7/2/10

Most rates prices are unchanged with yesterday as mortgage bonds hold onto Thursday’s levels after some earlier volatility. Bonds were improved after the initial jobs report was released, then turned negative, but have since recovered to near unchanged. Expect some more choppiness as the holiday weekend close approaches and Wall Street heads for the Hamptons. The jobs data was weak not just in the pure employment number but also in the reduction of the labor force as many simply give up—a troubling sign and asterisk to the “false” lower unemployment rate (1.2 million workers have given up and don’t count as “unemployed”). The bond market is trading at “crisis” levels and seems like it wants to sell off despite the poor data. And though we have fears of a double dip and sovereign debt issues, we’re not in the day Lehman failed mode. A sell off could happen at any time. No fireworks today folks as the big jobs report yields a level day so far for interest rates. So far… Have a safe and happy Fourth

6/30/10

Most rate prices worsened today as mortgage bonds lose some ground. The house voted to extend the deadline of the homebuyer tax credit to September and the Senate will vote on it today. The house is also voting on financial regulation today as last minute jockeying takes place as upcoming elections are in sight. Across the pond, the ECB lending facility was tapped less than expected by the European banks, suggesting more strength in that sector than many analysts thought ahead of the upcoming stress tests. Stocks are attempting to pare some of the massive sell off from Tuesday despite less than expected ADP private payroll figures.

6/29/10

Rates are the same as yesterdays close this morning, but even with low rates, mortgage traders reported low volumes. Personal Income was up slightly and Personal Consumption (spending) rose .2% – perhaps the consumer is becoming more confident…? The Chicago Fed Survey fell slightly. But critics say that the billions of dollars of stimulus have only moved the problems with our economy from the private to the public sector.
Here this morning interest rates are taking a bit of a breather. The stock markets are pointing to a big down day,

Mortgage Market Review - 6/28/10

This Morning…Monday, June 28, 2010:
This morning one can expect May personal income to rise 0.4% and for personal spending to be up 0.2%; the core PCE deflator is projected to come in at 0.1%. And so for economic news - today we have the Chicago Fed numbers, along with Personal Consumption and Income. It’s a busy week, so stayed tuned.

Last Week:
Last week was a pretty a good one for the rate markets, somewhat driven by the FOMC policy statement after the meeting on Wednesday and huge declines in home sales in May. Volatility in both the stock and bond markets remained high with broad swings occurring on a daily basis. Mortgage rates moved lower following the release of the weak housing data and the improvements seen earlier in the week were reversed following a weak 5-year Treasury auction on Wednesday. The volatility is expected to continue until the future of the economy becomes clear

This Week:
The data calendar is full this week with the main highlight being the June employment report on Friday. Tomorrow we have the S&P/Case-Shiller Home Price Indexes, and the Conference Board's Consumer Confidence stats. Wednesday some ISM numbers, Thursday Jobless Claims, ISM Manufacturing, and Pending Home Sales, but the biggest economic event next week will be the important Employment report on Friday. Early estimates are for a decrease of about 70K jobs in June.

EconomicIndicator
Personal Income and Outlays
Monday, June 28,8:30 am, et
Income up 0.5%Outlays up 0.1%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
Consumer Confidence
Tuesday, June 29,10:00 am, et
62.
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
ADP Employment
Wednesday, June 30,8:30 am, et
+56K
Important. An indication of the employment. Weakness in payrolls may bring lower rates.
ISM Index
Thursday, July 1,10:00 am, et
58.8
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Employment
Friday, July 2,8:30 am, et
Jobs -70KUnemp @ 9.7%
Very important. An increase in unemployment or weakness in payrolls may bring lower rates.
Factory Orders
Friday, July 2,10:00 am, et
-0.6%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.

Market Forecast:
Overall, Tuesday and Thursday’s data should bring some volatility in trading and mortgage rates, but Friday’s Employment report is definitely the most important of the week. Its impact can single-handedly lead to an improvement or increase in mortgage rates for the week. Next Monday is when the Independence Day holiday will be recognized. There is no early close for the bond market Friday ahead of it, but it will probably be a light afternoon in trading as traders head home for the long weekend. This could lead to additional volatility during morning trading, particularly with the Employment report being posted.

Some Humor:
A cruise ship suddenly hits rough waters and a huge storm. Lightening comes out of the sky and strikes the ship in half! There is only one survivor, a man, who wakes up on the shore of an island with its only other residents being a dog and a pig.

Months and months go by and after numerous days of watching the seas for help and the occasional smoke signals, no rescue. One day as the man is lying on the beach in the hot sun and starting to go a little nuts. He looks over at the pig and with the help of a little hallucinating the pig appears to be a beautiful woman. He crawls over towards the pig and as soon as he touches the pig the dog bites onto his ankle growling madly. He lets the pig go and the dog releases him. The man comes to his senses and thinks, “Holy Cow! What am I doing?” But over the next few months this happens a few more times: pig transforms into a beautiful woman, man grabs pig, dog snaps onto his ankle growling, man let's go of pig, dog releases the man and the man awakes from his daze.

One day he spots a cruise ship in the distance. He can't believe what he is seeing and is sure that it's another mirage. He starts a fire, sends smoke signals, and jumps up and down screaming! The boat sounds its horns and turns towards the island. Tragically, the ship hits a rock and sinks. He is devastated, but soon the man sees something floating out in the ocean. He swims out, and amazingly it's a beautiful woman. He brings her to shore, applies CPR and resuscitates her back to life. She sits up, stares into his eyes and tells him that after he has saved her life she will do anything for him. He replies "anything?" and she nods yes.

He jumps up an immediately says, "Do you see that dog over there? Can you please take him for a walk"?

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.

6/25/10

Thursday traders felt that everyone was selling: originators, investors, money managers, etc., especially after a strong, but sloppy, 7-yr auction and mortgage rates did a little worse for the second day in a row. Today we have old GDP news on 1st quarter revisions, expected to be unchanged, and the final June Michigan Sentiment reading, also seen unchanged from mid-month. The press is certainly talking about a “double dip” in the economy, in spite of double-dips in output being extremely rare in modern economic history (only three double-dips in the last 160 years of US business cycles). So far this morning we find mortgage prices slightly worse.

6/24/10

Yesterday the New Home Sales number surprised everyone, plunging almost 33% in May to the lowest level since 1963. Of course, it followed two strong months where buyers rushed into the market due to the tax credit. Regionally, new-home sales plunged 23.9% in the Midwest, 53.2% in the West, 25.4% in the South, and 33.3% in the Northeast. Tuesday's two-year note sale was stellar, but the 5-yr sale did not go well (this took away some of yesterdays gains). The 7-yr notes will be sold today.
Today we’ve had the standard weekly Initial Jobless Claims number. Initial Jobless Claims dropped to 457,000. Six states’ unemployment had increases, and seven had no change. Nevada beat out Michigan for the first time in 4 years, and now has the highest jobless rate in the country (14%). We also found out the May Durable Goods number came in as expected. For now, mortgage rates are slightly improved from yesterdays close.

6/23/10

Another round of bad housing data was released this morning in the form of record low new home sales which has stabilized rates after yesterdays improvement. It seems the persistence of the data surprises and negative housing stats is painting a troubling picture of household wealth, deflation and confidence. We have the Fed decision on tap due at 11:15 today. But first we have a 5-year auction around 10am. We could see some choppiness around these events so stay tuned.

6/22/10

There is really not much going on in the market today. Stocks were close to flat yesterday after rallying early in the day on some news from China, but overall, it was pretty quiet. This morning we will have some news on Existing Home Sales, FHFA Home Purchase Index, and the Richmond Fed Index, and then a 2-yr auction. Ahead of that we find mortgage rates about the same as yesterday morning.

Mortgage Market Review - 6/21/10

This Morning…Monday, June 21, 2010:
Monday’s bond market has opened in negative territory following early stock strength. The stock markets opened the week with strong gains after news from China about their currency that was taken as extremely favorable for the international markets. The U.S. stock markets are following overseas strength with the Dow up 101 points and the Nasdaq up 14 points. These gains in stocks have pushed the bond market down and interest rates are slightly worsened this morning

Last Week:
Mortgage bond prices rose last week pushing mortgage interest rates slightly lower. Uncertainty in the Euro zone resulted in some flight to quality buying of US debt instruments. There were concerns that Spain could be the next economy to falter following the Greek instability. Most of the data showed a US economy that continues to struggle with little current price pressures. Weekly jobless claims were higher than expected and the consumer price data came in exactly as expected. Over the week, rates fell by about 1/8%.

This Week:
In terms of economic news, there is nothing today. Tomorrow we have Existing Home Sales, FHFA Home Purchase Index, and the Richmond Fed Index. Wednesday is New Home Sales, but later on we'll have the end of the Federal Reserve's FOMC meeting. (No matter how much the press wants to talk about the meeting, there will be no change to overnight rates, and little, if any, change to the actual announcement.) Thursday we have Initial Jobless Claims and Durable Goods. Friday is GDP, and the University of Michigan Consumer Sentiment Survey. And in order to finance activities of the US government, the Treasury will auction 2, 5 and 7-year notes beginning tomorrow. It’s a busy week.

EconomicIndicator
Existing Home Sales
Tuesday, June 22,10:00 am, et
Up 4.3%
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
New Home Sales
Wednesday, June 23, 10:00 am, et
Down 4.8%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Fed Meeting Adjourns
Wednesday, June 23, 2:15 pm, et
No change
Important. No rate changes are expected but some volatility may surround the adjournment of this meeting.
Durable Goods Orders
Thursday, June 24, 8:30 am, et
Down 1.4%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
Weekly Jobless Claims
Thursday, June 24,8:30 am, et
460k
Important. An indication of US employment situation. A higher figure should help rates.
Preliminary Q1 GDP
Friday, June 25,8:30 am, et
3.0
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Friday, June 25,10:00 am, et
75.2
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Market Forecast:
Overall, it appears today may not be the quietest day of the week after all. We will likely see more volatility this week, particularly Wednesday afternoon when the first relevant Treasury auction is finished and the FOMC meeting adjourns. The same goes for Thursday with the week’s most important data being released during morning hours and the 7-year Note auction results are posted early afternoon. So, while today is an active day for rates, it probably will not be the only one this week. Proceeding with caution would be a wise move if still floating an interest rate.

Some Humor:
Two 90-year-old women, Vivian and Edith, had been friends all of their lives. When it was clear that Edith was dying, Vivian visited her every day. One day Vivian said, “Edith, we both loved playing women's softball all our lives, and we played it all through high school. Please do me one favor: when you get to Heaven, somehow you must let me know if there's women's softball there.”
Edith looked up at Vivian from her death bed, “Vivian, you've been my best friend for many years. If it's at all possible, I'll do this favor for you.”
Shortly after that, Edith passed on.At midnight a couple of nights later, Vivian was awakened from a sound sleep by a blinding flash of white light and a voice calling out to her, “Vivian, Vivian.”
“Who is it?” asked Vivian, sitting up suddenly.“
Who is it? Vivian -- it's me, Edith.”“You're not Edith. Edith died.”
“I'm telling you, Vivian, it's me,” insisted the voice.“
Edith! Where are you?
“In Heaven,” replied Edith. “
I have some really good news and a little bad news.“
Tell me the good news first,” said Vivian.“
The good news,” Edith said, “is that there's softball in Heaven. Better yet, all of our old buddies who died before us are here, too. Better than that, we're all young again. Better still, it's always springtime, and it never rains or snows. And best of all, we can play softball all we want, and we never get tired.”
“That's fantastic,” said Vivian. “It's beyond my wildest dreams! So what's the bad news?'
“You're pitching Tuesday.”

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.

6/18/10

Most rate prices are level with Thursday as mortgage bonds trade in a choppy session as rumors of China re-valuing their currency pressure Treasuries but have pared losses after rumors were quelled. Hedge funds and Asia are in buying while servicers and us originators are selling has picked up a bit adding some pressure to MBS levels. No economic news was released today so we’ll leave this Friday to the ebb and flow of stocks and trader sentiment. Potential positive bank stress testing and some Spanish confidence are taking some pressure off of the Europe thing. The Dow is up nearly 25-points at the moment.

6/17/10

This morning’s Consumer Price Index came out as expected, at -.2%. Initial Claims were up 12,000 from the revised number from the previous week, and continuing claims also rose. Inflation is not an issue. We still have Leading Economic Indicators and the Philly Fed numbers (expected up .5% and slipping slightly, respectively) possibly moving rates a little. We also have next week’s 2-yr, 5-yr, and 7-yr auction amounts announcement. After this news, mortgage rates are unchanged.

6/16/10

Today we have already had the Producer Price Index which was down.3%. May Building Permits were down 5.9%, and Housing Starts were -10%. Some would say, “Why build new houses when there are so many old ones on the market?” Housing continues to be a weak point in the economy, in addition to the employment picture, despite a huge amount of help from the government. Housing Starts were expected to be down quite a bit (but a 19-year low?), and may signal a trend which some believe will last several months. Mortgage applications for purchases are now down 49 percent from their April peak and the rate of delinquencies and foreclosures continue to rise. Consequently, housing starts should pull back in the second and third quarters, but begin to pick up some momentum later in the year. After all this news, and even with stocks pointing down, mortgage prices are slightly worse this morning.

6/15/10

This morning mortgage bonds grind higher and tighter with Treasuries. Initially negative off of stronger stocks and euro, Treasuries have since turned positive despite a Dow up over 100-points. Economic releases today indicated lower inflation, improved manufacturing, strong demand for US assets and weak builder confidence post tax credit. More trouble from Europe as an EU report cites growing concern over Spain and Portugal, a plunge in German investor confidence and another downgrade of Greek debt. Nevertheless, both stock and bond markets are in the green but Bonds appear to be under some pressure as this goes out.

Mortgage Market Review - 6/14/10

This Morning…Monday, June 14, 2010:
There is no relevant economic data being posted today or tomorrow, so look for any further changes in mortgage rates to come as a result of changes in the stock markets. The mortgage market started weaker this morning with the stock market opening stronger after reversing late on Friday. Industrial production data from Europe this morning was better than expected boosting Europe's stock markets. At 9:30 the DJIA opened +75 and interest rates are slightly worsened.

Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. Trading was positive for the week through Wednesday’s close. The data generally was benign causing no large mortgage bond market swings. Unfortunately a strong 273-point jump in the DOW Thursday resulted in mortgage rates worsening that afternoon. Fortunately bond prices recovered some Friday, as the stocks were unable to hold those gains. The mortgage market whipped around all week and ended about unchanged on the week.

This Week:
For economic news, there is none scheduled for today. Tomorrow we'll see some import & export price information, along with some manufacturing numbers out of New York. Wednesday will contain the Producer Price Index, Housing Starts, and Industrial Production and Capacity Utilization. Thursday is the big day with Initial Claims, the Consumer Price Index, Leading Economic Indicators, and the Philly Fed survey. Some say that the inflation reports are important, others say that inflation is not a concern, and are more interested in the industrial production and jobless claims numbers. Either way, stay tuned!

EconomicIndicator
Housing Starts
Wednesday, June 16,8:30 am, et
Down 2.5%
Important. A measure of housing sector strength. Larger than expected decreases may lead to lower rates.
Producer Price Index
Wednesday, June 16,8:30 am, et
Down 0.4%,Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.
Industrial Production
Wednesday, June 16,9:15 am, et
Up 0.7%
Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization
Wednesday, June 16,9:15 am, et
74.2%
Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower rates.
Weekly Jobless Claims
Thursday, June 17,8:30 am, et
450K
Important. An indication of US employment situation. A higher figure should help rates.
Consumer Price Index
Thursday, June 17,8:30 am, et
Down 0.1%Core up 0.1%
Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates.
Leading Economic Indicators
Thursday, June 17,10:00 am, et
Up 0.4%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey
Thursday, June 17,10:00 am, et
17.0
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.

Market Forecast:
This week is fairly busy with five economic reports scheduled to be released. The producer and consumer price index data will be the most important releases this week, so two of the five are considered to be of high importance to the markets and mortgage rates. The remaining three are of interest to the markets but likely will not cause a large change in mortgage rates unless they vary greatly from forecasts. None of the relevant data is being posted tomorrow or Tuesday, so look for the stock markets to influence bond trading and mortgage rates again. Expect global economies to continue to factor into trading.
Overall, look for Wednesday to be the biggest day of the week, because it brings us the PPI that is considered to be a key inflation reading. Thursday is also very important with the CPI being posted, so look for the most movement in rates during the middle part of the week. If inflation remains tame mortgage interest rates may improve.

Some Humor:
A man staggered into a hospital with a concussion, multiple bruises, two black eyes, and a five iron wrapped tightly around his throat.
Naturally the doctor asked him, "What happened to you?"
"Well, I was having a quiet round of golf with my wife, when, at a difficult hole, we both sliced our balls into a cow pasture. We went to look for them and while I was looking around I noticed one of the cows had something white at its rear end. I walked over, lifted its tail, and sure enough, there was a golf ball with my wife's monogram on it - stuck right in the middle of the cow's rump."
“Ah,” said the doctor, “then what?”
“Still holding the cow's tail up, I yelled to my wife, 'Hey, this looks like yours!'"
"I don't remember much after that ..."

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.

6/11/10

Most rate prices improved just slightly today from yesterday’s selloff as mortgage bonds pare some losses alongside Treasuries after disappointing retail sales figures were released this morning. Bonds retreated a bit after stronger consumer sentiment data hit the wires, but have since regained momentum. Stocks too have pared earlier losses as the Dow is down about 30-points after yesterday’s rally. It’s all about risk on / risk off as the markets display their bi-polar tendencies in this environment of high volatility and day trading plays. Well it’s Friday and sunshine is forecast for the next several days—a much deserved break for us! Have a great weekend and go USA tomorrow at the World Cup! (one does have to feel sorry for England with all that debt and now the BP oil spill…).

6/10/10

Most rate prices worsened today as mortgage bonds follow treasuries into negative territory, pressured by improved global economic sentiment (China, Japan, Australia), better than expected job data and pre-auction set up. Today’s downward trend smells more like consolidation than signaling a breakout to the downside—trade has been light and is exacerbating volatility today as money managers and hedge funds command the selling so far. The stock market is responding positively to developments across the pond as both Portugal and Spain pull off successful bond offerings and ECB president Trichet pledges to continue to offer unlimited cash to struggling institutions and buy government bonds. He also defended the Euro as a valid currency and the market is responding accordingly. This is all well and good but the whisper over the shoulder is “double dip”. This is the real fear because it is widely accepted we’ve used all our bullets to combat recession and if we get another move down, we really don’t have any tools to counter it. This might explain the market’s grasping onto any bits of positive news it can.

6/9/10

Yesterday the U.S. Treasury sold 3-yr notes to solid demand which is always good news. The problems in Europe are still there, will be there for a long time, but aren’t quite grabbing the headlines they were a few weeks ago. But as they discussed how to reduce swollen budget deficits, Spanish public service workers staged a one-day strike which underlined the problems governments face implementing austerity measures such as spending cuts that will bring down wages..” Today we have some trade figures that come out later this morning, but still, it is another slow news day, and a slow news week. The nominal U.S. trade deficit for goods and services widened slightly in March with both imports and exports increasing. The fact that both increased would suggest continued, arguable recovery. But given the poor employment situation, growth in retail sales are not expected to be robust for some time and now with the fears of financial trouble brewing everywhere in the world, the consumer will be even more reluctant to spend in the months ahead. This morning. we find mortgage prices slightly worse than yesterdays close

6/8/10

Most rate prices improved slightly today as mortgage bonds continue to grind higher and tighter to Treasuries as the Dow falls below 9800. Growing concern of a double dip recession (in addition to all the other challenges we keep talking about!) is benefitting bonds as the flight to quality and low supply continue to provide some low rates. Economic releases today were limited to a couple of optimism reports, one showing improved small business outlook; the other indicating pessimism from the public (what a shocker!) On tap today is the first round of auctions this week with an offering of 3 year notes.

Mortgage Market Review - 6/7/10

Good morning. There were some interesting statements late last week regarding the longer term view about interest rates that I thought I’d mention. Atlanta Fed's Lockhart said that the Fed might need to raise rates to counter inflation even with high unemployment. "Good policy, even in circumstances of unacceptable levels of unemployment, may incorporate higher interest rates. The time is approaching when it will be appropriate to consider recalibrating interest rate policy." He added, "as the economy continues to improve and financial markets find firmer ground, extraordinarily low policy rates will not be needed to promote recovery and will become inconsistent with maintaining price stability." Lockhart noted inflation remained under control for now. If you are on the fence regarding a refinance or a possible home purchase, now is a great time to take advantage of mortgage interest rates at these historically low levels to avoid future market volatility, especially with the recent decline in rates and remarks like Lockhart’s hitting the market. Give me a call and I’d be happy to run some scenarios for you to see if it would be worthwhile.
Thanks for taking the time to read this over. Have a great week.

Fred

This Morning…Monday, June 7, 2010
Most rate prices held steady today as mortgage bonds hold onto Friday’s gains. The Euro is at fresh 4 year lows as speculative talk of parity with the dollar gains momentum. Stocks attempted to pare some of last week’s losses after positive economic news out of Germany, an about face from Hungary over it’s state of affairs and an overall more sober Monday mindset compared to Friday’s frenzy seem to calm the markets a bit. However the options market indicates a record low level of confidence in the market and it appears to be showing up today as stocks have reversed course this morning and are once again heading lower and bonds are benefiting. Little in economic news was released today but we have a round of Treasury auctions beginning tomorrow.

Last Week:
Mortgage bond prices rose last week pushing mortgage interest rates lower. We were negative through Thursday as stocks performed generally well until Friday’s data was released. Fortunately bond prices surged higher Friday morning following the weaker than expected payrolls component of the employment report. In addition, news of a troubled Hungarian economy reignited global fears and resulted in flight to quality buying of US debt instruments. Stocks fell precipitously Friday and interest rates improved.

This Week:
This week we start off with no scheduled news today or tomorrow, but on Wednesday have the Fed's Beige Book which detail current economic conditions across the country. The Retail Sales report will be released on Friday. There will, however, be Treasury auctions tomorrow, Wednesday, and Thursday.

EconomicIndicator
Consumer Credit
Monday, June 7,3:00 pm, et
Down $4.3 billion
Low importance. A significantly larger than expected increase may lead to lower mortgage interest rates.
3-year Treasury Note Auction
Tuesday, June 8,1:15 pm, et
None
Important. $36 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction
Wednesday, June 9, 1:30 pm, et
None
Important. $21 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Fed "Beige Book"
Wednesday, June 9, 2:00 pm, et
None
Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
Trade Data
Thursday, June 10,8:30 am, et
$42 billion deficit
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
30-year Treasury Bond Auction
Thursday, June 10,1:15 pm, et
None
Important. $13 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Retail Sales
Friday, June 11,8:30 am, et
Up 0.5%
Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
U of Michigan Consumer Sentiment
Friday, June 11,10:00 am, et
74.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Business Inventories
Friday, June 11,10:00 am, et
Up 0.4%
Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates.

Market Forecast:
This week brings us the release of only four pieces of data for the markets to digest. The first part of the week will likely be driven by stock market gains or losses. Overall, it likely is going to be a fairly busy week for the financial markets, but the most action will probably come in the latter days. I think that Friday will be the single most important day of the week, but as we have seen over the past couple of weeks, we don’t need significant news from economic reports for the markets to move heavily and mortgage rates to change.

Some Humor:
Two women were sitting next to each other at a bar. After a while one looks at the other and says, “I can't help but think, from listening to you, that you're from Ireland.”
The other woman responds proudly, “Yes, I sure am!”
The first one says, “So am I! And where about in Ireland are ya from?”
The other woman answers, “I'm from St. John's, I am.”
The first one responds, “So, am I!! And what street did you live on?”
The other woman says, “A lovely little area, it was in the west end. I lived on Warbury Street in the old central part of town.”
The first one says, “Faith and it's a small world. So did I! So did I! And what school did ya go to?”
The other woman answers, “Well now, I went to Holy Heart of Mary, of course.”
The first one gets really excited and says, “And so did I. Tell me, what year did you graduate?”
The other woman answers, “Well, now, let's see. I graduated in 1979.”
The first woman exclaims, “The Good Lord must be smiling down upon us! I can hardly believe our good luck at winding up in the same pub tonight. Can you believe it; I graduated from Holy Heart of Mary in 1979 me self.”
About this time, Michael walks into the bar, sits down and orders a beer.Brian, the bartender, walks over to Michael, shaking his head and mutters, “It's going to be a long night tonight.”
Michael asks, “Why do you say that, Brian?”
Brian answers, “The Murphy twins are drunk again.”

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.

6/4/10

Non-Farm Payrolls were up 431,000, but the private sector was up only 41,000. In fact, the census workers accounted for 411,000. Although there were March and April revisions, this is a weak number, and stock market numbers plunged on the news. The unemployment rate fell to 9.7% from 9.9% which is certain to be the data that makes the headlines.

Yesterday not only did interest rates go up, but the stock market fell as well. What a difference a day makes, as today we are seeing stocks tumble after a weak jobs number, but fixed-income prices improve nicely. You can read all the flowery language you want, but it boils down to a poor job market continuing to show that our economy is sluggish, leading to a lower stock market and continued lower rates.

6/3/10

This morning we had the private ADP jobs number, with usually a dubious correlation between this number and the unemployment data which will come out tomorrow. ADP’s report, for example, does not include census hiring (since it is government related), but still showed a gain of 55,000 for its 4th consecutive increase. Tomorrow’s nonfarm number is expected to be up over 500,000, a strong number for the economy. That isn’t to say that rates won’t move higher even if the number comes in as expected – they already are! We also had Initial Jobless Claims out this morning, down 10,000, with the 4-week moving average creeping higher. Also, 1st Quarter Productivity came out at 2.8% with Labor Costs -1.3%, with little change in rates, and still ahead of us Factory Orders (expected +1.8%), the ISM Nonmanufacturing index (expect unchanged), and the auction amounts for next week’s Treasury sale (expect about $80 billion). With all of this we find mortgage prices worse this morning.

6/2/10

Yesterday was yet another volatile day in the markets, with both stocks and bonds chopping around a little. Yesterday we had April’s Pending Home Sales, which are still in positive territory due to the tax credit (buyers have until the end of June to close the sale!). Construction spending was up (its fastest pace in 10 years, and investment in private construction rising for the first time since October), and the ISM index was down less than expected. Lots of eyes are on Friday’s unemployment data, with estimates running between a gain in jobs of 500-600k, and the unemployment rate hovering in the high 9% area. Much of that gain in workers is due to census workers, but May will be the last month in which the Census adds to employment, as temps are released over the coming months. Ahead of a Pending Home Sales number, we find mortgage rates slightly better this morning.

Mortgage Market Review - 6/1/10

This Morning…Monday, June 1, 2010:
Most rates improved a bit today as mortgage bonds attempt to continue making modest gains after Thursday’s losses. Both mortgages and Treasuries benefitted from early stock market weakness, although stocks have since made a recovery with the Dow now in positive territory, up over 40-points at the moment. As stocks improved bonds retreated, but have since regained some of the day’s gains with mortgages tightening in to Treasuries. Today’s economic releases showed manufacturing falling less than expected and construction spending up more than expected--not bond friendly data and the price action is not looking good as stocks appear to have some wind under their wings. This week brings the start of the month and a short trading week with the biggie jobs report on Friday. Stay tuned!

Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. The global economic turmoil continued with concerns about instability on the Korean peninsula. The Spanish government took over a regional bank, which added to the fray of an already battered Euro. The Chinese indicated they would not liquidate Euro bond holdings, which was a concern. Stocks continued to bounce up and down, as one hundred point swings were often the norm.

This Week:
It is a semi-busy week for news. Today (Tuesday!) we have Construction Spending (discussed above) and ISM (look for continued expansion with a number above 50), tomorrow is Pending Home Sales, Thursday Initial Claims, Productivity, Factory Orders, and then on Friday, as mentioned above, all the employment data. Tomorrow should be pretty quiet, but volatility will definitely increase as the week progresses towards Friday’s employment figures.

EconomicIndicator
Construction Spending
Tuesday, June 1,10:00 am, et
Up 0.1%
Low importance. An indication of economic strength. A significant decrease may lead to lower rates.
ISM Index
Tuesday, June 1,10:00 am, et
58.9
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
ADP Employment
Wednesday, June 3,8:30 am, et
Up 50k
Important. An indication of employment. Weakness in payrolls may bring lower rates.
Revised Q1 Productivity
Wednesday, June 3,8:30 am, et
Up 3.6%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, June 4,8:30 am, et
455k
Moderately Important. A measure of unemployment. Higher claims may bring lower rates.
Factory Orders
Thursday, June 4,10:00 am, et
Up 1.1%
Important. A measure of manufacturing sector strength. A larger decrease may lead to lower rates.
Employment
Friday, June 5,8:30 am, et
Unemp. @ 9.8%,Payrolls +500k
Very important. An increase in unemployment or weakness in payrolls may bring lower rates.


Market Forecast:
Overall, Friday will likely to be the most important day of the week for mortgage rates with May’s Employment report being posted. The rest of the week’s data could also lead to noticeable changes in mortgage rates and we also need to watch for stock market volatility. I suspect this will be a fairly active week for rates, but most of the changes will probably come the latter part of the week.

Some Humor:
A couple was celebrating their golden wedding anniversary on the beaches in Montego Bay, Jamaica. Their domestic tranquility had long been the talk of the town. People would say, "What a peaceful & loving couple."
The local newspaper reporter was inquiring as to the secret of their long and happy marriage. The husband replied, "Well, it dates back to our honeymoon in America. We visited the Grand Canyon, in Arizona, and took a trip down to the bottom of the canyon, by horse. We hadn't gone too far when my wife's horse stumbled and she almost fell off."
My wife looked down at the horse and quietly said, 'That's once.'"
We proceeded a little further and her horse stumbled again. Again my wife quietly said, 'That's twice.'"
We hadn't gone a half-mile when the horse stumbled for the third time my wife quietly removed a revolver from her purse and shot the horse dead."
The man continued, "I shouted at her, 'What's wrong with you, woman?! Why did you shoot the poor animal like that, are you *%&#@$ crazy!?'
She looked at me, and quietly said, 'That's once.'
And from that moment we have lived happily ever after."

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.

5/28/10

Most rates have improved this morning going into the long weekend, as mortgage bonds have recovered some of their losses from yesterday's rout. Today's gains could be attributed to the fact that the JV trading teams are on the floor at the NYSE while senior managers have already fled to their quaint Hampton's retreats. Inflation expectations seem to be creeping up in the near term. North Korea has emboldened its stance regarding its southern neighbor, while the gulf coast environmental disaster finally seems to be getting the cleanup attention it deserves. Global turmoil is generally good for bonds, but with thin trading, and high volatility, it's tough to gauge market direction. Let's make sure we take a few minutes this weekend to think about our service men and women who provide this nice long weekend for the rest of us. Remember the bond market closes at 11:00 am PST today due to the Memorial Day holiday.

5/27/10

Most rates are sharply higher today, as mortgage bonds have accelerated their decline from yesterday’s trade. The Dow is rallying through the roof, erasing much of the week’s losses. The decline comes mostly off of the news that China will hold their European debt for the time being. Jobless claims came in higher than expected, and GDP was weaker than expected. Both bond friendly indicators paint a still weakened economic picture for the US. Welcome back to life without the Fed. Volatility remains high, and doesn't show any signs of slowing.

5/26/10

Overall the news yesterday helped bonds: continued European fears, the Euro hitting an 8-year low versus the yen, Korean fears, the Case-Shiller index lower, Consumer Confidence slightly higher. We also had a 2-yr auction, which is now under water. At one point the DOW was down over 300 points.
Later this morning we will have New Home Sales for April, expected to increase. We also have a 5-yr auction, which typically goes pretty well and Durable Goods came out at +2.9%. But ex-transportation the number was down, so cars and planes played a big role in this number.

5/25/10

Most rate prices have improved today as mortgage bonds are rallying off of a decimated stock market. News releases were a mixed batch today with consumer confidence improving for the most part, but home prices showed a net decline in the 1st quarter, signaling that the home buyer tax-credit did little more than line the pockets of realtors. Most of the market movement has little to do with domestic headlines. Tensions in the Korean peninsula continue to escalate driving investors into the "security" of US fixed income. Keep watching.

Mortgage Market Review - 5/24/10

This Morning…Monday, May 24, 2010:
April existing home sales released at 10:00 were expected to be up 4.4% and came in up 7.6%. The dark side however, according to NAR there is now an 8.4 month supply of homes, increasing from 8.1 months in March. Single family sales were down from March adding credence to our long held view that the housing sector is nowhere near a turn. The April increase was mostly in condos which were up 9.1%. Sales increased in April mainly on the tax credit. Markets' reactions were choppy on the data but by 10:10 the DJIA which jumped to -95 had come back to -60 and mortgage rates about where they traded prior to the report. No additional economic releases today; the remainder of the day is as it has been for three weeks; watching equity markets and the euro currency.

Last Week:
Last week interest rates fell on a 426 point decline in the stock market and increasing concern that Europe's economy is going to slow and drag down recovery here. The euro rallied three days last week but traders and investors appear no longer to be tying their pessimism solely to the euro currency. Weekly jobless claims unexpectedly jumped to a two month high of new unemployment claims. What was the strong belief the economic recovery was solid has now been redefined as a potential double dip with the economy slipping on Europe's debt problems headlined by Greece. For two months after a strong run up in the equity markets most were expecting a correction in the stock market but didn't believe it would be this bad. Money running headlong to the safety of US treasuries and has allowed mortgage rates to fall which has been the good news for us.

This Week:
This week we have another set of auctions with which to grapple (2-year notes, 5-yr, and 7-yr. notes). We have Existing Home Sales today and New Home Sales on Wednesday. Durable Good is on Wednesday, and on Thursday one of the usual GDP revisions for the 1st quarter (old news). The Chicago PMI manufacturing index and Personal Income & Consumption are scheduled for Friday. It should be a volatile week.

EconomicIndicator
Consumer Confidence
Tuesday, May 25,10:00 am, et
58.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction
Tuesday, May 25,1:15 pm, et
None
Important. $42 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders
Wednesday, May 26,8:30 am, et
Up 0.9%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
New Home Sales
Wednesday, May 26,10:00 am, et
Up 2.2%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction
Wednesday, May 26,1:15 pm, et
None
Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q1 GDP
Thursday, May 27,8:30 am, et
3.3%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
7-year Treasury Note Auction
Thursday, May 27,1:15 pm, et
None
Important. $31 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Personal Income and Outlays
Friday, May 28,8:30 am, et
Up 0.4%,Up 0.2%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core
Friday, May 28,8:30 am, et
Up 0.1%
Important. An indication of inflation. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Friday, May 28,10:00 am, et
73.2
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Market Forecast:
Overall, I think we have a busy week ahead of us. The big reports of the week are Tuesday’s CCI and Wednesday’s Durable Goods Orders. If Thursday’s GDP revision varies greatly from forecasts, it can also lead to sizable changes in rates. The Treasury auctions are also worth noting which might influence bond trading and possibly mortgage rates if they are met with an exceptional demand or if there is lackluster interest from investors. The bond market will close early Friday afternoon ahead of next Monday’s Memorial Day holiday. There is a pretty good possibility of seeing mortgage rates change several times this week, especially if there is more volatility in the stock markets, so please proceed extremely cautiously.

Some Humor:
My neighbor found out her dog could hardly hear so she took him to the veterinarian. She found that the problem was hair in his ears! The veterinarian cleaned both ears and the dog could hear fine.
The vet then proceeded to tell my neighbor that if she wanted to keep this from reoccurring she should go to the store and get some 'Nair' hair remover and rub it in the dog's ears once a month. So my neighbor went to the drug store and gets some 'Nair' hair remover.
At the register, the druggist tells her, “If you're going to use this under your arms don't use deodorant for a few days.”
The lady says, “I'm not using it under my arms.”
The druggist says, “If you're using it on your legs don't shave for a couple of days.”
The lady says, “I'm not using it on my legs either; I'm using it on my schnauzer.”
The druggist says, “Stay off your bicycle for a week.”

The material contained in this newsletter is provided by a 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.

5/21/10

There is no economic news today, not that it would make much difference with what is going on in Europe and with the Senate’s passage of its version of overhauling financial-sector regulations. Yesterday, in the late morning, the Conference Board’s Leading Economic Indicators dropped in April. Although the drop was attributed to a smaller money supply, lower building permits, and shorter manufacturing times, it was the first drop in LEI in more than a year. But with stock markets around the world continuing to fall, and the jobs picture here in the US still bad, the flight to safety bid for our fixed-income securities continues. Who would have ever thought that a “flight to safety” would take place into our mortgage market!? This morning mortgage prices are better once again. Hooray!!!

5/20/10

Most rate prices improved today as mortgage bonds continue to benefit from the flight to quality as fear dominates the markets (stocks have erased all gains made this year). Investors who got burned by underestimating the mortgage meltdown don’t want to make the same mistake about the European debt crisis--a crisis that gives more the appearance of being held together by rubber bands and scotch tape in Europe and at risk of spinning out of control and taking the Euro currency with it. This view is sending global stock markets down and bond markets up giving us some of the lowest rates of 2010. Adding insult to injury today, jobless claims came in higher than expected (sending us back to November levels) and Leading Economic Indicators were down (the first time in a year) suggesting the V-shaped recovery may not be the shape of things to come after all. Bonds have broken through all resistance so far as buyers continue to dominate the trade. The irony of this rally is the very source of the fear is what is benefitting the most: the bond markets. Think about that one…

5/19/10

This morning the Consumer Price Index expected to be up slightly, actually dropped by .1%. It is a lagging economic indicator, but still, it will give the press something to talk about. Given the huge rally yesterday, it is not surprising that the market, regardless of no signs of inflation, is giving back a little. Currently mortgage prices are alightly worse.

5/18/10

Most rate prices improved a bit from yesterday’s re-price for the worse as mortgage bonds regain some losses. MBS, although lagging, are benefitting despite an initially improved market for stocks as investors attempt to turn thoughts away from the European debt situation. However much of those gains are evaporating as bonds firm up levels and the market shrugs off the higher than expected core Producer Price Index and better than expected Housing Starts data released today.

Mortgage Market Review - 5/17/10

This Morning…Monday, May 17, 2010
Today, as has been the case, the potential for volatility will remain extreme. So far in the early trade markets are quiet but very stressed. The euro is currently trading higher and supporting equity markets. No scheduled data points for the rest of the day. As for equity markets, currently bearish and likely to work lower. That said however, the stock market in past periods of softness has always managed to work higher.

Last Week:
Mortgage bond prices rose last week applying pressure on mortgage interest rates. The week started on negative footing when the European Union poured a trillion dollars into efforts to stabilize Greece. Stocks across the globe rallied at the expense of bonds. Fortunately that was short-lived, as traders remain concerned the efforts will not stop future economic turmoil in Europe. Last week’s news confirmed that there is overall consensus that the US is on some type of recovery. The trade numbers showed growth, retail sales were up, industrial production and capacity utilization were up, and initial jobless claims were down. On Friday, bond prices improved and rates dropped, primarily based on continued European problems. These problems are not going to go away any time soon, so look for more volatility.

This Week:
This week, the sovereign debt concerns in Europe will continue to be the focus; the euro currency is collapsing and we expect more of it this week. A weakening euro, or stated another way, the strengthening dollar, reduces the US export trade as US goods become more costly. There are also a couple of important releases this week. Today we already had the Empire State Manufacturing Survey. Tomorrow we have Residential Construction with Housing Starts and Building Permits, and the Producer Price Index. Wednesday we have the Consumer Price Index, to check just how much of the increase or decrease in PPI is being passed along to us consumers, and the release of the April Fed meeting. Thursday is Initial Jobless Claims, the Philly Fed Survey, and Leading Economic Indicators. Friday zip.

EconomicIndicator
Producer Price Index
Tuesday, May 18,8:30 am, et
Up 0.2%,Core up 0.1%
Important. A measure of inflation at the producer level. Lower figures may lead to lower rates.
Housing Starts
Tuesday, May 18,8:30 am, et
420k
Important. A measure of housing sector strength. Larger than expected decreases may lead to lower rates.
Consumer Price Index
Wednesday, May 19,8:30 am, et
Up 0.2%,Core up 0.1%
Important. An indication of inflationary pressures at the consumer level. Decreases may lead to lower rates.
Weekly Jobless Claims
Thursday, May 20,8:30 am, et
410k
Moderately important. An increase in claims may bring lower rates.
Leading Economic Indicators
Thursday, May 20,10:00 am, et
Up 1.2%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey
Thursday, May 20,10:00 am, et
21.5
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.

Market Forecast:
Overall, it appears it is going to be another active week for the mortgage market. We have two inflation readings that are very important to the bond market the middle part of the week. Stock market volatility will likely also affect bond trading again this week, so we may see movement in rates several days. The consumer price index Wednesday will be the most important event this week. The housing data, producer price index, and leading economic indicators data may also move the market. Market participants expect the consumer price relatively tame this week. Inflation friendly data may lead to improvements in mortgage interest rates. However, unexpected consumer price spikes may push interest rates higher in the short-term. . If the stock markets remain fairly calm, I would guess the middle part of the week will probably be the most important for mortgage pricing. A cautious approach to float/lock decisions is prudent.

Some Humor: (my apologies…it’s a “blond” joke)

A blonde gal decides to go shoe shopping, and stops in at many fashionable stores with no luck. No one seemed to have what she was looking for, which was a pair of alligator shoes.
After becoming very frustrated with the attitude of one of the shopkeepers, the young blonde declared, “Well, then, maybe I'll just go out and catch my own alligator and get a pair of alligator shoes for free!”
The shopkeeper replied with a sly smile, “Well, little lady, why don't you go on and give it a try?” The blonde headed off to the swamp, determined to catch an alligator. Later in the day, as the shopkeeper was driving home, he spotted the same young woman standing waist deep in the murky water, shotgun in hand.
As he brought his car to a stop, he saw a huge 9-foot gator swimming rapidly toward her. With lightning reflexes, the blonde took aim, shot the creature, and hauled it up onto the slippery bank. Nearby were 7 more dead gators all lying belly up. The shopkeeper stood on the bank, watching in silent amazement as the blonde struggled mightily and barely managed to flip thegator onto its back.
Then, rolling her eyes heavenward, she screamed in frustration, “Darn it! This one’s barefoot too!”

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.

5/14/10

Unlike the last four days, today we have lots of scheduled news. We have already had Retail Sales which came in a little higher than expected (Retail Sales have gained in 12 out of the last 13 months). Today we also have Industrial Production and Capacity Utilization, both expected higher. And then we have Factory Orders and the University of Michigan Consumer Sentiment Survey numbers – also expected higher. Industrial Production dropped by almost 15% during the recession (which apparently ended almost a year ago) IP has posted gains in each and every month since July 2009 and, in the process, has regained about 35% of what it lost – it is expected to rise about .5% this time around. After Retail Sales we have the mortgage prices slightly better.

5/13/10

Mortgage bonds continue to tighten with Treasuries from their wide of a week ago ahead of today’s 30yr auction. Meanwhile in domestic news released today, import prices rose largely on seasonal oil prices, netting a positive read on inflation and jobless claims remained stubbornly above expectations. The stock markets have traded in negative territory as investors are concerned after the jobless claim data was released and financials are pressured as US prosecutors and the SEC probe into past mortgage deals and whether banks misled investors with fraudulent ratings information. Folks, this will be one to watch…

5/12/10

Most rate prices improved slightly today as mortgage bonds hold onto much of yesterday afternoon gains. Bonds benefitted yesterday from strong overseas demand and a well bid 3yr Treasury auction. Tomorrow brings another auction, import price and jobless claim data. Yesterdays auction was strong…let’s hope for a repeat today.

5/11/10

Most rate prices are modestly improved today as mortgage bonds attempt to hold onto yesterday’s closing levels in choppy trading. Bonds were up earlier this morning but have erased those gains as the stocks have paired earlier losses. Today brings the first of 3 auctions this week with 3yr notes. Scheduled econ news is limited to positive business confidence surveys and inventory figures—not any real market movers here. Fed speak is dominant with several figures making the rounds. Yesterday’s euro euphoria seems to have dimmed a bit today as the reality of “fixing” the debt crisis is causing some to sober up and ask tough questions. Simply throwing money isn’t enough…structural reform will need to happen and it only takes a replay of the Greek rioting tapes to get the picture. Today could be bumpy.

Mortgage Market Review - 5/10/10

This Morning…Monday, May 10, 2010:
Monday’s bond market has opened down sharply following news that the European Union has agreed to a bailout for Greece. The news has helped erase concerns about the global economy that the situation brought and fueled a stock market rally that has the Dow up over 410 points and the Nasdaq up 102 points. Unfortunately this proposed stability in the Eurpoean market has had a negative impact of mortgage rates which are higher this morning.

Last Week:
Mortgage bond prices rose last week pushing mortgage interest rates lower. Trading was once again dominated by foreign influences as the Greek debt concerns spread across the globe. US stocks fell precipitously Thursday afternoon. At one point the DOW was down over 900 points. This sent a flood of investor funds into mortgage bonds helping rates improve. The data for the week was mixed with higher than expected unemployment and a larger than expected payrolls figure. Oil prices fell to around $77/barrel, which helped alleviate inflation concerns. Overall interest rates recovered most of the losses from the week before.

This Week:
There is $78 billion of supply to bid this week. Tomorrow we have 3-yr notes to sell, Wednesday, 10-yr’s, and on Thursday, 30-yr bonds. Aside from that, the most significant economic data this week will be Friday's Retail Sales report, along with Industrial Production and Capacity Utilization. Import Prices, the Trade Balance, and Consumer Sentiment will round out a light week – there is nothing today. In case you haven’t noticed, gasoline prices are the highest they’ve been since October 2008.

EconomicIndicator
3-year Treasury Note Auction
Tuesday, May 11,1:15 pm, et
None
Important. $38 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Wednesday, May 12,8:30 am, et
$39.5 billion deficit
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
10-year Treasury Note Auction
Wednesday, May 12,1:15 pm, et
None
Important. $24 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, May 13,8:30 am, et
410k
Moderately important. An increase in claims may bring lower rates.
30-year Treasury Bond Auction
Thursday, May 13,1:15 pm, et
None
Important. $16 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Retail Sales
Friday, May 14,8:30 am, et
Up 0.4%
Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Industrial Production
Friday, May 14,9:15 am, et
Up 0.5%
Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization
Friday, May 14,9:15 am, et
73.3%
Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates.
U Michigan Consumer Sentiment
Friday, May 14,10:00 am, et
73
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Market Forecast:
The retail sales data Friday will be the most important event this week.
Overall, it likely will be another active week for mortgage rates. Besides Europe’s important economic news, look for the stock markets to be a major influence on trading. The most important day of the week is Friday with three reports on the agenda, including the sales data. The Treasury auctions will also take center stage as market participants cautiously await the result to determine foreign investor appetite for US debt instruments.
Today’s volatility does not come as a surprise and may actually end up making today the most active day of the week if Friday’s data does not reveal any significant variances.

Some Humor:
A barber kisses his wife goodbye and heads into work. Later that morning, a guy stuck his head into a barbershop and asked, “How long before I can get a haircut?”
The barber looked around the shop full of customers and said, “About 2 hours.”
The guy left.
A few days later, the same guy stuck his head in the door and asked, “How long before I can get a haircut?”
The barber looked around at the shop and said, “About 3 hours.”
The guy left.
A week later, the same guy stuck his head in the shop and asked, “How long before I can get a haircut?”
The barber looked around the shop and said, “About an hour and a half.”
The guy left.
The barber turned to his friend and said, “Hey, Bob, do me a favor. Follow that guy and see where he goes. He keeps asking how long he has to wait for a haircut, but then he doesn't ever come back.”
A little while later, Bob returned to the shop, laughing hysterically.
The barber asked, “So, where does that guy go when he leaves?”
Bob looked up and said, “Your house!”

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.

5/7/10

This morning Non-farm Payroll came in at +290,000, the Unemployment Rate came in at 9.9%, and Hourly Earnings were unchanged. It is a strong gain for payrolls, along with some upward revisions in prior months. Just like a spring, markets tend to bounce or retract a little after a big move. We’re seeing that this morning, with stocks up, mortgage rates have worsened a bit.

5/6/10

Yesterday we had the ADP National Employment report, which measures private sector employment. The numbers are much better than they were a year ago but still high on a relative basis. Tomorrow we have the Non farm Payroll numbers and forecasts seem to be running around+225k or +150k excluding census workers, with the unemployment rate perhaps moving lower to 9.6% versus 9.7% in March.
Today we will have another day of credit crisis hearings in Washington DC, along with a number of Fed speakers. The economic news scheduled is pretty much limited to Initial Claims which dropped slightly as expected. After this news the mortgage rates are stable this morning.

5/5/10

Yesterday we had some economic news of note, the first being Pending Home Sales. The index was up in March, with sales in the South up 13%, up 2% in the West, up 1% in the Midwest, but fell 3.3% in the Northeast. Second, Factory Orders here in the US were up in March.
This morning we had the ADP private-payroll number for April which showed job growth coming in at 32,000. After these, and in the face of further stock sell-offs, mortgage prices are better.

5/4/10

Yesterday was not a particularly busy day on mortgage trading desks, although rates were a little higher to start the day. We did have a fair amount of news, all of it reflecting economic recovery. The ISM Manufacturing Index increased in April and growing at its fastest pace since 2004. Construction Spending increased .2% from the revised February number (private construction. Today we will have Factory Orders and Pending Home Sales, and ahead of that we have a rally: This morning mortgage prices are slightly improved.

Mortgage Market Review - 5/3/10

This Morning…Monday, May 3, 2010:
Monday’s bond market has opened in negative territory following early stock strength. The stock markets are starting the week in positive ground after Greece accepted a bailout package that should help stabilize the country’s financial system. There were two reports released this morning that were relevant to mortgage rates. The first was March’s Personal Income & Outlays that showed a rise in income and an increase in spending. Both of these readings matched forecasts, minimizing its impact on mortgage rates. The second report of the day was one of the more important releases of the week. The Institute for Supply Management (ISM) posted their manufacturing index for April which was slightly lower than forecasts but an increase from the previous month. This indicates that more surveyed manufacturers felt business improved during the month than last month. That can be considered negative for bonds, but since the reading did not exceed forecasts, its impact on the markets has been minimal.

Last Week:
Trading was dominated last week by foreign influences as the Greek debt concerns spread throughout Europe. Analysts point to Spain and Portugal as additional areas of concern. Fortunately, this sent global investor funds into US Treasury bonds and mortgage-backed securities. Real GDP grew during the first quarter, consumer confidence rose in April, and weekly first-time unemployment claims fell. This was good news for our economy. Unfortunately, our debt continues to grow as does overall unemployment (hovering around 10%).

This Week:
This week shows quite a bit of news. We started today with Personal Income & Consumption (Spending) as mentioned above. Tomorrow we have Pending Home Sales, Wednesday the ISM Services number and ADP private-sector employment figures. Thursday is Initial Jobless Claims and some productivity and costs numbers. Friday is the biggest economic event with the employment report containing Non-farm Payroll, the Unemployment Rate, Hourly Earnings, etc.

EconomicIndicator
Personal Income and Outlays
Monday, May 3,8:30 am, et
Up 0.2%Up 0.6%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
ISM Index
Monday, May 3,10:00 am, et
59.6
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Factory Orders
Tuesday, May 4,10:00 am, et
Down 0.8%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
ADP Employment
Wednesday, May 5,8:30 am, et
Jobs +20K
Important. An indication of employment. A large decrease in payrolls may bring lower rates.
Preliminary Q1 Productivity
Thursday, May 6,8:30 am, et
Up 3.1%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Employment
Friday, May 7,8:30 am, et
Jobs +175KUmemp @ 9.7%
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.

Market Forecast:
Overall, I believe Friday will be the most important day of the week with the employment data being posted. It can easily erase the week’s accumulated gains or losses in mortgage rates if it shows any surprises. The productivity data to be released Thursday also is a major release. The middle part of the week will likely be the calmest, but I still suggest proceeding cautiously.

Some Humor:
Two doctors, a psychiatrist and a proctologist, opened an office in a small town and put up a sign reading: "Dr. Smith and Dr. Jones: Hysterias and Posteriors."
The town council was not happy with the sign, so the doctors changed it to read, "Schizoids and Hemorrhoids."
This was not acceptable either, so in an effort to satisfy the council, they changed the sign to "Catatonics and High Colonics." No go.
Next, they tried "Manic Depressives and Anal Retentives." Thumbs down again. Then came "Minds and Behinds." Still no good.
Another attempt resulted in "Lost Souls and Butt Holes." Unacceptable again!
So they tried "Analysis and Anal Cysts." Not a chance.
"Nuts and Butts?" No way.
"Freaks and Cheeks?" Still no go.
"Loons and Moons?" Forget it. A
lmost at their wit's end, the doctors finally came up with: "Dr. Smith and Dr. Jones, Odds and Ends."
Everyone loved it.

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.

4/30/10

For those watching the mortgage markets, yesterday was pretty quiet relative to Tuesday and Wednesday. The 7-yr Treasury Note auction went well, with yields coming in about at market. The news out of Greece didn’t seem to shake up the markets too much as that country readied severe austerity measures to secure a multi-billion euro aid package needed to avoid default, providing relief to financial markets but drawing threats of a battle from Greek unions. For economic news today there are no auctions or policy speeches. At 8:30AM EST we had Real GDP. 1st Quarter Advance GDP number came in at +3.2%, less than expected, but +3.6% on consumption, stronger than expected. Mortgage rates are roughly unchanged. Have a great weekend.

4/29/10

Yesterday both the bond and stock markets rebounded from moves on Tuesday. Bond prices fell, and rates slid up due to the concerns over Greece. The Federal Reserve said interest rates would remain low for an extended period and pointed to signs of strength in the economy. (Are there any questions on this? I hope not – the Fed has said the same thing in the past several announcements.) And we had a decent 5-yr Treasury note auction.
Most rates are level to slightly worse today as mortgage bonds hold onto Wednesday’s losses but appear to be contained and attempting to firm up. Treasuries are largely unchanged this day after a big snore of a Fed rate decision. In news released today, modest improvements were reported in manufacturing and jobless claims. Today brings an offering of 7-year notes. Let’s hope for similar results, due out around 10:15am.

4/28/10

No news this morning, but later today we have a 5-yr auction, and the Fed announcement. To sum it up, don’t look for any rate change in overnight rates. Instead, if it is a slow day, the bond market will pick apart the announcement for word changes. Whether it is Greece, Spain, Portugal, Abu Dhabi, Las Vegas, the commercial property market in general, foreclosures here in the US, there are a lot of problems out there, and the Fed pushing rates higher is very unlikely. This morning mortgage prices are slightly worsened.

4/27/10

Interest rates worsened slightly this morning as mortgage bonds move higher helped by the safety bid of Treasuries off of more Greek anxiety. Today begins day one of the FOMC meeting where they are expected to hold rates unchanged. Today also begins this week’s series of non-inflation indexed note sales with $44 billion of 2 year maturities with results due around 10am. Adding to the drama of the day, we have Goldman Sachs executives on Capitol Hill, answering questions and defending reputations. This is good television! In economic news released this morning Home Prices rose less than forecast but Consumer Confidence rose to the highest level since 2008. A mixed message indeed…

Mortgage Market Review - 4/26/10

This Morning…Monday, April 26, 2010:
Not much news today. Monday’s bond market has opened in positive territory despite a positive open for stocks. The Dow is starting the week off with a gain of 39 points while the Nasdaq is up 2 points.

Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. The first portion of the week had very little data. Leading economic indictors came in stronger than expected which really didn’t help us. Strong stocks pressured mortgage bonds a bit. Producer prices rose more than expected but the core rate was tame. New home sales shocked the market with a 26.9% increase. This was the largest increase in 47 years and not bond friendly. Rates rose by about ¼% by weeks end.

This Week:
This week presents us a mixed-bag of economic releases. Today we have Building Permits. Tomorrow we have the S&P/Case-Shiller Price Index, along with Consumer Confidence which is significant in that it provides a precursor into consumers’ willingness to spend in the months ahead (however, many analysts point out that willingness to spend does not always convert to actual expenditures). Wednesday is the Fed meeting and most expect that the Fed is seeing the same thing many are: slow but sustained economic growth, lagging consumer spending, tight credit, a muddling housing market, and little sign of inflation. The committee will likely conclude that conditions continue to warrant leaving rates “exceptionally low” for an “extended period.” mentioned above, Thursday is Initial Claims and the Chicago Fed numbers, and on the last day of April we have the GDP numbers, the Employment Cost Index, and Chicago Purchasing Managers’ numbers.

EconomicIndicator
Consumer Confidence
Tuesday, April 27,10:00 am, et
54.0
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction
Tuesday, April 27,1:15 pm, et
None
Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
5-year Treasury Note Auction
Wednesday, April 28,1:15 pm, et
None
Important. $42 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Fed Meeting Adjourns
Wednesday, April 28,2:15 pm, et
No change
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Weekly Jobless Claims
Thursday, April 29,8:30 am, et
455k
Moderately important. An indication of employment. A larger figure may lead to lower rates.
7-year Treasury Note Auction
Thursday, April 29,1:15 pm, et
None
Important. $32 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q1 Advance GDP
Friday, April 30,8:30 am, et
3.5%
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Q1 Employment Cost Index
Friday, April 30,8:30 am, et
Up 0.4%
Very important. A measure of wage inflation. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Friday, April 30,10:00 am, et
72
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Market Forecast:
Overall, look for plenty of movement in the financial markets and mortgage some days this week, while others will probably be calm. Wednesday will likely be the most important day of the week with the FOMC adjournment, but we may see noticeable changes to rates Friday as the employment cost index and gross domestic product data are released. If this week’s reports reveal weaker than expected economic conditions, the bond market should extend its rally and mortgage rates should fall for the week. However, I recommend taking a cautious approach towards rates.

Some Humor:
A young monk arrives at the monastery. He is assigned to helping the other monks in copying the old canons and laws of the church by hand. He notices, however, that all of the monks are copying from copies, not from the original manuscript.
So, the new monk goes to the head abbot to question this, pointing out that if someone made even a small error in the first copy, it would never be picked up! In fact, that error would be continued in all the subsequent copies.
The head monk, says, "We have been copying from the copies for centuries, but you make a good point, my son."
He goes down into the dark caves underneath the monastery where the original manuscripts are held as archives in a locked vault that hasn't been opened for hundreds of years.
Hours and hours pass and nobody sees the old abbot.
So, the young monk gets worried and goes down to look for him. He sees him banging his head against the wall and wailing!!!
"We missed the R. We missed the R!!! We missed the R!!!!!!!!!"
His forehead is bloody and bruised and he is crying uncontrollably.
The young monk asks the abbot, "What's wrong, father?"
With a choking voice, the old abbot replies, "The word was ‘CELEBRATE'!!!!”

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.

4/22/10

Yesterday the stock and bond markets did not see too much volatility. Today we have had the Producer Price Index, Initial Jobless Claims, and will see housing data for existing homes. PPI was up slightly and stronger than expected. Year-over-year the PPI was up 6.0% which is very strong. Initial Jobless Claims dropped to 456,000, and continuing claims dropped slightly. Later today the Treasury will announce the amount of securities to be auctioned off next week: 2-yr, 5-yr, 7-yr, and 5-yr TIPS. After the inflation and jobs’ news, mortgage prices are roughly unchanged.

4/21/10

Yesterday, by most accounts, was a pretty quiet day in mortgage-land and it helps that the continuing Treasury auctions are in a lull period, and there is little news from the Fed since we are within the one-week “quiet period” ahead of the meeting next week. Today there is little news, and tomorrow we have the usual Initial Jobless Claims. Rates are stable this morning

4/20/10

Most rate prices worsened today as mortgage bonds continue to trade lower alongside Treasuries. MBS have been bound and tied to a range that seems more ready to fade than rally. Stock markets are up on positive earning reports--even an SEC fraud charge can’t deter Goldman Sachs’ stock from gaining after better than expected earnings came out today (much of those earnings courtesy of the Fed’s rate policy and ultimately us taxpayers—lets’ hear it for bonuses all around!) No major economic releases are scheduled today except ABC consumer confidence due at 2pm but don’t expect any major shockwaves from the data. We don’t get any big news until Thursday in the form of producer price index, jobless claims and home sales data. Bonds remain under some pressure as continued thin trading conditions are not moving in our favor.

Mortgage Market Review - 4/19/10

This Morning…Monday, April 19, 2010:
This morning the Goldman-Sachs fraud suit remains the hot topic with various outlooks as to implications for the financial markets in terms of regulatory reform. This began on Friday with an announcement from the SEC that it was filing civil fraud charges against Goldman-Sachs, implying the firm allowed Paulson& Co. to select sub prime loans that went into a security that Goldman was putting together to sell to investors. Paulson, according to the SEC was openly going to short the security and picked the worst possible mortgages to put in the package to sell. Investors lost about $1 billion from the trade. Goldman Sachs denies wrongdoing and has indicated it did nothing wrong and will defend itself "vigorously". The SEC and now the British government are increasing scrutiny now and will look closely at other firms that sold the junk to unsuspecting investors. Large investors and central banks bought the junk without looking at the details in the prospectuses and simply relying on the AAA ratings that were issued by the rating agencies. We wonder when the SEC will take on the rating agencies, the three agencies (S&P, Moody's and Fitch) have greased through all of this without much focus. Who paid them what, and how much? It was then, and even more so now, a question that never has been answered; AAA ratings on junk that was doomed to fail needs explanation.

At 9:30 the DJIA opened -20; 10 yr -2/32 and mortgage rates are stable.

Last Week:
Mortgage interest rates ended up stabilizing at the end of a volatile week. Oil prices continued to fall off the beginning of the week helping to lower rates amid the tame inflation numbers. Unfortunately that trend reversed mid week as oil prices spiked tied to a report which indicated supply declines. Stocks also surged higher as earnings reports generally pleased investors and the DOW easily eclipsed the 11,000 mark. On Thursday Jobless Claims and Manufacturing Data came in worse than expected which helped rates earn back some of the losses. Then on Friday Housing Starts came in better than expected which created some additional volatility. Up and down all week!

This Week:
Things are pretty slow this week for the first few days, although we do have Leading Economic Indicators later this morning (expected to be up 1.3% for March, which would be the largest increase in nine months). On Thursday we have the Producer Price Index (PPI), Existing Home Sales, and Initial Jobless Claims. Friday we have Durable Goods, an important indicator of economic activity, and New Home Sales.
The Goldman situation will settle down; the key take away from the charges filed is whether this is the beginning of a sweep through Wall Street by the SEC. The Street is likely to get a lot of attention and likely more firms and charges will unfold.

EconomicIndicator
Leading Economic Indicators
Monday, April 19,10:00 am, et
Up 1.0%
Important. An indication of future economic activity. Weakness may lead to lower rates.
Weekly Jobless Claims
Thursday, April 22,8:30 am, et
465K
Important. An indication of employment. An increase in jobless claims may bring lower rates.
Producer Price Index
Thursday, April 22,8:30 am, et
Up 0.5%,Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Decreases may lead to lower rates.
Existing Home Sales
Thursday, April 22,10:00 am, et
5.3M
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
Durable Goods Orders
Friday, April 23,8:30 am, et
Unchanged
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
New Home Sales
Friday, April 23,10:00 am, et
Up 1.9%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.

Market Forecast:
Overall, look for Thursday or Friday to be the most important day of the week with the Producer Price Index and Durable Goods reports being posted. . If inflation pressures emerge, mortgage interest rates may be pressured higher. The rest of the week will likely be heavily influenced by the stock markets. If the major stock indexes rally, bonds will likely suffer and mortgage rates will move higher

Some Humor:

Dear Tide:

I am writing to say what an excellent product you have.
I've used it all of my married life, as my Mom always told me it was the best.
Now that I am in my fifties I find it even better!
In fact, about a month ago, I spilled some red wine on my new white blouse. My inconsiderate and uncaring husband started to belittle me about how clumsy I was, and generally started becoming a pain in the neck. One thing led to another and somehow I ended up with his blood on my new white blouse!
I grabbed my bottle of Tide with bleach alternative, to my surprise and satisfaction, all of the stains came out!
In fact, the stains came out so well the detectives who came by yesterday told me that the DNA tests on my blouse were negative and then my attorney called and said that I was no longer considered a suspect in the disappearance of my husband.
What a relief! Going through menopause is bad enough without being a murder suspect!
I thank you, once again, for having a great product.

Well, gotta go, have to write to the Hefty bag people.

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.

4/16/10

Rates suffered a little yesterday even though Jobless Claims came in higher than expected. Today had New Home Construction and will have the University of Michigan Sentiment Survey. Housing Starts for March were better than expected and March Building Permits were up as well. It is nice to see the economic activity associated with housing, but don’t we already have a pretty good inventory of existing housing stock in many locales? After these housing stats mortgage rates are steady this morning. Friday’s are always strange days.

4/15/10

Most rate prices are near unchanged with yesterday’s re-price for the worse as mortgage bonds firm in their closing levels after yesterday’s mid-day selloff. After earlier negative movement off of significantly better than expected Manufacturing data, followed by worse than expected jobless claim and industrial production, both MBS and Treasuries are trading positive at the moment as narrow range volatility continues and buyers emerge after the dips (prices not traders!). The Philly Fed business outlook survey came right in at expectations but could be viewed as disappointing in light of the strong NY Fed manufacturing data. Stocks have reversed their initial negative movement as both the Dow and S&P trade higher.

4/14/10

Most rate prices are unchanged as mortgage bonds hold Tuesday’s levels. Bernanke began his testimony before the Joint Economic Committee of Congress earlier this morning. Meanwhile, MBS supply and demand has reached a bit of equilibrium at midweek helping to keep rates stable. The Dow pierced and is holding above 11,000 and now the S&P is tickling the 1200 mark after positive earnings reports were released today. February Business Inventories reported the largest gain since July 2008, Retail Sales beat expectations for a second month and the Consumer Price Index came in slightly better than expected. All ears are on Bernanke, looking to hear any hints of a change in the Fed’s “extended period” language. But, alas, Ben’s prepared remarks have no mention of any change. Nonetheless we will see if traders can parse any tradable tidbits from the chairman testimony. Stay tuned…

4/13/10

Most rate prices are improved today as mortgage bonds are not able to hold onto all of Monday’s gains. MBS and Treasuries both made further gains in early morning trading but have since began to sell off as the day trading practices of pre-Fed intervention resume. Stocks are down too as the Dow is unable to hold onto the 11,000+ closing mark it reached yesterday for the first time since September 2008 off of poor earnings from Alcoa. Greater volatility will mean unexpected moves up and down, probably more violently than in the past year. This is no place for complacency as the fundamentals point to higher rates sooner than later and inter-day re-prices will surely increase. In news released today, the nation’s trade deficit widened more than expected and March import prices rose less than expected. However, the price action in this morning’s market appears to be driven more by profit taking than data. Fed speak resumes today with discussions of financial regulation and literacy.

4/9/10

There is nothing on the day's horizon that will garner any direct focus today. After the continuing volatility this week we expect a generally quiet day with the caveat that it depends on the way stock markets trade. If stock indexes have a strong day the bond and mortgage markets will be pressured somewhat but not much; conversely, if equity markets cave the bond and mortgage markets will improve.

4/8/10

Yesterday we continued to see bonds’ prices improve, and rates drop, after a solid 10-yr sale by the Treasury. The bond market was helped by Ben Bernanke’s somber statements about the economy not being out of the woods yet and the fact that inflation is not an issue. Today we got our first economic news of the week, with Initial Jobless Claims coming in at 460,000, up 18k from 442,000. The 4-week moving average moved up slightly. After the number mortgage prices are slightly better.

4/7/10

Rates improved yesterday – all rates. It appears that Greece "isn't keen on the IMF being involved in any bailout" which pushed Greek bonds down and caused a bit of a flight to quality here in the US. Say what you will about the credit quality of our debt, on a relative basis it is still safer and more liquid than most. The 3-yr note auction went ok, and in fact the market overwhelmingly believes that overnight rates (set by the Fed) will remain near 0% through August. With origination dropping, and buyers buying, mortgage spreads are behaving themselves in spite of a little volatility.

4/6/10

Most rate prices improved a bit today as mortgage bonds regain some losses from Monday. Mortgages are benefitting from Treasury bonds’ first positive movement in 4 days ahead of today’s 3-year auction and Fed minutes release, due out around 10am and 11am respectively. Bonds are benefitting this morning from renewed concerns the Greek bailout plan will unravel. However, continued signs of economic recovery are prompting investors to seek out riskier assets away from bonds. This week’s auctions will be very telling as demand is expected to be less the strong for today’s 3-year, tomorrow’s 10-year and Thursday’s 30-year. Watch out for volatility as the auction results come out just an hour before the Fed minutes.

Mortgage Market Review - 4/5/10

This Morning…Monday, April 5, 2010:
Monday’s bond market has opened in negative territory following early stock gains. The stocks markets are reacting favorably to Friday’s data as they were expected to do. The Dow is currently 54 points while the Nasdaq has gained 22 points. The bond market is currently down 5/32, which will likely push this morning’s mortgage rates higher.

Last Week:
Mortgage bond prices fell again last week pushing mortgage interest rates higher. The Fed ended the mortgage backed securities purchase program last Wednesday. There was no coincidence that rates spiked higher Thursday morning with the Fed no longer there to buffer negative movements and keep rates in check. Stock strength also pressured bonds as the Dow approached the 11,000 mark. Escalating oil prices also caused rates to spike higher as inflation fears begin to increase. Fortunately the PCE Price Index data came in as expected. By the end of the week, we saw interest rates up about ¼%.

This Week:
There is not a not due for this week after last week's plethora of economic data. Today we have an ISM Services number (up in February for the 2nd month in a row, but expected to drop a little) and Pending Home Sales. Thursday we have Initial Unemployment Claims, and Friday a Wholesale Trade number. The only "important" 8:30AM EST number is on Thursday with Initial Claims! Markets will also concentrate on the demand for Treasury auctions on Tuesday, Wednesday and Thursday. Two weeks ago, the last dip into the pool, Treasury auctioned notes that were not as well bid as they had been for the past year when demand was strong for US debt. The less than expected demand is one of the elements behind the recent spike in interest rates.

EconomicIndicator
3-year Treasury Note Auction
Tuesday, April 6,1:15 pm, et
None
Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Fed Minutes
Tuesday, April 6,2:00 pm, et
None
Important. Details of last Fed meeting. Volatility may surround the release.
Consumer Credit
Wednesday, April 7,8:30 am, et
Up $1.6 billion
Low importance. A significantly larger than expected increase may lead to lower mortgage interest rates.
10-year Treasury Note Auction
Wednesday, April 7,1:15 pm, et
None
Important. $21 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, April 8,8:30 am, et
430k
Moderately Important. An indication unemployment. Higher claims may lead to lower rates.
30-year Treasury Bond Auction
Thursday, April 8,1:15 pm, et
None
Important. $13 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.

Market Forecast:
Overall, I am proceeding into this week very cautiously. There are several variables that could make this week very quiet or quite rocky for mortgage shoppers. Tomorrow’s FOMC minutes could very well be a major market mover or a complete non-factor. The same goes for the Treasury auctions. If foreign demand is lackluster like the last few auctions we could see that carry over to the mortgage bond market causing rates to spike. In other words, we may have a very calm week ahead of us, or we may see rates move noticeably several days. With no important economic data to drive trading and mortgage rates, bonds may move opposite of stocks. This means large stock gains could lead to bond selling and higher mortgage rates. But stock weakness could lead to mortgage pricing improving for the week. Watch the market closely and proceed cautiously.

Some Humor:
A man and his wife walked into a dentist's office.The man said to the dentist, "Doc, I'm in one heckuva hurry. I have two buddies sitting out in my car waiting for us to go play golf, so forget about the anesthetic and just pull the tooth and be done with it. We have a 10:00 AM tee time at the best golf course in town and its 9:30 already. I don't have time to wait for the anesthetic to work!"
The dentist thought to himself, "My goodness, this is surely a very brave man asking to have his tooth pulled without using anything to kill the pain."So the dentist asks him, "Which tooth is it sir?"
The man turned to his wife and said, "Open your mouth, Honey, and show him."

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.