Friday, February 26, 2010
2/26/10
Most rate prices are level as mortgage bonds hold onto gains and Treasuries grind lower. The 10-year yield is back down below 3.625% this morning—the lowest since Feb 10. Bonds are benefitting from continued turmoil in the sovereign debt arena—i.e. Greece—and worse than expected existing home sales and consumer sentiment which are trumping better than expected GDP and business activity numbers. Today’s home and consumer data validates yesterday’s bad news, bolstering bearish sentiment. Adding to bond friendliness we have the expected month end balanced fund tactical asset allocations out of stocks and into bonds. Well, the Fed is down to digging deep in its pocket as only $9 Billion per week remains in its allocated MBS piggy bank ($11 Billion was spent in the last week). That equates to less than $2 Billion per week--not enough to soak up all of originator supply--which could make for some interesting sessions ahead. Rates are low. Have a great weekend.
2/25/10
Yesterday’s $42 billion 5-yr auction did not go well and had the lowest bids since July. Not good. The Bernanke testimony (rates need to remain low), along with the much worse-than-expected New Homes Sales data, muddled the picture somewhat for investors yesterday.
The New Home Sales data was particularly bad. In January sales dropped 11%, the worst on record and erasing all the gains from last year. Nationwide, inventory represents over a 9 month supply – the highest in almost a year. And year-over-year the median price for a new home fell in January by 2.4%, to $203,500 from $208,600 a year ago. Regionally, January new-home sales dropped 35.1% in the Northeast, 11.9% in the West, and 9.5% in the South. Sales rose 2.1% in the Midwest.
This morning the markets are being pushed around by Jobless Claims, the GDP, a 7-yr note auction, and continued testimony from Ben Bernanke. Durable Goods were up for January and Jobless Claims showed an increase. Immediately after the news mortgage prices are better this morning.
The New Home Sales data was particularly bad. In January sales dropped 11%, the worst on record and erasing all the gains from last year. Nationwide, inventory represents over a 9 month supply – the highest in almost a year. And year-over-year the median price for a new home fell in January by 2.4%, to $203,500 from $208,600 a year ago. Regionally, January new-home sales dropped 35.1% in the Northeast, 11.9% in the West, and 9.5% in the South. Sales rose 2.1% in the Midwest.
This morning the markets are being pushed around by Jobless Claims, the GDP, a 7-yr note auction, and continued testimony from Ben Bernanke. Durable Goods were up for January and Jobless Claims showed an increase. Immediately after the news mortgage prices are better this morning.
2/24/10
Today we have New Home Sales, a 5-yr auction, and Ben Bernanke’s testimony for the Federal Reserve’s semi-annual monetary policy report to Congress. Last week the Fed raised the discount rate by 0.25 point to 0.75 percent, said the term of these direct loans to banks will revert to overnight next month from 28 days currently, and left Fed Funds unchanged at 0-.25%. There has been nothing to suggest an extension or expansion of the MBS purchase program, which ends March 31st, so it will be interesting to see what he says. Currently mortgage prices are a shade better.
2/23/10
Most rate prices improved today as mortgage bonds rally along with Treasuries off of worse than expected consumer sentiment data released this morning that has the 10-year yield back down to 3.72%. Not surprisingly, stocks are lower with the Dow down 75-points at the moment. Many analysts are indicating they do not think mortgage rates will jump right after the Fed stops buying at the end of March. Many believe private money will come in—although they do admit spreads with Treasuries will have to widen somewhat—and take up the slack, somewhat due to the Fannie and Freddie impending buybacks that will given investors capital to reinvest in mortgages. The two main drivers of rates post Fed will be where the Treasury market is (as mortgages are relative to them) and at what time and pace the Fed decides to start selling all those MBS is has purchased. Time will tell…
Monday, February 22, 2010
Mortgage Market Review - 2/22/10
This Morning…Monday, February 22, 2010:
Most rate prices are slightly improved today as mortgage bonds tighten with Treasuries after last week’s beating. Stocks are lower, still bruised from the Fed’s hiking of the discount rate last week and uncertainty over Greece’s debt crisis despite positive manufacturing data released this morning.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates considerably higher. The bond market took a hit as inflation concerns emerged after the stronger than expected producer price index data. Producer prices surged in January amid higher energy costs to almost double expectations. The Fed made a surprise rate hike to the discount rate that also resulted in mortgage rate increases. The only positive was the tame consumer inflation reading Friday morning but we were unable to rebound from the earlier losses. Unfortunately rates rose over ¼% for the week.
This Week:
As we head into the last week of February, today is void of economic news. Tomorrow we have the Case-Shiller 20-city Index, along with Consumer Confidence which will set the tone for trading this week.. Wednesday holds New Home Sales which is expected to be up over 2%. Thursday we have the standard Jobless Claims, and also Durable Goods. Friday is the Chicago Purchasing Manager’s Survey, and Existing Home Sales which is expected to be up almost 1%. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday and a Bernanke speech on Wednesday.
EconomicIndicator
Consumer Confidence
Tuesday, Feb. 23,10:00 am, et
55.0
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction
Tuesday, Feb. 23,1:00 pm, et
None
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
New Home Sales
Wednesday, Feb. 24, 10:00 am, et
Up 2.3%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction
Wednesday, Feb. 24, 1:00 pm, et
None
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders
Thursday, Feb 25,8:30 am, et
Up 1.5%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
Weekly Jobless Claims
Thursday, Feb 25,8:30 am, et
460k
Important. Higher jobless claims may lead to lower mortgage interest rates.
7-year Treasury Note Auction
Thursday, Feb 25,1:00 pm, et
None
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q4 GDP second estimate
Friday, Feb. 26,8:30 am, et
Up 5.6%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Friday, Feb. 26,10:00 am, et
73.9
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Existing Home Sales
Friday, Feb. 26,10:00 am, et
Up 0.9%
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
Market Forecast:
There should be plenty of movement in bond prices and mortgage rates this week. I think we will see the most movement either Wednesday or Thursday, but Friday may be fairly active also.
The Federal Reserve caught market participants by surprise with their 25 basis point discount rate hike last week. While analysts were split on whether the Fed would raise rates this year, that question has now been answered. The move resulted in volatility in most of the US financial markets. The discount rate is the interest rate charged to commercial banks on loans they receive from the Fed. The rate hike is an effort to pull back the aid provided by extraordinary low rates amid the global economic decline. The Fed specifically noted the move was needed "in light of continued improvement in financial market conditions." Many analysts noted the earlier warnings from Fed Bernanke that rate hikes were coming but very few, if any, expected the move this soon.
While the rate hike resulted in mortgage bond price weakness in the short-term, the long-term outlook is less certain. Most analysts believe inflation remains in check, but at the same time the Fed purchasing of MBS will soon be over. Interest rates are headed higher, in a choppy pattern but up. The path won't be straight up and analysts do not expect rates to increase more than another ½% through the rest of the year. As for any potential for a sizeable decline in rates; it will take a solid break in the equity markets which at this point doesn't seem likely. A cautious approach to "float" and "lock" decisions is prudent taking the current market conditions into consideration.
Some Humor:
A psychiatrist was conducting a group therapy session with four young mothers and their small children.
"You all have obsessions," he observed.
To the first mother, he said, "Mary, you are obsessed with eating. You've even named your daughter Candy."
He turned to the second Mom: "Ann, your obsession is with money. Again it manifests itself in your child's name, Penny."
He turned to the third Mom: "Joyce, your obsession is alcohol. This too shows itself in your child's name, Brandy."
At this point, the fourth mother, Kathy, quietly got up, took her little boy by the hand, and whispered, "Come on, Dick, this guy has no idea what he's talking about. Let's pick up Peter and Willy from school and go get dinner."
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.
Most rate prices are slightly improved today as mortgage bonds tighten with Treasuries after last week’s beating. Stocks are lower, still bruised from the Fed’s hiking of the discount rate last week and uncertainty over Greece’s debt crisis despite positive manufacturing data released this morning.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates considerably higher. The bond market took a hit as inflation concerns emerged after the stronger than expected producer price index data. Producer prices surged in January amid higher energy costs to almost double expectations. The Fed made a surprise rate hike to the discount rate that also resulted in mortgage rate increases. The only positive was the tame consumer inflation reading Friday morning but we were unable to rebound from the earlier losses. Unfortunately rates rose over ¼% for the week.
This Week:
As we head into the last week of February, today is void of economic news. Tomorrow we have the Case-Shiller 20-city Index, along with Consumer Confidence which will set the tone for trading this week.. Wednesday holds New Home Sales which is expected to be up over 2%. Thursday we have the standard Jobless Claims, and also Durable Goods. Friday is the Chicago Purchasing Manager’s Survey, and Existing Home Sales which is expected to be up almost 1%. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday and a Bernanke speech on Wednesday.
EconomicIndicator
Consumer Confidence
Tuesday, Feb. 23,10:00 am, et
55.0
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction
Tuesday, Feb. 23,1:00 pm, et
None
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
New Home Sales
Wednesday, Feb. 24, 10:00 am, et
Up 2.3%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction
Wednesday, Feb. 24, 1:00 pm, et
None
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders
Thursday, Feb 25,8:30 am, et
Up 1.5%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
Weekly Jobless Claims
Thursday, Feb 25,8:30 am, et
460k
Important. Higher jobless claims may lead to lower mortgage interest rates.
7-year Treasury Note Auction
Thursday, Feb 25,1:00 pm, et
None
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q4 GDP second estimate
Friday, Feb. 26,8:30 am, et
Up 5.6%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Friday, Feb. 26,10:00 am, et
73.9
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Existing Home Sales
Friday, Feb. 26,10:00 am, et
Up 0.9%
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
Market Forecast:
There should be plenty of movement in bond prices and mortgage rates this week. I think we will see the most movement either Wednesday or Thursday, but Friday may be fairly active also.
The Federal Reserve caught market participants by surprise with their 25 basis point discount rate hike last week. While analysts were split on whether the Fed would raise rates this year, that question has now been answered. The move resulted in volatility in most of the US financial markets. The discount rate is the interest rate charged to commercial banks on loans they receive from the Fed. The rate hike is an effort to pull back the aid provided by extraordinary low rates amid the global economic decline. The Fed specifically noted the move was needed "in light of continued improvement in financial market conditions." Many analysts noted the earlier warnings from Fed Bernanke that rate hikes were coming but very few, if any, expected the move this soon.
While the rate hike resulted in mortgage bond price weakness in the short-term, the long-term outlook is less certain. Most analysts believe inflation remains in check, but at the same time the Fed purchasing of MBS will soon be over. Interest rates are headed higher, in a choppy pattern but up. The path won't be straight up and analysts do not expect rates to increase more than another ½% through the rest of the year. As for any potential for a sizeable decline in rates; it will take a solid break in the equity markets which at this point doesn't seem likely. A cautious approach to "float" and "lock" decisions is prudent taking the current market conditions into consideration.
Some Humor:
A psychiatrist was conducting a group therapy session with four young mothers and their small children.
"You all have obsessions," he observed.
To the first mother, he said, "Mary, you are obsessed with eating. You've even named your daughter Candy."
He turned to the second Mom: "Ann, your obsession is with money. Again it manifests itself in your child's name, Penny."
He turned to the third Mom: "Joyce, your obsession is alcohol. This too shows itself in your child's name, Brandy."
At this point, the fourth mother, Kathy, quietly got up, took her little boy by the hand, and whispered, "Come on, Dick, this guy has no idea what he's talking about. Let's pick up Peter and Willy from school and go get dinner."
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, February 19, 2010
2/19/10
The only news out this morning was the Consumer Price Index, which showed that consumer prices rose less than expected in January: The core rate, excluding food and energy fell for the first time since 1982. After the news the 10-yr is basically unchanged at 3.80% and mortgage rates are worse by about .125 from yesterday afternoon.
2/18/10
Most rate prices are worse today as mortgage bonds continue yesterday’s slide into negative territory after the FOMC minutes headline highlighted some members’ preference for selling MBS sooner than later. The selloff trend has extended after the release of bond unfriendly data in the form of higher producer prices, better than expected manufacturing and leading economic indicator data. The benchmark 10-year Treasury yield has broken through its resistance level and is now pushing 3.80%. We’re in open waters folks so be careful as selloffs can take on a life of their own. Lenders are in the middle of re-prices as we type. Stock market indices are slightly positive as this is really a bond story ahead of the Fed’s exit and the anxiety of valuations when the private market has to come back to the table…
2/17/10
Most rate prices worsened today as mortgage bonds give up yesterday’s modest gains and much of the price improvements. Mortgages are tight with Treasuries which opened weaker after better than expected housing starts and industrial production data was released this morning. Higher than expected import prices were largely due to higher oil prices as investors read this data as market neutral. Stock market indices are again in positive territory, putting pressure on bonds as the Dow is back comfortably above the 10,000 mark.
Tuesday, February 16, 2010
Mortgage Market Review - 2/16/10
This Morning…Monday, February 16, 2010:
Tuesday’s bond market has opened in negative territory due early gains in stocks. The stock markets are kicking-off the holiday shortened week with noticeable gains. The Dow is currently up 50 points while the Nasdaq has gained 7 points. The bond market is currently down which has pushed mortgage rates slightly higher.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates slightly higher. The early part of the week saw a reversal of the recent flight to quality buying of US investments as talks hinted of a Greek bailout by Germany. German Chancellor Merkel dashed those hopes late in the week causing turmoil in the European Union. As a result global investor funds returned to the US bond market. Rates improved Friday morning, which helped recover some of the earlier losses. Unfortunately rates still rose overall for the week by about 1/8 of a discount point.
This Week:
This week, the most significant economic data are the PPI and CPI siblings: the monthly inflation reports. The Producer Price Index comes out Thursday, and the Consumer Price Index comes out Friday. Besides those, we have little of importance today. Tomorrow we have Housing Starts and Building Permits, Industrial Production and Capacity Utilization, along with the FOMC Minutes from the January 27 Fed meeting. Throw in some Import Prices tomorrow, Leading Indicators, Jobless Claims, and the Philly Fed Thursday, and we have a pretty busy and potentially volatile week.
EconomicIndicator
Presidents Day
Monday, Feb. 15
Important. Extended holiday weekend may result in volatility when trading resumes Tuesday.
Housing Starts
Wednesday, Feb. 17,8:30 am, et
Up 0.4%
Important. A measure of housing sector strength. Weakness may lead to lower rates.
Industrial Production
Wednesday, Feb. 17,9:15 am, et
Up 0.8%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Capacity Utilization
Wednesday, Feb. 17,9:15 am, et
72.2%
Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.
Producer Price Index
Thursday, Feb. 18,8:30 am, et
Up 0.7%,Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.
Leading Economic Indicators
Thursday, Feb. 18,10:00 am, et
Up 0.5%
Important. An indication of future economic activity. Weakness may lead to lower rates.
Philadelphia Fed Survey
Thursday, Feb. 18,10:00 am, et
17.5
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Consumer Price Index
Friday, Feb. 19,8:30 am, et
Up 0.3%,Core up 0.2%
Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates.
Market Forecast:
Overall, the most important day of the week will likely be Friday with the very important Consumer Price Index being released, but Thursday may also be active days for mortgage rates due to the Producer Price Index being posted. We also cannot forget about tomorrow’s FOMC minutes as they may be a non-factor but also have the potential to heavily influence the markets and mortgage pricing. In other words, be prepared for an active week in the markets and mortgage rates.
Some Humor:
An Amish boy and his father were in a mall. They were amazed by almost everything they saw, but especially by two shiny, silver walls that could move apart and then slide back together again.
The boy asked, "What is this Father?"
The father (never having seen an elevator) responded, "Son, I have never seen anything like this in my life, I don't know what it is!"
While the boy and his father were watching with amazement, an overweight old lady in a wheel chair moved up to the moving walls and pressed a button.
The walls opened and the lady rolled between them into a small room. The walls closed and the boy and his father watched the small circular numbers above the walls light up sequentially. They continued to watch until it reached the last number and then the numbers began to light in the reverse order.
Finally the walls opened up again and a gorgeous 24-year-old blond stepped out.
The father said quietly to his son....."Go get your mother."
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.
Tuesday’s bond market has opened in negative territory due early gains in stocks. The stock markets are kicking-off the holiday shortened week with noticeable gains. The Dow is currently up 50 points while the Nasdaq has gained 7 points. The bond market is currently down which has pushed mortgage rates slightly higher.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates slightly higher. The early part of the week saw a reversal of the recent flight to quality buying of US investments as talks hinted of a Greek bailout by Germany. German Chancellor Merkel dashed those hopes late in the week causing turmoil in the European Union. As a result global investor funds returned to the US bond market. Rates improved Friday morning, which helped recover some of the earlier losses. Unfortunately rates still rose overall for the week by about 1/8 of a discount point.
This Week:
This week, the most significant economic data are the PPI and CPI siblings: the monthly inflation reports. The Producer Price Index comes out Thursday, and the Consumer Price Index comes out Friday. Besides those, we have little of importance today. Tomorrow we have Housing Starts and Building Permits, Industrial Production and Capacity Utilization, along with the FOMC Minutes from the January 27 Fed meeting. Throw in some Import Prices tomorrow, Leading Indicators, Jobless Claims, and the Philly Fed Thursday, and we have a pretty busy and potentially volatile week.
EconomicIndicator
Presidents Day
Monday, Feb. 15
Important. Extended holiday weekend may result in volatility when trading resumes Tuesday.
Housing Starts
Wednesday, Feb. 17,8:30 am, et
Up 0.4%
Important. A measure of housing sector strength. Weakness may lead to lower rates.
Industrial Production
Wednesday, Feb. 17,9:15 am, et
Up 0.8%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Capacity Utilization
Wednesday, Feb. 17,9:15 am, et
72.2%
Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.
Producer Price Index
Thursday, Feb. 18,8:30 am, et
Up 0.7%,Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.
Leading Economic Indicators
Thursday, Feb. 18,10:00 am, et
Up 0.5%
Important. An indication of future economic activity. Weakness may lead to lower rates.
Philadelphia Fed Survey
Thursday, Feb. 18,10:00 am, et
17.5
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Consumer Price Index
Friday, Feb. 19,8:30 am, et
Up 0.3%,Core up 0.2%
Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates.
Market Forecast:
Overall, the most important day of the week will likely be Friday with the very important Consumer Price Index being released, but Thursday may also be active days for mortgage rates due to the Producer Price Index being posted. We also cannot forget about tomorrow’s FOMC minutes as they may be a non-factor but also have the potential to heavily influence the markets and mortgage pricing. In other words, be prepared for an active week in the markets and mortgage rates.
Some Humor:
An Amish boy and his father were in a mall. They were amazed by almost everything they saw, but especially by two shiny, silver walls that could move apart and then slide back together again.
The boy asked, "What is this Father?"
The father (never having seen an elevator) responded, "Son, I have never seen anything like this in my life, I don't know what it is!"
While the boy and his father were watching with amazement, an overweight old lady in a wheel chair moved up to the moving walls and pressed a button.
The walls opened and the lady rolled between them into a small room. The walls closed and the boy and his father watched the small circular numbers above the walls light up sequentially. They continued to watch until it reached the last number and then the numbers began to light in the reverse order.
Finally the walls opened up again and a gorgeous 24-year-old blond stepped out.
The father said quietly to his son....."Go get your mother."
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, February 12, 2010
2/12/10
Yesterday’s bond auction was below expectations as the 30-yr yield came in at the cheapest level since June. But at least it is out of the way! This morning the delayed Retail Sales figure was released. Sales rose more than expected in January, according to the Commerce Department, after falling in December. Sales, compared to January ’09, were up 4.7 percent. We are seeing a bit of a bounce in bond-land, with mortgage rates slightly lower this morning. Have a nice 3-day weekend.
2/11/10
Most rates are level to slightly better than yesterday’s re-price for the worse as mortgage bonds attempt to hold onto some reclaimed losses from late in the session on Wednesday. Treasuries are weakening ahead of today’s 30-year Auction. If Tuesday’s and Wednesday’s auctions are any indication, it doesn’t look good. However MBS are tightening with Treasuries at the moment helping keep rate sheet prices intact—for now. Stocks initially negative have done an about face and are now trading higher, adding pressure to bonds. Jobless claims came in better than expected but had little effect on the market. Tomorrow brings retail sales and consumer confidence. Today’s auction results due out around 10am.
2/10/10
Good morning. Most rates worsened again today as mortgage rates continue to slide from their recent highs on Friday ahead of today’s 10-year auction. Stocks opened down as questions surfaced over Europe’s resolve to triage Greece’s debt crisis, helping bonds hold their levels. Bernanke’s press release was a sneak preview of what might be in the cards for the Fed’s tightening. He indicated that nothing would be implemented until the economy was back in better shape, but the markets took this release--and it’s not-to-be-delayed by the weather urgency—as a hint it may happen sooner than he suggested. The economic releases did little to move the markets—they were all worse than expected. Not good news…
2/9/10
Most rate prices are worse today as mortgage bonds continue to slide with Treasuries ahead of today’s 3-year note auction. Bonds are under pressure this morning as the stock market bounces back with the Dow back up over 10,000 as investors are buoyed by hopes of a Greek bailout plan as well as positive comments from analysts on industrial stocks. Today we are seeing some improvement since market open as the Dow recedes below 10,000 again in back and forth trading…
Monday, February 8, 2010
Mortgage Market Review - 2/8/10
Good morning. What a game yesterday! Even non football enthusiasts had to admit it was a good one. If you missed the ads, you can find ALL of them at http://superbowlads.fanhouse.com/?sem=1&ncid=AOLSPR00170000000009&otim=1265644718&spid=36198916. On a complete aside, a few days ago CNBC reported that it costs 2 cents to make a penny and 10 cents to make a nickel. Lastly, I thought that I knew what a bank was, until I saw this… http://uncyclopedia.wikia.com/wiki/Banker. Have a great week and please let me know if you have any questions. Thanks for taking the time to look this over. I hope you find it informative and useful.
Fred
This Morning…Monday, February 8, 2010:
Monday’s bond market has opened in negative territory despite a negative open in stocks. The Dow and Nasdaq are both showing early losses with the Dow and Nasdaq down. The bond market is currently down, which should keep this morning’s mortgage rates near Friday’s morning levels. It should be a generally quiet trade today unless there is a very big move in stock indexes.
Last Week:
Mortgage bond prices rose last week pushing mortgage interest rates just slightly lower. Reignited fear of a global economic meltdown sent money into the mortgage bond market in flight to quality buying. The news reports were permeated with worries about European debt payment defaults. Greece and a few other countries were noted as specific concerns. The employment report Friday morning was mixed with unemployment not as bad as expected (down 9.7% from 10.0%) but a larger than expected drop in payrolls.
This Week:
This week the government will auction a total of $81 billion in 3-year, 10-year and 30-year Treasury securities. Strong foreign demand will likely help the entire bond market. There is no economic news today, nor really any tomorrow of any consequence. Wednesday the 10th we will see some Trade Balance figures, and on Thursday Retail Sales (likely the headline figure this week), Jobless Claims, and Business Inventories. Friday we finish off the light week with the University of Michigan Consumer Sentiment Survey.
EconomicIndicator
3-year Note Auction
Tuesday, Feb. 9,1:00 pm, et
None
Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Wednesday, Feb. 10,8:30 am, et
$35 billion deficit
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
10-year Note Auction
Wednesday, Feb. 10,1:00 pm, et
None
Important. $25 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, Feb. 11,8:30 am, et
475k
Important. An indication of the employment situation. Higher claims could lead to lower rates.
Retail Sales
Thursday, Feb. 11,8:30 am, et
Up 0.4%
Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Business Inventories
Thursday, Feb. 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.
30-year Bond Auction
Thursday, Feb. 11,1:00 pm, et
None
Important. $16 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
U of Michigan Consumer Sentiment
Friday, Feb. 12,10:00 am, et
74.6
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
Overall, look for Thursday to be the most important of the day of the week due to the importance of the Retail Sales report. But, I suspect that we may see movement in mortgage rates several days this week. I am still holding a cautious approach stance towards mortgage rates and believe that the risk of floating a rate outweighs the potential gains.
Some Humor:
A Cajun who died went to hell.
The devil assigned him the usual punishment: he put him in the mass pit where the heat was melting others.
The devil came back sometime later surprised to find the Cajun just sitting around, not even misting, much less sweating. "How come you're not so much as sweating here where everyone else is screaming for relief from the heat?"
The Cajun laughed and said, "Man, I was raised in the bayous of Sout Looziana. Dis ain't nothin' but May in Lafayette to me!"
The devil decided to really put the Cajun through it. He put him in a sealed off cave in the pit with open blazes and four extra furnaces blasting.
When he came back, days later, the Cajun was sitting pretty, had barely begun to bead up with sweat.
The devil was outraged. "How is this possible!? You should be melted to a shrieking puddle in these conditions!"
The Cajun laughed even harder than before. "Hey, man! I done tole you. I was raised in Sout Looziana. You tink dis is heat?! Dis ain't nothin' but August in Jennings!"
So the devil thought, "Alright, a little reverse ought to do the trick." He put the Cajun into a corner of hell where no heat ever reached. It was freezing; and, to add to the Cajun's misery, he added massive icebergs and blasting frozen air. When he returned, the Cajun was shivering with ice hanging from every part of him; but he was grinning like it was Christmas.
Exasperated, the devil asked, "HOW!? How is it possible?! You're impervious to heat, and here you sit in conditions you can't be used to...freezing cold; and yet you're happier than ever. WHY?!"
The Cajun kept grinning and said, "Dis mean de Saints done won da Super Bowl?!!"
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.
Fred
This Morning…Monday, February 8, 2010:
Monday’s bond market has opened in negative territory despite a negative open in stocks. The Dow and Nasdaq are both showing early losses with the Dow and Nasdaq down. The bond market is currently down, which should keep this morning’s mortgage rates near Friday’s morning levels. It should be a generally quiet trade today unless there is a very big move in stock indexes.
Last Week:
Mortgage bond prices rose last week pushing mortgage interest rates just slightly lower. Reignited fear of a global economic meltdown sent money into the mortgage bond market in flight to quality buying. The news reports were permeated with worries about European debt payment defaults. Greece and a few other countries were noted as specific concerns. The employment report Friday morning was mixed with unemployment not as bad as expected (down 9.7% from 10.0%) but a larger than expected drop in payrolls.
This Week:
This week the government will auction a total of $81 billion in 3-year, 10-year and 30-year Treasury securities. Strong foreign demand will likely help the entire bond market. There is no economic news today, nor really any tomorrow of any consequence. Wednesday the 10th we will see some Trade Balance figures, and on Thursday Retail Sales (likely the headline figure this week), Jobless Claims, and Business Inventories. Friday we finish off the light week with the University of Michigan Consumer Sentiment Survey.
EconomicIndicator
3-year Note Auction
Tuesday, Feb. 9,1:00 pm, et
None
Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Wednesday, Feb. 10,8:30 am, et
$35 billion deficit
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
10-year Note Auction
Wednesday, Feb. 10,1:00 pm, et
None
Important. $25 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, Feb. 11,8:30 am, et
475k
Important. An indication of the employment situation. Higher claims could lead to lower rates.
Retail Sales
Thursday, Feb. 11,8:30 am, et
Up 0.4%
Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Business Inventories
Thursday, Feb. 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.
30-year Bond Auction
Thursday, Feb. 11,1:00 pm, et
None
Important. $16 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
U of Michigan Consumer Sentiment
Friday, Feb. 12,10:00 am, et
74.6
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
Overall, look for Thursday to be the most important of the day of the week due to the importance of the Retail Sales report. But, I suspect that we may see movement in mortgage rates several days this week. I am still holding a cautious approach stance towards mortgage rates and believe that the risk of floating a rate outweighs the potential gains.
Some Humor:
A Cajun who died went to hell.
The devil assigned him the usual punishment: he put him in the mass pit where the heat was melting others.
The devil came back sometime later surprised to find the Cajun just sitting around, not even misting, much less sweating. "How come you're not so much as sweating here where everyone else is screaming for relief from the heat?"
The Cajun laughed and said, "Man, I was raised in the bayous of Sout Looziana. Dis ain't nothin' but May in Lafayette to me!"
The devil decided to really put the Cajun through it. He put him in a sealed off cave in the pit with open blazes and four extra furnaces blasting.
When he came back, days later, the Cajun was sitting pretty, had barely begun to bead up with sweat.
The devil was outraged. "How is this possible!? You should be melted to a shrieking puddle in these conditions!"
The Cajun laughed even harder than before. "Hey, man! I done tole you. I was raised in Sout Looziana. You tink dis is heat?! Dis ain't nothin' but August in Jennings!"
So the devil thought, "Alright, a little reverse ought to do the trick." He put the Cajun into a corner of hell where no heat ever reached. It was freezing; and, to add to the Cajun's misery, he added massive icebergs and blasting frozen air. When he returned, the Cajun was shivering with ice hanging from every part of him; but he was grinning like it was Christmas.
Exasperated, the devil asked, "HOW!? How is it possible?! You're impervious to heat, and here you sit in conditions you can't be used to...freezing cold; and yet you're happier than ever. WHY?!"
The Cajun kept grinning and said, "Dis mean de Saints done won da Super Bowl?!!"
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, February 5, 2010
2/5/10
Good morning. Yesterday’s stock market drop dominated the financial news and the markets did not pay much attention to Non-Farm Productivity increasing over 6% during the fourth quarter of 2009. Efficiency in the last nine months of 2009 soared at the fastest pace since 1966 as companies cut worker hours even after sales stabilized. And Factory Orders for November were up 1%, better than expected. But the focus, and one of the reasons given for stocks taking a beating, was on Jobless Claims which hit a 7-week high.
There is certainly a lot to be nervous about. There is the concern that around-the-world budget deficits will need to be financed by issuing more debt. Oil prices declined over 5% while gold prices also fell, down over 4%. This morning, Non-Farm Payrolls fell 20,000 in January which was less than expected. Conversely the Unemployment Rate dropped to 9.7%, once again highlighting the fact that a sharp increase in the number of people giving up looking for work helped to depress the jobless rate. After this news surprisingly, mortgage prices are holding steady.
There is certainly a lot to be nervous about. There is the concern that around-the-world budget deficits will need to be financed by issuing more debt. Oil prices declined over 5% while gold prices also fell, down over 4%. This morning, Non-Farm Payrolls fell 20,000 in January which was less than expected. Conversely the Unemployment Rate dropped to 9.7%, once again highlighting the fact that a sharp increase in the number of people giving up looking for work helped to depress the jobless rate. After this news surprisingly, mortgage prices are holding steady.
2/4/10
Today we have already seen the weekly Jobless Claims number and productivity numbers and will have Factory Orders later on. In other words, pretty quiet on the economic news front. We do have 3, 10, and 30 year Treasury instruments to auction off next week. Jobless Claims unexpectedly rose last week, up 8,000. to 480,000 in the last week of January. The four-week moving average for new claims rose for the third straight week of increases. And U.S. non-farm productivity rose faster than expected in the fourth quarter. Employers have been cutting costs and headcounts. The bond market likes the news, and is retracing yesterday’s losses: mortgage rates are slightly better this morning.
2/3/10
Good morning. Not much happening today. Later this morning we have another Institute of Supply Management number, and the only other scheduled economic news, of sorts, was the ADP employment number. (ADP, by the way, is the world’s largest payroll processing company, but its statistics do not include government jobs.) U.S. private employers cut 22,000 jobs in January, less than the 61,000 jobs lost in December. So far this morning mortgage rates are slightly worse.
2/2/10
Most rate prices are slightly improved today as mortgage bonds trade modestly higher with Treasuries this morning in what is shaping up to be a very quiet and uneventful start to the week that ends with the biggie jobs report. The other number that will most likely move mortgage rates is Thursday’s prepayment report. Today’s news is little more than an unchanged report of existing home pending sales. Stock Markets are trading to the positive for a second day and bonds are holding their ground at the moment.
Monday, February 1, 2010
Mortgage Market Review - 2/1/10
This Morning…Monday, February 1, 2010:
There has been a lot of information already this morning. Trading in the stock market was better this morning, sending mortgage rates slightly higher. At 8:30 Dec personal income, came in higher than expected, though spending came in slightly lower. The Institute for Supply Management (ISM), releases the "Report on Business" on the first working day of each month. Part of this report is the "diffusion index," which tracks the economy’s ups and downs fairly well. Jan ISM manufacturing data came in strong. The data was much better than traders were expecting and added to the selling in treasuries and mortgages. Also at 10:00 Dec construction spending, expected to be down slightly, was down hard. Markets put it on the back burner however, focusing more on the ISM report.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates slightly higher. Most of the data early in the week was bond-friendly. Unfortunately the Fed’s reminder that their purchases of mortgage bonds would cease after the first quarter sent bond prices tumbling Wednesday afternoon. This was partially due to KC Fed president Hoenig who dissented against the use of the phrase "keeping rates low for an extended period.” He thought with the economy improving, the "extended" word was inappropriate. This was followed by stronger than expected gross domestic product, employment cost index, and PCE price data Friday morning. Bonds were helped Friday afternoon as stocks remained jittery. Interest rates rose by about 1/8 of a discount point for the week.
This Week:
The employment report Friday will be the most important event this week. Income, outlays, ISM Index, productivity, and factory orders data may also move the market. The ADP payrolls data will be carefully watched on Wednesday even though the release does not always reflect the results of the employment report. It still provides another view of the employment situation.
EconomicIndicator
Personal Income and Outlays
Monday, Feb. 1,8:30 am, et
Income up 0.3%,Outlays up 0.2%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
Construction Spending
Monday, Feb. 1,10:00 am, et
Down 0.3%
Low importance. An indication of economic strength. A significant decrease may lead to lower rates.
ISM Index
Monday, Feb. 1,10:00 am, et
56.7
Important. A measure of manufacturer sentiment. A large decline may lead to lower mortgage rates.
ADP Employment
Wednesday, Feb. 3,8:30 am, et
-90k
Important. A measure of employment. A large decrease in payrolls may bring lower rates.
Preliminary Q4 Productivity
Thursday, Feb. 4,8:30 am, et
Up 5.9%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Factory Orders
Thursday, Feb. 4,10:00 am, et
Up 1.5%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Employment
Friday, Feb. 5,8:30 am, et
Unemp. @ 10%,Payrolls +20k
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Consumer Credit
Friday, Feb. 5,3:00 pm, et
Down $9.2 billion
Low importance. A significantly large increase may lead to lower mortgage interest rates.
Market Forecast:
Friday’s data is by far the most important of the week. The Labor Department will post January’s Employment data early Friday morning, giving us the U.S. unemployment rate and the number of jobs added or lost during the month among other related statistics. Analysts are expecting to see the unemployment rate remain at 10.0% and that approximately 13,000 new jobs were added to the economy. An increase in unemployment and a loss in payrolls would be great news for the bond market. However, if Friday’s report reveals stronger than expected results, we can expect to see mortgage rates move higher. In addition to the factual economic data, we also have several public speaking events about the U.S. budget, monetary policy and other related topics. They are sprinkled throughout the week and can cause a market reaction if anything said surprises market participants.
Overall, I believe that market volatility this week will likely be up a little with interday swings that will keep markets in check until the employment data on Friday morning.
Some Humor:
A rancher got in his pickup and drove to a neighboring ranch and knocked at the door. A young boy, about 9, opened the door "Is your Dad home?" the rancher asked.
"No sir, he isn't," the boy replied. "He went into town."
"Well," said the rancher, "Is your Mother here?"
"No sir, she's not here either. She went into town with Dad."
"How about your brother, Howard? Is he here?"
"No sir, He went with Mom and Dad."
The rancher stood there for a few minutes, shifting from one foot to the other and mumbling to himself.
"Is there anything I can do for you?" the boy asked politely. "I know where all the tools are, if you want to borrow one. Or maybe I could take a message for Dad."
"Well," said the rancher uncomfortably, "I really wanted to talk to your Dad. It's about your brother Howard getting my daughter, Suzie, pregnant."'
The boy considered for a moment. "You would have to talk to Pa about that," he finally conceded. "If it helps you any, I know that Pa charges $500 for the bull and $50 for the hog, but I really don't know how much he gets for Howard."
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
There has been a lot of information already this morning. Trading in the stock market was better this morning, sending mortgage rates slightly higher. At 8:30 Dec personal income, came in higher than expected, though spending came in slightly lower. The Institute for Supply Management (ISM), releases the "Report on Business" on the first working day of each month. Part of this report is the "diffusion index," which tracks the economy’s ups and downs fairly well. Jan ISM manufacturing data came in strong. The data was much better than traders were expecting and added to the selling in treasuries and mortgages. Also at 10:00 Dec construction spending, expected to be down slightly, was down hard. Markets put it on the back burner however, focusing more on the ISM report.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates slightly higher. Most of the data early in the week was bond-friendly. Unfortunately the Fed’s reminder that their purchases of mortgage bonds would cease after the first quarter sent bond prices tumbling Wednesday afternoon. This was partially due to KC Fed president Hoenig who dissented against the use of the phrase "keeping rates low for an extended period.” He thought with the economy improving, the "extended" word was inappropriate. This was followed by stronger than expected gross domestic product, employment cost index, and PCE price data Friday morning. Bonds were helped Friday afternoon as stocks remained jittery. Interest rates rose by about 1/8 of a discount point for the week.
This Week:
The employment report Friday will be the most important event this week. Income, outlays, ISM Index, productivity, and factory orders data may also move the market. The ADP payrolls data will be carefully watched on Wednesday even though the release does not always reflect the results of the employment report. It still provides another view of the employment situation.
EconomicIndicator
Personal Income and Outlays
Monday, Feb. 1,8:30 am, et
Income up 0.3%,Outlays up 0.2%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
Construction Spending
Monday, Feb. 1,10:00 am, et
Down 0.3%
Low importance. An indication of economic strength. A significant decrease may lead to lower rates.
ISM Index
Monday, Feb. 1,10:00 am, et
56.7
Important. A measure of manufacturer sentiment. A large decline may lead to lower mortgage rates.
ADP Employment
Wednesday, Feb. 3,8:30 am, et
-90k
Important. A measure of employment. A large decrease in payrolls may bring lower rates.
Preliminary Q4 Productivity
Thursday, Feb. 4,8:30 am, et
Up 5.9%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Factory Orders
Thursday, Feb. 4,10:00 am, et
Up 1.5%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Employment
Friday, Feb. 5,8:30 am, et
Unemp. @ 10%,Payrolls +20k
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Consumer Credit
Friday, Feb. 5,3:00 pm, et
Down $9.2 billion
Low importance. A significantly large increase may lead to lower mortgage interest rates.
Market Forecast:
Friday’s data is by far the most important of the week. The Labor Department will post January’s Employment data early Friday morning, giving us the U.S. unemployment rate and the number of jobs added or lost during the month among other related statistics. Analysts are expecting to see the unemployment rate remain at 10.0% and that approximately 13,000 new jobs were added to the economy. An increase in unemployment and a loss in payrolls would be great news for the bond market. However, if Friday’s report reveals stronger than expected results, we can expect to see mortgage rates move higher. In addition to the factual economic data, we also have several public speaking events about the U.S. budget, monetary policy and other related topics. They are sprinkled throughout the week and can cause a market reaction if anything said surprises market participants.
Overall, I believe that market volatility this week will likely be up a little with interday swings that will keep markets in check until the employment data on Friday morning.
Some Humor:
A rancher got in his pickup and drove to a neighboring ranch and knocked at the door. A young boy, about 9, opened the door "Is your Dad home?" the rancher asked.
"No sir, he isn't," the boy replied. "He went into town."
"Well," said the rancher, "Is your Mother here?"
"No sir, she's not here either. She went into town with Dad."
"How about your brother, Howard? Is he here?"
"No sir, He went with Mom and Dad."
The rancher stood there for a few minutes, shifting from one foot to the other and mumbling to himself.
"Is there anything I can do for you?" the boy asked politely. "I know where all the tools are, if you want to borrow one. Or maybe I could take a message for Dad."
"Well," said the rancher uncomfortably, "I really wanted to talk to your Dad. It's about your brother Howard getting my daughter, Suzie, pregnant."'
The boy considered for a moment. "You would have to talk to Pa about that," he finally conceded. "If it helps you any, I know that Pa charges $500 for the bull and $50 for the hog, but I really don't know how much he gets for Howard."
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
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