Friday, April 30, 2010
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.
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…
Monday, April 26, 2010
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.
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.
Monday, April 19, 2010
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.
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.
Friday, April 16, 2010
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.
Friday, April 9, 2010
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.
Monday, April 5, 2010
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.
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.
Friday, April 2, 2010
4/2/10
More trouble for the interest rate sector this morning on the releases of the employment report at 8:30. The headline is an increase in jobs by 162K with the unemployment rate unchanged at 9.7%. While the overall number of jobs was less than expected, the increase in private jobs (non-government hires) was more than thought and the addition of census workers to the job market was much less than expected. The stock market is closed today and the bond market is open until noon. I hope you have a Happy Easter holiday.
4/1/10
Most rate prices worsened today this first day of April, a new quarter and the “new” market without the Fed buying mortgages. No, rates haven’t fallen off a cliff without the Fed today, but strong jobless claims—the lowest since 2008—and a stronger than expected ISM manufacturing number—the first time all components signaled expansion since April 2006--are pressuring bonds and boosting stocks. The Dow is up over 60-points at the moment, tickling the evasive 11,000 mark. Adding pressure, the market is set for an early close tomorrow for Good Friday ahead of Easter Sunday. Tomorrow brings the big Jobs report and for the first time in a long time we’re expecting a positive number. Given the Fed’s exit and the early close it should make for an interesting day. Stay tuned!
3/31/10
Most rate prices are near unchanged today. Economic data was mixed today with better than expected Factory order numbers tempered by a worse than expected Chicago region production index. Both numbers, however depict a slow and sometimes sputtering but nonetheless forward moving economic recovery. Today is the last day of the Fed’s MBS buying spree which has given them ownership of $1.25 TRILLION in MBS. Overseas demand, GSE buyouts putting money back into the market and the well-telegraphed timing by the Fed are believed to mute most negative effects of the pullout. One thing is for sure: we will see great volatility in rate pricing. So fasten your seatbelts. The ride could be a little bumpier from now on…
3/30/10
Most rate prices worsened today as mortgage bonds lose ground from Monday levels. Yesterday mortgages benefitted from overseas buying as originator supply was below average, helping to prop up prices and lower rates. Earlier this morning a round of profit taking undercut some of those gains, but bonds appear to be firming up as stocks fade and the Dow turns negative, denying the 11,000 mark once again. Home price data came in line with expectations and consumer confidence data exceeded expectations but was tempered by the sharp decline from last month. Today is expected to be another quiet trading day with tomorrow potentially shaking things up with month end and quarter end activities. And…the end of the Fed MBS program. Many are hopeful we won’t see a sharp rise in rates as investor demand—especially overseas—has picked up.
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