Week:
Mortgage bond prices rose last week pushing mortgage interest rates lower. Rates initially spiked higher following higher than expected producer price index figures. Fortunately the consumer price index showed tame inflation on the consumer level and mortgage bonds were able to recover. The Fed kept rates unchanged, indicated they would try to keep rates low for some time, but also warned that long term security purchases would cease at the end of the 1st quarter of 2010. Overall for the week, interest rates fell by about 1/8% from the prior week.
This Week:
Today is quiet, tomorrow we have Existing Home Sales and the final GDP numbers for the third quarter. Wednesday is Personal Income and Consumption, New Home Sales, Consumer Sentiment, and Building Permits – along with the announcement of the size of next week’s Treasury auction. The morning of Christmas Eve we have Durable Goods and Jobless Claims that come out at 8:30AM EST, about 10 minutes before everyone on Wall Street heads home.
The inflation data will be the most important release this week. The recent inflation reports were mixed. The PCE price index will be carefully watched for any signs of inflationary pressures. The shortened trading week may result in some market volatility coupled with thin trading conditions likely.
EconomicIndicator
Q3 GDP
Tuesday, Dec. 22,8:30 am, et
Up 2.7%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Existing Home Sales
Tuesday, Dec. 22,10:00 am, et
Up 3.3%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Personal Income and Outlays
Wednesday, Dec. 23,8:30 am, et
Up 0.5%,Up 0.7%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Price Index
Wednesday, Dec. 23,8:30 am, et
Up 0.5%,Core up 0.1%
Important. A measure of inflation. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Wednesday, Dec. 23,10:00 am, et
73.9
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales
Wednesday, Dec. 23,10:00 am, et
Up 2.3%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Durable Goods Orders
Thursday, Dec. 24, 8:30 am, et
Up 0.4%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
Market Forecast:
The Federal Reserve left interest rates unchanged last week as expected. The remarks were mixed and caused some mortgage market uncertainty. The Fed statement indicated, "subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of their purchases of mortgage-backed securities and agency debt. It anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets.
The Fed’s challenge will be stepping out of the mortgage market without causing mortgage interest rates to spike uncontrollably higher. The housing sector is a vital component of the economy. The last thing the Fed needs is for mortgage interest rates to escalate causing the housing sector to suffer. While the most recent data shows positive housing trends across most of the nation, analysts attribute the positive movements to artificially low mortgage interest rates tied to the Fed buying of mortgage bonds. How this will all play out is still very uncertain. Now is a great time to take advantage of rates at these historically favorable levels.
Some Humor:
It is near the Christmas break of the school year. The students have turned in all their work and there is really nothing more to do. All the children are restless and the teacher decides to have an early dismissal.
Teacher: "Whoever answers the questions I ask, first and correctly, can leave early today."
Little Johnny says to himself "Good, I want to get outta here. I'm smart and will answer the question."
Teacher: "Who said 'Four Score and Seven Years Ago'?"
Before Johnny can open his mouth, Susie says, "Abraham Lincoln."
Teacher: "That's right Susie, you can go home."
Johnny is mad that Susie answered the question first.
Teacher: "Who said 'I Have a Dream'?"
Before Johnny can open his mouth, Mary says, "Martin Luther King."Teacher:
"That's right Mary, you can go."
Johnny is even madder than before.
Teacher: "Who said 'Ask not, what your country can do for you'?"
Before Johnny can open his mouth, Nancy says, "John F. Kennedy."
Teacher: "That's right Nancy, you may also leave."
Johnny is boiling mad that he has not been able to answer to any of the questions.
When the teacher turns her back Johnny says, "I wish these “gals” would keep their mouths shut!"
The teacher turns around: "NOW WHO SAID THAT?"
Johnny: "TIGER WOODS. CAN I GO NOW?"
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, December 18, 2009
12/18/09
Rates had a good day yesterday, as volatility continues to increase. Jobless Claims moved rates one way, but then Leading Economic Indicators rose in November (more than forecast) and pushed them another way. Lastly, the Philly Fed survey rose to its highest level since April of 2005! In the absence of any economic news today, mortgage prices are roughly unchanged. Have a great weekend
12/17/09
Good morning. The big mid-day news yesterday was the Fed’s announcement. They are leaving overnight rates unchanged, as expected, but the markets were more interested in the verbiage of the statement. “Economic activity has continued to pick up and that the deterioration in the labor market is abating. The housing sector has shown some signs of improvement…Household spending appears to be expanding at a moderate rate…”
Jobless Claims rose unexpectedly last week. This news, combined with a rally in the value of the dollar, is giving the stock markets “fits” and lowering interest rates.
Jobless Claims rose unexpectedly last week. This news, combined with a rally in the value of the dollar, is giving the stock markets “fits” and lowering interest rates.
12/16/09
Good morning. There’s a lot to report today. Rates moved higher yesterday morning as Treasury rates hit their highest levels since August. Obviously volatility picked up, which tends to make mortgage prices a little worse. The news that inflation at the producer level was worse than expected did not help. After that we saw Industrial Production rise in November (the fourth gain in five months) and Capacity Utilization rise also.
This morning we’re off to the races with Housing Starts. Starts were up 8.9% but were still lower than expected. This is the largest percentage increase since May, which is nice to see, and although housing starts are still down over 12% versus a year ago, they are much better than the 54.9% drop seen in January. Single family numbers were up about 2%, but the volatile multifamily segment was up over 67%. New building permits, which give a sense of future home construction, rose 6%, the highest since November 2008. We also had the Consumer Price Index, which rose in line with expectations in November. Prices rose over the last 12 months, as expected, the first year-over-year gain since February. Today we have the Fed announcement, so look for some potential volatility. For now mortgages are about unchanged from Tuesday afternoon.
This morning we’re off to the races with Housing Starts. Starts were up 8.9% but were still lower than expected. This is the largest percentage increase since May, which is nice to see, and although housing starts are still down over 12% versus a year ago, they are much better than the 54.9% drop seen in January. Single family numbers were up about 2%, but the volatile multifamily segment was up over 67%. New building permits, which give a sense of future home construction, rose 6%, the highest since November 2008. We also had the Consumer Price Index, which rose in line with expectations in November. Prices rose over the last 12 months, as expected, the first year-over-year gain since February. Today we have the Fed announcement, so look for some potential volatility. For now mortgages are about unchanged from Tuesday afternoon.
12/15/09
U.S. producer prices were up more than expected in November, mostly due to energy costs. (Analysts seemed to believe that the PPI was only going to be up last month.) Year-over-year the PPI was up 2.4% in November versus an expected number of +1.6%. Gas was up over 14%, hurting Escalade and Hummer drivers everywhere, and the “core rate” without food and energy was +.5%. Although we still have Industrial Production and Capacity Utilization ahead this morning, currently the bond market is taking the news on the chin and mortgage prices are worsened
Mortgage Market Review - 12/14/09
Good morning. I often get asked about my opinion regarding “floating” or “locking” an interest rate. As we all know, mortgage interest rates change on a daily and intra-day basis. With so much volatility, it is often difficult to make the right decision regarding floating or locking. What is important to remember is the fact that there is a difference between gambling and taking a calculated risk when making mortgage interest rate decisions. Floating into an economic release such as the employment report is usually a gamble, as was evident with the rate spike the beginning of this month. In addition, floating over a span of more than a few days is also a gamble. Unforeseen events can cause instability in the financial markets which results in mortgage interest rate volatility. On the contrary, floating on a day of positive market movement with no economic data the following day, while such action is still vulnerable to market movements, can be considered a calculated risk. It is possible for interest rates to push lower due to the uncertain future of the economy. Unfortunately the recent focus has been towards rate increases, which generally don’t bode well for lower mortgage interest rates. Taking advantage of rates at the current levels guarantees a historically favorable interest rate and protects against uncertainty surrounding future interest rate developments.
There’s a full week in the markets coming up, so stay tuned. Please let me know if you have any questions and thanks for taking the time to read this. I hope you find it useful and informative. Have a great week.
Fred
This Morning…Monday, December 14, 2009:
Treasuries and mortgages opened a little better this morning. Today there isn't any economic data to think about. At 9:30 the DJIA opened +30.
Last Week:
Mortgage bond prices were near unchanged last week holding mortgage rates steady. Trade was extremely volatile with swings throughout the week. The Treasury auctions were not as well received by foreign accounts as traders were hoping. The US relies on foreign central banks such as China to fund our deficit spending. If China were to decrease or cease purchasing US bonds and notes, rates would rise.
This Week:
It will be a busy pre-Christmas week for economic news. For one, the Fed meeting on Wednesday is expected to have no change for rates but, as usual, investors will be closely watching the language. The Producer Price Index (PPI) comes out tomorrow, as does Industrial Production and Capacity Utilization, and the Empire State Manufacturing Index. This is followed by the Consumer Price Index (CPI) and New Residential Construction on Wednesday. Housing Starts comes out Wednesday. Jobless Claims, Leading Economic Indicators, and the Philly Fed are on Thursday.
EconomicIndicator
Producer Price Index
Tuesday, Dec. 15,8:30 am, et
Up 0.9%,Core up 0.2%
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
Industrial Production
Tuesday, Dec. 15,9:15 am, et
Up 0.6%
Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization
Tuesday, Dec. 15,9:15 am, et
71.1%
Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates.
Housing Starts
Wednesday, Dec. 16,8:30 am, et
Up 8.6%
Important. A measure of housing sector strength. Weakness may lead to lower rates.
Consumer Price Index
Wednesday, Dec. 16,8:30 am, et
Up 0.7%,Core up 0.1%
Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates.
Fed Meeting Adjourns
Wednesday, Dec. 16,2:15 pm, et
No rate change
Important. Few expect the Fed to raise rates, but some volatility may surround the adjournment of this meeting.
Leading Economic Indicators
Thursday, Dec. 17,10:00 am, et
Up 0.7%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey
Thursday, Dec. 17,10:00 am, et
16.5
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Market Forecast:
Funds are essentially done for the year. Trade in markets is thinning daily, leading to the potential of continuing volatility on any surprises. We expect interest rate markets will continue to hang in a narrow range with not much change from where they trade today. This week the FOMC statement on Wednesday will likely cement rates into a tight range after the statement is chewed and a consensus forms as to what the Fed wants markets to accept. With economic improvement slowly but surely improving, markets will be keyed on what if anything it means to the Fed. Bernanke and most Fed officials have been stalwart on letting short term rates remain at zero for most of 2010, or at least until there is complete conviction job markets are stabilizing and some evidence jobs are being created. Although the Fed wants to be sure tightening rates won't lead to a double dip recession, there are a few regional Fed Presidents that are sounding more hawkish on rates. The concern is reacting too late may imbed inflation, and once ignited it becomes more difficult to control. This is the last week of the year where trading will have a modicum of volume
Some Humor:
Bob had finally made it to the last round of the $5,000,000 Question. The night before the big question, he told the M.C. that he desired a question on American History.
The big night had arrived. Bob made his way on stage in front of the studio and TV audience. He had become the talk of the week. He was the best guest this show had ever seen. The M.C. stepped up to the microphone.
"Bob, you have chosen American History as your final question. You know that if you correctly answer this question, you will walk away $5,000,000 dollars richer. Are you ready?"
Bob nodded with a cocky confidence-the crowd went nuts - he hadn't missed a question all week.
"Bob, your question on American History is a two-part question. As you know, you may answer either part first. As a rule, the second half of the question is always easier. Which part would you like to take a stab at first?"
Bob was now becoming more noticeably nervous. He couldn't believe it, but he was drawing a blank. American History was his easiest subject, but he played it safe. "I'll try the easier part first."
The M.C. nodded approvingly. "Here we go Bob. I will ask you the second half first, then the first half."
The audience silenced with gross anticipation . . .
"Bob, here is your question: And in what year did it happen??"
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.
There’s a full week in the markets coming up, so stay tuned. Please let me know if you have any questions and thanks for taking the time to read this. I hope you find it useful and informative. Have a great week.
Fred
This Morning…Monday, December 14, 2009:
Treasuries and mortgages opened a little better this morning. Today there isn't any economic data to think about. At 9:30 the DJIA opened +30.
Last Week:
Mortgage bond prices were near unchanged last week holding mortgage rates steady. Trade was extremely volatile with swings throughout the week. The Treasury auctions were not as well received by foreign accounts as traders were hoping. The US relies on foreign central banks such as China to fund our deficit spending. If China were to decrease or cease purchasing US bonds and notes, rates would rise.
This Week:
It will be a busy pre-Christmas week for economic news. For one, the Fed meeting on Wednesday is expected to have no change for rates but, as usual, investors will be closely watching the language. The Producer Price Index (PPI) comes out tomorrow, as does Industrial Production and Capacity Utilization, and the Empire State Manufacturing Index. This is followed by the Consumer Price Index (CPI) and New Residential Construction on Wednesday. Housing Starts comes out Wednesday. Jobless Claims, Leading Economic Indicators, and the Philly Fed are on Thursday.
EconomicIndicator
Producer Price Index
Tuesday, Dec. 15,8:30 am, et
Up 0.9%,Core up 0.2%
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
Industrial Production
Tuesday, Dec. 15,9:15 am, et
Up 0.6%
Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization
Tuesday, Dec. 15,9:15 am, et
71.1%
Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates.
Housing Starts
Wednesday, Dec. 16,8:30 am, et
Up 8.6%
Important. A measure of housing sector strength. Weakness may lead to lower rates.
Consumer Price Index
Wednesday, Dec. 16,8:30 am, et
Up 0.7%,Core up 0.1%
Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates.
Fed Meeting Adjourns
Wednesday, Dec. 16,2:15 pm, et
No rate change
Important. Few expect the Fed to raise rates, but some volatility may surround the adjournment of this meeting.
Leading Economic Indicators
Thursday, Dec. 17,10:00 am, et
Up 0.7%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey
Thursday, Dec. 17,10:00 am, et
16.5
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Market Forecast:
Funds are essentially done for the year. Trade in markets is thinning daily, leading to the potential of continuing volatility on any surprises. We expect interest rate markets will continue to hang in a narrow range with not much change from where they trade today. This week the FOMC statement on Wednesday will likely cement rates into a tight range after the statement is chewed and a consensus forms as to what the Fed wants markets to accept. With economic improvement slowly but surely improving, markets will be keyed on what if anything it means to the Fed. Bernanke and most Fed officials have been stalwart on letting short term rates remain at zero for most of 2010, or at least until there is complete conviction job markets are stabilizing and some evidence jobs are being created. Although the Fed wants to be sure tightening rates won't lead to a double dip recession, there are a few regional Fed Presidents that are sounding more hawkish on rates. The concern is reacting too late may imbed inflation, and once ignited it becomes more difficult to control. This is the last week of the year where trading will have a modicum of volume
Some Humor:
Bob had finally made it to the last round of the $5,000,000 Question. The night before the big question, he told the M.C. that he desired a question on American History.
The big night had arrived. Bob made his way on stage in front of the studio and TV audience. He had become the talk of the week. He was the best guest this show had ever seen. The M.C. stepped up to the microphone.
"Bob, you have chosen American History as your final question. You know that if you correctly answer this question, you will walk away $5,000,000 dollars richer. Are you ready?"
Bob nodded with a cocky confidence-the crowd went nuts - he hadn't missed a question all week.
"Bob, your question on American History is a two-part question. As you know, you may answer either part first. As a rule, the second half of the question is always easier. Which part would you like to take a stab at first?"
Bob was now becoming more noticeably nervous. He couldn't believe it, but he was drawing a blank. American History was his easiest subject, but he played it safe. "I'll try the easier part first."
The M.C. nodded approvingly. "Here we go Bob. I will ask you the second half first, then the first half."
The audience silenced with gross anticipation . . .
"Bob, here is your question: And in what year did it happen??"
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.
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