This Morning…Monday, November 30, 2009:
The United Arab Emirates since has come out saying it will lend money to the Dubai banks involved and that has settled things a little this morning. What UAE has not said however, is whether that central bank will stand with Dubai World, the island making venture that has ruin out of buyers. Estimates of the combined debt being default are ranging from $80B to $120B but no one really has a handle yet. The market is volatile this morning.
Last Week:
Interest rates improved slightly last week. The day prior to Thanksgiving, the results of the 7-year note were very strong, New Home Sales were up over 6% in October, much better than the drop that experts had forecast, and inventories shrank to about a 6.7 month supply at the current sales rate. Weekly jobless claims fell and for the first time in months total weekly claims were below 500K. We also had Consumer Spending pick up a little bit, which may give retailers a little hope for the upcoming buying season.
While here in the US we celebrated Thanksgiving the rest of the world went about business as usual; but it wasn't without a problem. Thursday Dubai announced it would ask for a moratorium on its outstanding debt, unable to pay for those grandiose ventures like an indoor snow ski resort in the middle of the desert and Dubai World. One more debt mess hitting. The reaction sent global equity markets down and a flight to safety in sovereign debt. Though US banks are not too involved in the Dubai crisis, most of Dubai's debt is held in Europe and the problem re-lights concern that debt problems are still out there and could re-surface at anytime.
This Week:
There is a heavy economic calendar this week with the Nov employment data bringing up the rear on Friday. Today we have the Chicago Purchasing Manager’s Survey at 9:45 EST. Tomorrow will be Construction Spending and ISM, Wednesday is the Fed’s Beige Book, Thursday Jobless Claims, and then on Friday is all of the unemployment data.
The Fed "Beige Book" is a summary of economic conditions from each of the 12 Federal Reserve regional districts. The release takes place eight times a year approximately two weeks ahead of each of the Federal Open Market Committee meetings. The report is used at the FOMC meetings, which tends to be one of the most influential events in the market. If the "Beige Book" shows signs of inflationary pressures, the Fed’s ability to keep rates lower may be somewhat restricted. However, if the report shows signs of difficulties, the Fed may keep rates low to stimulate the economy.
EconomicIndicator
Construction Spending
Tuesday, Dec. 1,10:00 am, et
Down 0.4%
Low importance. An indication of economic strength. Significant weakness may lead to lower rates.
ISM Index
Tuesday, Dec. 1,10:00 am, et
54.8
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
ADP Employment
Wednesday, Dec. 2,8:30 am, et
-155,000
Important. A measure of employment. Payroll weakness may bring lower rates.
Fed "Beige Book"
Wednesday, Dec. 2, 2:00 pm, et
None
Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
Revised Q3 Productivity
Thursday, Dec. 3,8:30 am, et
8.5%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Q4 Employment Cost Index
Thursday, Dec. 3,8:30 am, et
Up 0.4%
Very important. A measure of wage inflation. Weakness may lead to lower rates.
Employment
Friday, Dec. 4,8:30 am, et
Jobs -120,000Unemp @ 10.2%
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Factory Orders
Friday, Dec. 4,10:00 am, et
+0.2%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Market Forecast:
The employment report will be the most important release this week. This is one of those weeks where there are many economic releases classified as very important or important. The "Beige Book" release on Wednesday should provide market participants with valuable insight into what the Fed will do and how mortgage interest rates will respond in the short-term.
The potential for market volatility is increased when these types of reports are released. Be cautious heading into this and the other important releases this week.
Some Humor:
John was a salesman's delight when it came to any kind of unusual gimmick. One day he came home with another one of his unusual purchases: a robot that John claimed was actually a lie detector.
It was about 5:30 that afternoon when Tommy, their 11 year old son, returned home from school. Tommy was over 2 hours late.
“Where have you been? Why are you over 2 hours late getting home?” asked John.
“Several of us went to the library to work on an extra credit project,” said Tommy.
The robot then walked around the table and slapped Tommy, knocking him completely out of his chair.
“Son,” said John, “this robot is a lie detector, now tell us where you really were after school.”
“We went to Bobby's house and watched a movie,” said Tommy.
“What did you watch?” asked Marsha.
“The Ten Commandments.” answered Tommy. The robot went around to Tommy and once again slapped him, knocking him off his chair once more.
With his lip quivering, Tommy got up, sat down and said, “I am sorry I lied. We really watched a porno tape.'’
“I am ashamed of you son,” said John. “When I was your age, I never lied to my parents.”
The robot then walked around to John and delivered a whack that nearly knocked him out of his chair.
Marsha doubled over in laughter, almost in tears and said, “Boy, did you ever ask for that one! You can't be too mad with Tommy. After all, he is your son!”
With that the robot immediately walked around to Marsha and knocked her out of her chair.
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Monday, November 30, 2009
11/25/09
Good morning. Anyone have gold to sell? It hit another high on dollar weakness, nearing $1,200 per ounce!!! Today there are many economic numbers to digest. Personal Income and Consumption, Durable Goods, Housing Starts and Building Permits and New Home Sales.
Jobless Claims dropped 35,000 last week, which surprised forecasters. The surprising decline in unemployment claims overshadowed two other 8:30 reports; Oct personal income increased slightly and spending was up 0.7%. Oct durable goods orders fell slightly. Without the claims data the decline in orders would be seen as a negative; however durables is a very volatile series so traders tend to pay it less attention.
Finally today (and the rest of the week) Oct new home sales were forecast to be up 0.8%, but sales jumped 6.2%. There is a 6.7 month supply based on current sales, the lowest level since 12/06. The median sales price at $212,200 is 0.5% lower on a yr/yr basis. The report sent stock indexes higher.
To wrap up the week; at 1:00 7 yr notes will be auctioned. Likely won't be as well bid as the 2 and 5 yr notes but shouldn't be a failure either. The market is closed tomorrow and open until 1:00 on Friday but not many will be in place. Yesterday and Monday the volume at the NYSE was extremely low, today will likely be the same as investors and traders are winding down for the rest of the year. Many funds have already buttoned up for the year to protect the profits earned this year.
After all this mortgages rates are about unchanged.
Once again, I would like to wish all of you a very happy Thanksgiving. I hope you have a wonderful holiday. I’ll be in touch on Monday the 30th.
Jobless Claims dropped 35,000 last week, which surprised forecasters. The surprising decline in unemployment claims overshadowed two other 8:30 reports; Oct personal income increased slightly and spending was up 0.7%. Oct durable goods orders fell slightly. Without the claims data the decline in orders would be seen as a negative; however durables is a very volatile series so traders tend to pay it less attention.
Finally today (and the rest of the week) Oct new home sales were forecast to be up 0.8%, but sales jumped 6.2%. There is a 6.7 month supply based on current sales, the lowest level since 12/06. The median sales price at $212,200 is 0.5% lower on a yr/yr basis. The report sent stock indexes higher.
To wrap up the week; at 1:00 7 yr notes will be auctioned. Likely won't be as well bid as the 2 and 5 yr notes but shouldn't be a failure either. The market is closed tomorrow and open until 1:00 on Friday but not many will be in place. Yesterday and Monday the volume at the NYSE was extremely low, today will likely be the same as investors and traders are winding down for the rest of the year. Many funds have already buttoned up for the year to protect the profits earned this year.
After all this mortgages rates are about unchanged.
Once again, I would like to wish all of you a very happy Thanksgiving. I hope you have a wonderful holiday. I’ll be in touch on Monday the 30th.
11/24/09
Good morning. Yesterday’s 2-yr sale didn’t move the markets much. The overall demand for the 2-yr note was lower than last month’s auction.
The Existing Home Sales number was up over 10% and hitting the highest level in almost three years. We all knew that there would be a “first time home buyer tax credit ending” crunch, but it exceeded what experts had forecast. Inventories of previously owned homes decreased by 3.7% - that represented a 7-month supply at the current sales pace, with median prices down 7.1% a year ago. Regionally, sales in October compared to September rose 11.6% in the Northeast, 14.4% in the Midwest, 12.7% in the South, and 1.6% in the West.
We learned this morning that U.S. economy grew more slowly than initially thought in the third quarter. The second reading of 3rd quarter GDP showed 2.8 percent annual increase rather than the 3.5 percent pace it estimated last month and a touch below the 2.9% expected. Although we have another auction ahead of us, after the GDP news we find mortgage prices slightly better.
The Existing Home Sales number was up over 10% and hitting the highest level in almost three years. We all knew that there would be a “first time home buyer tax credit ending” crunch, but it exceeded what experts had forecast. Inventories of previously owned homes decreased by 3.7% - that represented a 7-month supply at the current sales pace, with median prices down 7.1% a year ago. Regionally, sales in October compared to September rose 11.6% in the Northeast, 14.4% in the Midwest, 12.7% in the South, and 1.6% in the West.
We learned this morning that U.S. economy grew more slowly than initially thought in the third quarter. The second reading of 3rd quarter GDP showed 2.8 percent annual increase rather than the 3.5 percent pace it estimated last month and a touch below the 2.9% expected. Although we have another auction ahead of us, after the GDP news we find mortgage prices slightly better.
Monday, November 23, 2009
Mortgage Marketr Review - 11/23/09
This Morning…Monday, November 23, 2009:
At 10:00 Oct existing home sales were up 10.1% which was much higher than expected. 1st time homebuyers accounted for 33% of the sales. Sales according to the data this morning are up 23.5% from October, 2008. There has been no immediate reaction to the 10:00 report in the mortgage markets, but the DJIA jumped about 20 points from pre report levels.
Last Week:
Mortgage rates lowered slightly last week. Mixed data resulted in up and down trading but within a relatively narrow range. Things were going well the first part of the week with rates improving until Wednesday when the consumer price index and the core came in higher than expected. Inflation, real or perceived, erodes the value of fixed income investments causing prices to fall and rates to rise. We saw some of that mid-week. In FED Chief Bernanke's speech on Monday to the NY Economics Club he reiterated he would keep rates low; essentially admitted he has little insight as to how the economic recovery will unfold and remarked "The best thing we can say about the labor market right now is that it may be getting worse more slowly." In layman speak, he isn't sure the unemployment situation is at its bottom.
This Week:
There is a decent amount of economic data to be released this week. Today is Existing Home Sales (see information above). Tomorrow we have GDP, Consumer Confidence, and the FOMC Minutes from the November 4th Fed meeting. Wednesday, when everyone would rather be somewhere else, we have Durable Goods Orders, Personal Income, Core PCE inflation, New Home Sales, and Consumer Sentiment. Add on the Treasury auctions today through Wednesday, and many traders off for the week, and we have a recipe for volatility.
EconomicIndicator
Existing Home Sales
Monday, Nov. 23,10:00 am, et
Down 0.5%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Preliminary 3Q GDP
Tuesday, Nov. 24,8:30 am, et
Up 3.0%
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Consumer Confidence
Tuesday, Nov. 24,10:00 am, et
47.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Personal Income and Outlays
Wednesday, Nov. 25,8:30 am, et
Up 0.2%,Up 0.5%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Inflation
Wednesday, Nov. 25,8:30 am, et
Up 0.1%
Important. A measure of price increases for all domestic personal consumption. Weakness may help rates improve.
Durable Goods Orders
Wednesday, Nov. 25,8:30 am, et
Up 0.5%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Wednesday, Nov. 25,10:00 am, et
66.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales
Wednesday, Nov. 25,10:00 am, et
Up 2.9%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Market Forecast:
Look for increased volatility this week with thin volume. There are a lot of reports due in a shortened week. Plain and simple.
Some Humor:
Recently I received a parrot as a gift. The parrot had a bad attitude and an even worse vocabulary. Every word out of the bird's mouth was rude, obnoxious and laced with profanity.
I tried and tried to change the bird's attitude by consistently saying only polite words, playing soft music and anything else I could think of to "clean up" the bird's vocabulary.
Finally, I was fed up and I yelled at the parrot.
The parrot yelled back.I shook the parrot and the parrot got angrier and even ruder. So, in desperation, I threw up my hands, grabbed the bird and put him in the freezer.
For a few minutes the parrot squawked and kicked and screamed.
Then suddenly there was total quiet.Not a peep was heard for over a minute.
Fearing that I'd hurt the parrot, I quickly opened the door to the freezer.
The parrot calmly stepped out onto my outstretched arms and said, "I believe I may have offended you with my rude language and actions. I'm sincerely remorseful for my inappropriate transgressions and I fully intend to do everything I can to correct my rude and unforgivable behavior."I was stunned at the change in the bird's attitude.
As I was about to ask the parrot what had made such a dramatic change in his behavior, the bird continued,
"May I ask what the turkey did?"
Once again…I hope you have a wonderful Thanksgiving!
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
At 10:00 Oct existing home sales were up 10.1% which was much higher than expected. 1st time homebuyers accounted for 33% of the sales. Sales according to the data this morning are up 23.5% from October, 2008. There has been no immediate reaction to the 10:00 report in the mortgage markets, but the DJIA jumped about 20 points from pre report levels.
Last Week:
Mortgage rates lowered slightly last week. Mixed data resulted in up and down trading but within a relatively narrow range. Things were going well the first part of the week with rates improving until Wednesday when the consumer price index and the core came in higher than expected. Inflation, real or perceived, erodes the value of fixed income investments causing prices to fall and rates to rise. We saw some of that mid-week. In FED Chief Bernanke's speech on Monday to the NY Economics Club he reiterated he would keep rates low; essentially admitted he has little insight as to how the economic recovery will unfold and remarked "The best thing we can say about the labor market right now is that it may be getting worse more slowly." In layman speak, he isn't sure the unemployment situation is at its bottom.
This Week:
There is a decent amount of economic data to be released this week. Today is Existing Home Sales (see information above). Tomorrow we have GDP, Consumer Confidence, and the FOMC Minutes from the November 4th Fed meeting. Wednesday, when everyone would rather be somewhere else, we have Durable Goods Orders, Personal Income, Core PCE inflation, New Home Sales, and Consumer Sentiment. Add on the Treasury auctions today through Wednesday, and many traders off for the week, and we have a recipe for volatility.
EconomicIndicator
Existing Home Sales
Monday, Nov. 23,10:00 am, et
Down 0.5%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Preliminary 3Q GDP
Tuesday, Nov. 24,8:30 am, et
Up 3.0%
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Consumer Confidence
Tuesday, Nov. 24,10:00 am, et
47.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Personal Income and Outlays
Wednesday, Nov. 25,8:30 am, et
Up 0.2%,Up 0.5%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Inflation
Wednesday, Nov. 25,8:30 am, et
Up 0.1%
Important. A measure of price increases for all domestic personal consumption. Weakness may help rates improve.
Durable Goods Orders
Wednesday, Nov. 25,8:30 am, et
Up 0.5%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Wednesday, Nov. 25,10:00 am, et
66.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales
Wednesday, Nov. 25,10:00 am, et
Up 2.9%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Market Forecast:
Look for increased volatility this week with thin volume. There are a lot of reports due in a shortened week. Plain and simple.
Some Humor:
Recently I received a parrot as a gift. The parrot had a bad attitude and an even worse vocabulary. Every word out of the bird's mouth was rude, obnoxious and laced with profanity.
I tried and tried to change the bird's attitude by consistently saying only polite words, playing soft music and anything else I could think of to "clean up" the bird's vocabulary.
Finally, I was fed up and I yelled at the parrot.
The parrot yelled back.I shook the parrot and the parrot got angrier and even ruder. So, in desperation, I threw up my hands, grabbed the bird and put him in the freezer.
For a few minutes the parrot squawked and kicked and screamed.
Then suddenly there was total quiet.Not a peep was heard for over a minute.
Fearing that I'd hurt the parrot, I quickly opened the door to the freezer.
The parrot calmly stepped out onto my outstretched arms and said, "I believe I may have offended you with my rude language and actions. I'm sincerely remorseful for my inappropriate transgressions and I fully intend to do everything I can to correct my rude and unforgivable behavior."I was stunned at the change in the bird's attitude.
As I was about to ask the parrot what had made such a dramatic change in his behavior, the bird continued,
"May I ask what the turkey did?"
Once again…I hope you have a wonderful Thanksgiving!
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, November 13, 2009
11/13/09
Good morning. This morning we found out that the U.S. trade deficit widened in September by an unexpectedly large 18.2%, the most in more than 10 years. Most of the widening was attributed to oil prices (up for the 7th straight month) and imports from China. Both U.S. exports and imports had their best month since December 2008, with imports growing 5.8% and exports rising 2.9% which points to some economic growth here in the US. Moving on to October, U.S. import prices rose for the third straight month, up .7%. After the news we find mortgage rates slightly better.
I’ll be out of the office from Friday afternoon (11/13) and returning on Monday (11/23). I will be available on my Blackberry for email and cell as much as my wife will allow. The number is 425-268-7003. I am hoping to continue the updates while I’m gone, but am uncertain about the internet capability. Thanks
I’ll be out of the office from Friday afternoon (11/13) and returning on Monday (11/23). I will be available on my Blackberry for email and cell as much as my wife will allow. The number is 425-268-7003. I am hoping to continue the updates while I’m gone, but am uncertain about the internet capability. Thanks
11/12/09
Good morning. I hope you had a nice Veteran’s Day holiday. Fixed-income markets, which were closed yesterday in spite of the equity markets being open. The results of the 10-year note were “solid”. The auction came slightly below average.
Today we will have a $16 billion 30-yr bond auction (currently at a yield of 4.40%). We have already found out that Jobless Claims fell for the second week in a row and the four-week moving average of claims was the lowest in nearly a year. After the news we find our friend the mortgage rates roughly unchanged.
Today we will have a $16 billion 30-yr bond auction (currently at a yield of 4.40%). We have already found out that Jobless Claims fell for the second week in a row and the four-week moving average of claims was the lowest in nearly a year. After the news we find our friend the mortgage rates roughly unchanged.
11/10/09
Yesterday (Monday) we saw the equity markets rally nicely. Helping the interest rate markets was a record $40 billion 3-yr Treasury auction that went well.
There is no data but we do get three Fed officials today; Lockhart (Atlanta Fed President) already this morning saying unemployment will stay high for a long time. Not news but reiterating the rationale that the Fed will keep interest rates low for much of 2010. We caution however, not to take the meaning that mortgage rates or long term treasuries will stay low. The Fed will likely keep the Federal Funds rate low but market factors could drive long term rates up while short rates stay firm.
Let me know if you have any questions.
There is no data but we do get three Fed officials today; Lockhart (Atlanta Fed President) already this morning saying unemployment will stay high for a long time. Not news but reiterating the rationale that the Fed will keep interest rates low for much of 2010. We caution however, not to take the meaning that mortgage rates or long term treasuries will stay low. The Fed will likely keep the Federal Funds rate low but market factors could drive long term rates up while short rates stay firm.
Let me know if you have any questions.
Monday, November 9, 2009
Mortgage Market Review - 11/9/09
Good morning. As you probably know, the tax credit for new home purchases has been extended and enhanced to other than 1st time homebuyers. This is of course, really good news. I have seen nothing that it will be retroactive, so the “go” date is Dec 1. People buying a home for the first time in three years would receive an $8,000 tax credit if they sign a contract by April 30 and close by June 30. Homeowners who are buying a new primary residence would be eligible for a $6,500 tax credit beginning Dec. 1 if they owned their home for five consecutive years in the previous eight. The income caps are $125k for individuals and $225 for couples. Anyone who collects the tax credit but sells the home within three years of buying it must return the refund.
Check out this site for more details: http://money.cnn.com/2009/11/06/real_estate/tax_credit_extended/?postversion=2009110615
This Morning…Monday, November 9, 2009:
The markets have started quietly this morning. At 8:30 mortgage rates are unchanged from Friday and the Dow is + 70. The dollar is getting hit hard again this morning; stocks are rallying, crude oil higher and gold up----all a function of the dollar's decline. All of this has been a good thing for the equities and rate markets. There won’t be much happening today so mortgage rates should take their lead from selling in the stock market.
Last Week:
Mortgage bond prices were near unchanged for the week amid very choppy trading conditions. Stronger than expected factory orders and ISM Index data were generally not bond friendly and attributed to higher rates in the middle of the week. Fortunately on Wednesday, the Fed indicated the continued desire to keep rates low for an extended period. In addition on Friday, higher than expected unemployment (10.2%!!) and more payroll losses than expected helped mortgage bonds rally Friday. For the week and after the dust settled, interest rates finished near unchanged.
This Week:
The record debt auctions Monday, Tuesday, and Thursday will once again take center stage as the Veterans holiday Wednesday splits the trading week in half. Strong foreign demand remains necessary for interest rates to stay relatively low. The dollar decline is the key that attracts foreign demand, as long as the dollar continues its slide traders won't worry too much about the auctions. On Thursday we have Jobless Claims (expected to be unchanged), and on Friday we have some Trade Balance figures along with some import and export price measures, and the preliminary University of Michigan Consumer Sentiment survey. The trade data Friday will be important.
EconomicIndicator
3-year Treasury Note Auction
Monday, Nov. 9,12:00 pm, et
None
Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction
Tuesday, Nov. 10,12:00 pm, et
None
Important. $25 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Veterans Day
Wednesday, Nov. 11
Important. Shortened trading week may lead to mortgage interest rate volatility.
30-year Treasury Bond Auction
Thursday, Nov. 12,12:00 pm, et
None
Important. $16 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Friday, Nov. 13,8:30 am, et
$31.9 billion
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
U of Michigan Consumer Sentiment
Friday, Nov. 13,10:00 am, et
71.8
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
This week we have the Veteran’s Day holiday. Shortened trading weeks have the potential to compress a week’s worth of trading into fewer days and traders often take defensive positions ahead of weekends and holidays to guard against unforeseen events that could possibly jeopardize their investments. This positioning can be beneficial or detrimental to mortgage interest rates. If investors sell stocks and buy mortgage-backed securities, mortgage interest rates will improve. However, if investors sell mortgage-backed securities and hold cash positions, mortgage interest rates will rise. A cautious approach to interest rate exposure is prudent. Overall, we are still not expecting rates to decline much as long as investors continue to believe the economic outlook is positive; to push rates lower will require a major change in sentiment on the economic outlook.
Some Humor:
It was entertainment night at the Senior Center.
Claude the hypnotist exclaimed: "I'm here to put you into a trance; I intend to hypnotize each and every member of the audience."
The excitement was almost electric as Claude withdrew a beautiful antique pocket watch from his coat.
"I want you each to keep your eye on this antique watch - it's a very special watch. It's been in my family for six generations."
He began to swing the watch gently back and forth while quietly chanting, "Watch the watch, watch the watch, watch the watch..."
The crowd became mesmerized as the watch swayed back and forth, light gleaming off its polished surface Hundreds of pairs of eyes followed the swaying watch when suddenly it slipped from the hypnotist's fingers and fell to the floor, breaking into a hundred pieces.
"S---!" yelled the Hypnotist.
It took three days to clean up the Senior Center.
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.
Check out this site for more details: http://money.cnn.com/2009/11/06/real_estate/tax_credit_extended/?postversion=2009110615
This Morning…Monday, November 9, 2009:
The markets have started quietly this morning. At 8:30 mortgage rates are unchanged from Friday and the Dow is + 70. The dollar is getting hit hard again this morning; stocks are rallying, crude oil higher and gold up----all a function of the dollar's decline. All of this has been a good thing for the equities and rate markets. There won’t be much happening today so mortgage rates should take their lead from selling in the stock market.
Last Week:
Mortgage bond prices were near unchanged for the week amid very choppy trading conditions. Stronger than expected factory orders and ISM Index data were generally not bond friendly and attributed to higher rates in the middle of the week. Fortunately on Wednesday, the Fed indicated the continued desire to keep rates low for an extended period. In addition on Friday, higher than expected unemployment (10.2%!!) and more payroll losses than expected helped mortgage bonds rally Friday. For the week and after the dust settled, interest rates finished near unchanged.
This Week:
The record debt auctions Monday, Tuesday, and Thursday will once again take center stage as the Veterans holiday Wednesday splits the trading week in half. Strong foreign demand remains necessary for interest rates to stay relatively low. The dollar decline is the key that attracts foreign demand, as long as the dollar continues its slide traders won't worry too much about the auctions. On Thursday we have Jobless Claims (expected to be unchanged), and on Friday we have some Trade Balance figures along with some import and export price measures, and the preliminary University of Michigan Consumer Sentiment survey. The trade data Friday will be important.
EconomicIndicator
3-year Treasury Note Auction
Monday, Nov. 9,12:00 pm, et
None
Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction
Tuesday, Nov. 10,12:00 pm, et
None
Important. $25 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Veterans Day
Wednesday, Nov. 11
Important. Shortened trading week may lead to mortgage interest rate volatility.
30-year Treasury Bond Auction
Thursday, Nov. 12,12:00 pm, et
None
Important. $16 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Friday, Nov. 13,8:30 am, et
$31.9 billion
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
U of Michigan Consumer Sentiment
Friday, Nov. 13,10:00 am, et
71.8
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
This week we have the Veteran’s Day holiday. Shortened trading weeks have the potential to compress a week’s worth of trading into fewer days and traders often take defensive positions ahead of weekends and holidays to guard against unforeseen events that could possibly jeopardize their investments. This positioning can be beneficial or detrimental to mortgage interest rates. If investors sell stocks and buy mortgage-backed securities, mortgage interest rates will improve. However, if investors sell mortgage-backed securities and hold cash positions, mortgage interest rates will rise. A cautious approach to interest rate exposure is prudent. Overall, we are still not expecting rates to decline much as long as investors continue to believe the economic outlook is positive; to push rates lower will require a major change in sentiment on the economic outlook.
Some Humor:
It was entertainment night at the Senior Center.
Claude the hypnotist exclaimed: "I'm here to put you into a trance; I intend to hypnotize each and every member of the audience."
The excitement was almost electric as Claude withdrew a beautiful antique pocket watch from his coat.
"I want you each to keep your eye on this antique watch - it's a very special watch. It's been in my family for six generations."
He began to swing the watch gently back and forth while quietly chanting, "Watch the watch, watch the watch, watch the watch..."
The crowd became mesmerized as the watch swayed back and forth, light gleaming off its polished surface Hundreds of pairs of eyes followed the swaying watch when suddenly it slipped from the hypnotist's fingers and fell to the floor, breaking into a hundred pieces.
"S---!" yelled the Hypnotist.
It took three days to clean up the Senior Center.
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, November 6, 2009
11/6/09
Good morning. Tomorrow morning the headlines will all read, “Unemployment Rate hits 26 year high at 10.2%”. Nonfarm Payroll was worse than expected and payrolls have declined for 22 consecutive months now – and even many who are back at work are either “under-employed” – working part time, or not making as much as they were. Manufacturing employment fell, construction was down, the service-providing sector cut 61k and goods-producing industries cut 129k. How will we have a recovery with those numbers? As one would expect, stocks fell on the news and bonds have rallied: Mortgage prices are a bit better this morning.
Yesterday the House voted 403-12 to extend and expand the tax credit to include many buyers who already own homes. The Senate approved the measure Wednesday, and the White House said President Barack Obama would sign it today. “Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30. The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.”
http://www.google.com/hostednews/ap/article/ALeqM5hJJraNRE6DjWj2orF7SYJ12PADEAD9BPISHG0
Have a great weekend.
Yesterday the House voted 403-12 to extend and expand the tax credit to include many buyers who already own homes. The Senate approved the measure Wednesday, and the White House said President Barack Obama would sign it today. “Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30. The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.”
http://www.google.com/hostednews/ap/article/ALeqM5hJJraNRE6DjWj2orF7SYJ12PADEAD9BPISHG0
Have a great weekend.
11/5/09
Good morning. The Senate passed the bill extending the home buyers tax credit and adding 14 weeks to unemployment insurance; it goes to the House for quick passage then to Obama for a TV extravaganza signing event.
As was expected, the FOMC kept its central message and the Fed Funds rate unchanged, noting that "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." What are Fed Funds? These are cash balances held by banks with their local Federal Reserve Bank, typically involved in an “inter-bank sale” of a Fed fund deposit for one business day - overnight. And the Fed Funds Rate is the overnight interest rate charged by those banks with excess reserves on hand. Why would this impact the mortgage rate that you pay on your mortgage? They don’t, since the credit profile of a borrower, or house, is more complicated and riskier than a bank with excess funds, and an overnight rate is obviously different than a 30 year rate.
Yesterday, however, in addition to the Fed announcement, Treasury officials announced a record refunding package for next week. Sales include $40 billion in 3-year notes, $25 billion 10-year notes, and a $16 billion 30- year bonds to be held on Monday, Tuesday and Thursday. (Wednesday is a holiday.) For economic news we had Jobless Claims. Claims for jobless insurance hit a 10-month low. Tomorrow, of course, the Labor Department is expected to report that the decline in employment is slowing and that payrolls fell in October, compared to September. Currently mortgage prices are about the same as yesterday. With employment tomorrow look for generally quiet trade today in both stocks and bonds
As was expected, the FOMC kept its central message and the Fed Funds rate unchanged, noting that "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." What are Fed Funds? These are cash balances held by banks with their local Federal Reserve Bank, typically involved in an “inter-bank sale” of a Fed fund deposit for one business day - overnight. And the Fed Funds Rate is the overnight interest rate charged by those banks with excess reserves on hand. Why would this impact the mortgage rate that you pay on your mortgage? They don’t, since the credit profile of a borrower, or house, is more complicated and riskier than a bank with excess funds, and an overnight rate is obviously different than a 30 year rate.
Yesterday, however, in addition to the Fed announcement, Treasury officials announced a record refunding package for next week. Sales include $40 billion in 3-year notes, $25 billion 10-year notes, and a $16 billion 30- year bonds to be held on Monday, Tuesday and Thursday. (Wednesday is a holiday.) For economic news we had Jobless Claims. Claims for jobless insurance hit a 10-month low. Tomorrow, of course, the Labor Department is expected to report that the decline in employment is slowing and that payrolls fell in October, compared to September. Currently mortgage prices are about the same as yesterday. With employment tomorrow look for generally quiet trade today in both stocks and bonds
11/4/09
Good morning. The markets saw some volatility yesterday, with the stock market coming off its lows. Nonetheless, both the DOW and the bond market finished the day down. Factory Orders were up in September, the fifth increase in a row. One area of concern is obviously the Fed’s continued purchase of mortgage securities, thus keeping prices high, rates low. The government is slated to end its purchases of mortgage securities in the first quarter of 2010 and some analysts are predicting that this will add as much as a full percentage point to mortgage rates.
Today could be interesting. Not only will the Treasury announce how much it plans a rise in note and bond sales next week, but we hear the results of the FOMC meeting. Overnight rates are expected to stay the same, but watch the language for the Fed’s future plans. Friday’s employment data is still where most of the focus is. Expectations for Friday’s employment report include a rise in the unemployment rate to 9.9%. With all this in mind, mortgage prices are slightly worse this morning. Let me know if you have any questions.
Today could be interesting. Not only will the Treasury announce how much it plans a rise in note and bond sales next week, but we hear the results of the FOMC meeting. Overnight rates are expected to stay the same, but watch the language for the Fed’s future plans. Friday’s employment data is still where most of the focus is. Expectations for Friday’s employment report include a rise in the unemployment rate to 9.9%. With all this in mind, mortgage prices are slightly worse this morning. Let me know if you have any questions.
11/3/09
Good morning. Yesterday we saw Construction Spending rise .8% in September, the biggest gain in a year, the ISM Factory Index come in well above forecasts, and Pending Sales of existing homes here in the US rise over 6% in September. These “pending sales” are up almost 20% versus a year ago, which many attribute to the tax credit and “really good” prices on the low end. The FOMC meeting begins today, with the announcement tomorrow at 2:15PM EST with no change expected rates, but perhaps they tweak the language. The Fed may try to find a way of talking about what the conditions are under which interest rates would rise rather than simply pretending that there are no conditions under which rates would go up." So far this morning mortgages rates are a smidge better. We are expecting another quiet day for the bond and mortgage markets.
Monday, November 2, 2009
Mortgage Market Review - 11/2/09
Good morning. Although there is widespread support in Congress for extending the life of a home-buyer tax credit scheduled to expire at the end of this month, there is still nothing to report. Hopefully the entire industry doesn’t hinge on the result, but an extension is expected soon as Congress still hasn't finished work on the legislation. As many who have survived because of it know, the credit amount is 10% of a home's purchase price, with a maximum of $8,000 for a single taxpayer and a married couple filing a joint return. Eligible taxpayers will get the credit even if they don't owe any tax, or if the credit is more than the tax they owe for 2008 or 2009. Please let me know if you have any questions about this. Thanks for taking the time to read this over. I hope you find it useful and informative.
This Morning…Monday, November 2, 2009:
Treasuries and mortgages opened a little softer this morning after the strong rally Friday. There were three economic readings this morning. The most significant, Oct manufacturing index was better than expected, Sept construction spending was up more than expected and Sept pending home sales jumped 6.1%, the eighth month in a row pending sales have increased. As a result, treasury and mortgage rates are slightly higher this morning.
Last Week:
It was a good week for the interest rate markets after a number of tough days. Treasury once again successfully sold $123B of notes in four auctions. Consumer confidence measured by The Conference Board declined more than expected, implying consumers may not be as convinced of a recovery as the equity markets. Personal spending in Sept declined, new home sales were expected to be up slightly in Sept but declined 3.6%. Finally the stock market ended the week on what looks like the beginning of the long over-due correction that even the most bullish have been expecting for the past month. The DJIA declined 259 points last week and the rate markets benefited.
This Week:
We have yet another full slate of economic news this week. We begin slowly with "second tier" numbers like Construction Spending and the ISM Index today and Factory Orders tomorrow. Thursday we have the ISM services number, along with the Employment Cost Index and Jobless Claims. The biggest economic event this week will either be the Fed meeting on Wednesday or the unemployment data on Friday. So although overnight rates, which don’t directly impact mortgage rates, should stay put, the Fed may indicate future changes in monetary policy. Nonfarm Payroll is expected to drop 165K jobs for October. ISM Services will be released on Wednesday. Productivity, Construction Spending, and Factory Orders will round out the busy schedule. The Treasury will announce the size of upcoming auctions on Wednesday as well. Stay tuned.
EconomicIndicator
ISM Index
Monday, Nov. 2,10:00 am, et
53.0
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Factory Orders
Tuesday, Nov. 3,10:00 am, et
Up 1.0%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
ADP Employment
Wednesday, Nov. 4,8:30 am, et
Down 190k
Important. An indication of unemployment. A larger decrease in payrolls may bring lower rates.
Fed Meeting Adjourns
Wednesday, Nov. 4,2:15 pm, et
No rate change
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Preliminary Q3 Productivity
Thursday, Nov. 5,8:30 am, et
Up 5.8%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Employment
Friday, Nov. 6,8:30 am, et
Unemp. @ 9.9%,Payrolls -166k
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Market Forecast:
The likeliness of mortgage interest rate volatility this week is very high considering the abundance of important economic releases. The Fed meeting on Wednesday will be the most important event this week. Productivity and employment figures are likely to move the market.
Each piece of data this week has the ability to cause volatility in the financial markets. It is possible for interest rates to improve if the data shows weakness in the economy with few price pressures. However, any surprises will likely be bad for mortgage interest rates. The important thing to remember is that even the Treasury officials trying to shore the economy do not know exactly what the future holds. With this in mind, be cautious during these times of economic uncertainty and be ready in the event interest rates start to spike higher.
Some Humor:
A small zoo in Arkansas obtained a very rare species of gorilla. Within a few weeks the gorilla, a female, became very difficult to handle. Upon examination, the veterinarian determined the problem. The gorilla was in heat. To make matters worse, there was no male gorilla available. Thinking about their problem, the Zoo Keeper thought of Billy Bob Burnett, a redneck part-time worker responsible for cleaning the turtle cages. Billy Bob, had little sense but possessed ample ability to satisfy a female of any species. The Zoo Keeper thought they might have a solution. Billy Bob was approached with a proposition. Would he be willing to mate with the gorilla for $500?
Billy Bob showed some interest, but said he would have to think the matter over carefully. The following day, he announced that he would accept their offer, but only under five conditions: "First", Billy Bob said, "I ain't gonna kiss her on the lips." The keeper quickly agreed to this condition.
"Second", he said, "She must wear a 'Dale Earnhardt Forever' T-Shirt." The keeper again readily agreed to this condition.
"Third", he said, "you can't never tell no one about this." The keeper again readily agreed to this condition.
"Fourth", Billy Bob said, "I want all the children raised Southern Baptist." Once again it was agreed.
"And last," Billy Bob said, "I'll need another week to come up with the $500.00."
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
This Morning…Monday, November 2, 2009:
Treasuries and mortgages opened a little softer this morning after the strong rally Friday. There were three economic readings this morning. The most significant, Oct manufacturing index was better than expected, Sept construction spending was up more than expected and Sept pending home sales jumped 6.1%, the eighth month in a row pending sales have increased. As a result, treasury and mortgage rates are slightly higher this morning.
Last Week:
It was a good week for the interest rate markets after a number of tough days. Treasury once again successfully sold $123B of notes in four auctions. Consumer confidence measured by The Conference Board declined more than expected, implying consumers may not be as convinced of a recovery as the equity markets. Personal spending in Sept declined, new home sales were expected to be up slightly in Sept but declined 3.6%. Finally the stock market ended the week on what looks like the beginning of the long over-due correction that even the most bullish have been expecting for the past month. The DJIA declined 259 points last week and the rate markets benefited.
This Week:
We have yet another full slate of economic news this week. We begin slowly with "second tier" numbers like Construction Spending and the ISM Index today and Factory Orders tomorrow. Thursday we have the ISM services number, along with the Employment Cost Index and Jobless Claims. The biggest economic event this week will either be the Fed meeting on Wednesday or the unemployment data on Friday. So although overnight rates, which don’t directly impact mortgage rates, should stay put, the Fed may indicate future changes in monetary policy. Nonfarm Payroll is expected to drop 165K jobs for October. ISM Services will be released on Wednesday. Productivity, Construction Spending, and Factory Orders will round out the busy schedule. The Treasury will announce the size of upcoming auctions on Wednesday as well. Stay tuned.
EconomicIndicator
ISM Index
Monday, Nov. 2,10:00 am, et
53.0
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Factory Orders
Tuesday, Nov. 3,10:00 am, et
Up 1.0%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
ADP Employment
Wednesday, Nov. 4,8:30 am, et
Down 190k
Important. An indication of unemployment. A larger decrease in payrolls may bring lower rates.
Fed Meeting Adjourns
Wednesday, Nov. 4,2:15 pm, et
No rate change
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Preliminary Q3 Productivity
Thursday, Nov. 5,8:30 am, et
Up 5.8%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Employment
Friday, Nov. 6,8:30 am, et
Unemp. @ 9.9%,Payrolls -166k
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Market Forecast:
The likeliness of mortgage interest rate volatility this week is very high considering the abundance of important economic releases. The Fed meeting on Wednesday will be the most important event this week. Productivity and employment figures are likely to move the market.
Each piece of data this week has the ability to cause volatility in the financial markets. It is possible for interest rates to improve if the data shows weakness in the economy with few price pressures. However, any surprises will likely be bad for mortgage interest rates. The important thing to remember is that even the Treasury officials trying to shore the economy do not know exactly what the future holds. With this in mind, be cautious during these times of economic uncertainty and be ready in the event interest rates start to spike higher.
Some Humor:
A small zoo in Arkansas obtained a very rare species of gorilla. Within a few weeks the gorilla, a female, became very difficult to handle. Upon examination, the veterinarian determined the problem. The gorilla was in heat. To make matters worse, there was no male gorilla available. Thinking about their problem, the Zoo Keeper thought of Billy Bob Burnett, a redneck part-time worker responsible for cleaning the turtle cages. Billy Bob, had little sense but possessed ample ability to satisfy a female of any species. The Zoo Keeper thought they might have a solution. Billy Bob was approached with a proposition. Would he be willing to mate with the gorilla for $500?
Billy Bob showed some interest, but said he would have to think the matter over carefully. The following day, he announced that he would accept their offer, but only under five conditions: "First", Billy Bob said, "I ain't gonna kiss her on the lips." The keeper quickly agreed to this condition.
"Second", he said, "She must wear a 'Dale Earnhardt Forever' T-Shirt." The keeper again readily agreed to this condition.
"Third", he said, "you can't never tell no one about this." The keeper again readily agreed to this condition.
"Fourth", Billy Bob said, "I want all the children raised Southern Baptist." Once again it was agreed.
"And last," Billy Bob said, "I'll need another week to come up with the $500.00."
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
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