Friday, May 28, 2010
5/28/10
Most rates have improved this morning going into the long weekend, as mortgage bonds have recovered some of their losses from yesterday's rout. Today's gains could be attributed to the fact that the JV trading teams are on the floor at the NYSE while senior managers have already fled to their quaint Hampton's retreats. Inflation expectations seem to be creeping up in the near term. North Korea has emboldened its stance regarding its southern neighbor, while the gulf coast environmental disaster finally seems to be getting the cleanup attention it deserves. Global turmoil is generally good for bonds, but with thin trading, and high volatility, it's tough to gauge market direction. Let's make sure we take a few minutes this weekend to think about our service men and women who provide this nice long weekend for the rest of us. Remember the bond market closes at 11:00 am PST today due to the Memorial Day holiday.
5/27/10
Most rates are sharply higher today, as mortgage bonds have accelerated their decline from yesterday’s trade. The Dow is rallying through the roof, erasing much of the week’s losses. The decline comes mostly off of the news that China will hold their European debt for the time being. Jobless claims came in higher than expected, and GDP was weaker than expected. Both bond friendly indicators paint a still weakened economic picture for the US. Welcome back to life without the Fed. Volatility remains high, and doesn't show any signs of slowing.
5/26/10
Overall the news yesterday helped bonds: continued European fears, the Euro hitting an 8-year low versus the yen, Korean fears, the Case-Shiller index lower, Consumer Confidence slightly higher. We also had a 2-yr auction, which is now under water. At one point the DOW was down over 300 points.
Later this morning we will have New Home Sales for April, expected to increase. We also have a 5-yr auction, which typically goes pretty well and Durable Goods came out at +2.9%. But ex-transportation the number was down, so cars and planes played a big role in this number.
Later this morning we will have New Home Sales for April, expected to increase. We also have a 5-yr auction, which typically goes pretty well and Durable Goods came out at +2.9%. But ex-transportation the number was down, so cars and planes played a big role in this number.
5/25/10
Most rate prices have improved today as mortgage bonds are rallying off of a decimated stock market. News releases were a mixed batch today with consumer confidence improving for the most part, but home prices showed a net decline in the 1st quarter, signaling that the home buyer tax-credit did little more than line the pockets of realtors. Most of the market movement has little to do with domestic headlines. Tensions in the Korean peninsula continue to escalate driving investors into the "security" of US fixed income. Keep watching.
Monday, May 24, 2010
Mortgage Market Review - 5/24/10
This Morning…Monday, May 24, 2010:
April existing home sales released at 10:00 were expected to be up 4.4% and came in up 7.6%. The dark side however, according to NAR there is now an 8.4 month supply of homes, increasing from 8.1 months in March. Single family sales were down from March adding credence to our long held view that the housing sector is nowhere near a turn. The April increase was mostly in condos which were up 9.1%. Sales increased in April mainly on the tax credit. Markets' reactions were choppy on the data but by 10:10 the DJIA which jumped to -95 had come back to -60 and mortgage rates about where they traded prior to the report. No additional economic releases today; the remainder of the day is as it has been for three weeks; watching equity markets and the euro currency.
Last Week:
Last week interest rates fell on a 426 point decline in the stock market and increasing concern that Europe's economy is going to slow and drag down recovery here. The euro rallied three days last week but traders and investors appear no longer to be tying their pessimism solely to the euro currency. Weekly jobless claims unexpectedly jumped to a two month high of new unemployment claims. What was the strong belief the economic recovery was solid has now been redefined as a potential double dip with the economy slipping on Europe's debt problems headlined by Greece. For two months after a strong run up in the equity markets most were expecting a correction in the stock market but didn't believe it would be this bad. Money running headlong to the safety of US treasuries and has allowed mortgage rates to fall which has been the good news for us.
This Week:
This week we have another set of auctions with which to grapple (2-year notes, 5-yr, and 7-yr. notes). We have Existing Home Sales today and New Home Sales on Wednesday. Durable Good is on Wednesday, and on Thursday one of the usual GDP revisions for the 1st quarter (old news). The Chicago PMI manufacturing index and Personal Income & Consumption are scheduled for Friday. It should be a volatile week.
EconomicIndicator
Consumer Confidence
Tuesday, May 25,10:00 am, et
58.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction
Tuesday, May 25,1:15 pm, et
None
Important. $42 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders
Wednesday, May 26,8:30 am, et
Up 0.9%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
New Home Sales
Wednesday, May 26,10:00 am, et
Up 2.2%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction
Wednesday, May 26,1:15 pm, et
None
Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q1 GDP
Thursday, May 27,8:30 am, et
3.3%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
7-year Treasury Note Auction
Thursday, May 27,1:15 pm, et
None
Important. $31 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Personal Income and Outlays
Friday, May 28,8:30 am, et
Up 0.4%,Up 0.2%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core
Friday, May 28,8:30 am, et
Up 0.1%
Important. An indication of inflation. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Friday, May 28,10:00 am, et
73.2
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
Overall, I think we have a busy week ahead of us. The big reports of the week are Tuesday’s CCI and Wednesday’s Durable Goods Orders. If Thursday’s GDP revision varies greatly from forecasts, it can also lead to sizable changes in rates. The Treasury auctions are also worth noting which might influence bond trading and possibly mortgage rates if they are met with an exceptional demand or if there is lackluster interest from investors. The bond market will close early Friday afternoon ahead of next Monday’s Memorial Day holiday. There is a pretty good possibility of seeing mortgage rates change several times this week, especially if there is more volatility in the stock markets, so please proceed extremely cautiously.
Some Humor:
My neighbor found out her dog could hardly hear so she took him to the veterinarian. She found that the problem was hair in his ears! The veterinarian cleaned both ears and the dog could hear fine.
The vet then proceeded to tell my neighbor that if she wanted to keep this from reoccurring she should go to the store and get some 'Nair' hair remover and rub it in the dog's ears once a month. So my neighbor went to the drug store and gets some 'Nair' hair remover.
At the register, the druggist tells her, “If you're going to use this under your arms don't use deodorant for a few days.”
The lady says, “I'm not using it under my arms.”
The druggist says, “If you're using it on your legs don't shave for a couple of days.”
The lady says, “I'm not using it on my legs either; I'm using it on my schnauzer.”
The druggist says, “Stay off your bicycle for a week.”
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
April existing home sales released at 10:00 were expected to be up 4.4% and came in up 7.6%. The dark side however, according to NAR there is now an 8.4 month supply of homes, increasing from 8.1 months in March. Single family sales were down from March adding credence to our long held view that the housing sector is nowhere near a turn. The April increase was mostly in condos which were up 9.1%. Sales increased in April mainly on the tax credit. Markets' reactions were choppy on the data but by 10:10 the DJIA which jumped to -95 had come back to -60 and mortgage rates about where they traded prior to the report. No additional economic releases today; the remainder of the day is as it has been for three weeks; watching equity markets and the euro currency.
Last Week:
Last week interest rates fell on a 426 point decline in the stock market and increasing concern that Europe's economy is going to slow and drag down recovery here. The euro rallied three days last week but traders and investors appear no longer to be tying their pessimism solely to the euro currency. Weekly jobless claims unexpectedly jumped to a two month high of new unemployment claims. What was the strong belief the economic recovery was solid has now been redefined as a potential double dip with the economy slipping on Europe's debt problems headlined by Greece. For two months after a strong run up in the equity markets most were expecting a correction in the stock market but didn't believe it would be this bad. Money running headlong to the safety of US treasuries and has allowed mortgage rates to fall which has been the good news for us.
This Week:
This week we have another set of auctions with which to grapple (2-year notes, 5-yr, and 7-yr. notes). We have Existing Home Sales today and New Home Sales on Wednesday. Durable Good is on Wednesday, and on Thursday one of the usual GDP revisions for the 1st quarter (old news). The Chicago PMI manufacturing index and Personal Income & Consumption are scheduled for Friday. It should be a volatile week.
EconomicIndicator
Consumer Confidence
Tuesday, May 25,10:00 am, et
58.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction
Tuesday, May 25,1:15 pm, et
None
Important. $42 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders
Wednesday, May 26,8:30 am, et
Up 0.9%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
New Home Sales
Wednesday, May 26,10:00 am, et
Up 2.2%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction
Wednesday, May 26,1:15 pm, et
None
Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q1 GDP
Thursday, May 27,8:30 am, et
3.3%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
7-year Treasury Note Auction
Thursday, May 27,1:15 pm, et
None
Important. $31 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Personal Income and Outlays
Friday, May 28,8:30 am, et
Up 0.4%,Up 0.2%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core
Friday, May 28,8:30 am, et
Up 0.1%
Important. An indication of inflation. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Friday, May 28,10:00 am, et
73.2
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
Overall, I think we have a busy week ahead of us. The big reports of the week are Tuesday’s CCI and Wednesday’s Durable Goods Orders. If Thursday’s GDP revision varies greatly from forecasts, it can also lead to sizable changes in rates. The Treasury auctions are also worth noting which might influence bond trading and possibly mortgage rates if they are met with an exceptional demand or if there is lackluster interest from investors. The bond market will close early Friday afternoon ahead of next Monday’s Memorial Day holiday. There is a pretty good possibility of seeing mortgage rates change several times this week, especially if there is more volatility in the stock markets, so please proceed extremely cautiously.
Some Humor:
My neighbor found out her dog could hardly hear so she took him to the veterinarian. She found that the problem was hair in his ears! The veterinarian cleaned both ears and the dog could hear fine.
The vet then proceeded to tell my neighbor that if she wanted to keep this from reoccurring she should go to the store and get some 'Nair' hair remover and rub it in the dog's ears once a month. So my neighbor went to the drug store and gets some 'Nair' hair remover.
At the register, the druggist tells her, “If you're going to use this under your arms don't use deodorant for a few days.”
The lady says, “I'm not using it under my arms.”
The druggist says, “If you're using it on your legs don't shave for a couple of days.”
The lady says, “I'm not using it on my legs either; I'm using it on my schnauzer.”
The druggist says, “Stay off your bicycle for a week.”
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, May 21, 2010
5/21/10
There is no economic news today, not that it would make much difference with what is going on in Europe and with the Senate’s passage of its version of overhauling financial-sector regulations. Yesterday, in the late morning, the Conference Board’s Leading Economic Indicators dropped in April. Although the drop was attributed to a smaller money supply, lower building permits, and shorter manufacturing times, it was the first drop in LEI in more than a year. But with stock markets around the world continuing to fall, and the jobs picture here in the US still bad, the flight to safety bid for our fixed-income securities continues. Who would have ever thought that a “flight to safety” would take place into our mortgage market!? This morning mortgage prices are better once again. Hooray!!!
5/20/10
Most rate prices improved today as mortgage bonds continue to benefit from the flight to quality as fear dominates the markets (stocks have erased all gains made this year). Investors who got burned by underestimating the mortgage meltdown don’t want to make the same mistake about the European debt crisis--a crisis that gives more the appearance of being held together by rubber bands and scotch tape in Europe and at risk of spinning out of control and taking the Euro currency with it. This view is sending global stock markets down and bond markets up giving us some of the lowest rates of 2010. Adding insult to injury today, jobless claims came in higher than expected (sending us back to November levels) and Leading Economic Indicators were down (the first time in a year) suggesting the V-shaped recovery may not be the shape of things to come after all. Bonds have broken through all resistance so far as buyers continue to dominate the trade. The irony of this rally is the very source of the fear is what is benefitting the most: the bond markets. Think about that one…
5/19/10
This morning the Consumer Price Index expected to be up slightly, actually dropped by .1%. It is a lagging economic indicator, but still, it will give the press something to talk about. Given the huge rally yesterday, it is not surprising that the market, regardless of no signs of inflation, is giving back a little. Currently mortgage prices are alightly worse.
5/18/10
Most rate prices improved a bit from yesterday’s re-price for the worse as mortgage bonds regain some losses. MBS, although lagging, are benefitting despite an initially improved market for stocks as investors attempt to turn thoughts away from the European debt situation. However much of those gains are evaporating as bonds firm up levels and the market shrugs off the higher than expected core Producer Price Index and better than expected Housing Starts data released today.
Monday, May 17, 2010
Mortgage Market Review - 5/17/10
This Morning…Monday, May 17, 2010
Today, as has been the case, the potential for volatility will remain extreme. So far in the early trade markets are quiet but very stressed. The euro is currently trading higher and supporting equity markets. No scheduled data points for the rest of the day. As for equity markets, currently bearish and likely to work lower. That said however, the stock market in past periods of softness has always managed to work higher.
Last Week:
Mortgage bond prices rose last week applying pressure on mortgage interest rates. The week started on negative footing when the European Union poured a trillion dollars into efforts to stabilize Greece. Stocks across the globe rallied at the expense of bonds. Fortunately that was short-lived, as traders remain concerned the efforts will not stop future economic turmoil in Europe. Last week’s news confirmed that there is overall consensus that the US is on some type of recovery. The trade numbers showed growth, retail sales were up, industrial production and capacity utilization were up, and initial jobless claims were down. On Friday, bond prices improved and rates dropped, primarily based on continued European problems. These problems are not going to go away any time soon, so look for more volatility.
This Week:
This week, the sovereign debt concerns in Europe will continue to be the focus; the euro currency is collapsing and we expect more of it this week. A weakening euro, or stated another way, the strengthening dollar, reduces the US export trade as US goods become more costly. There are also a couple of important releases this week. Today we already had the Empire State Manufacturing Survey. Tomorrow we have Residential Construction with Housing Starts and Building Permits, and the Producer Price Index. Wednesday we have the Consumer Price Index, to check just how much of the increase or decrease in PPI is being passed along to us consumers, and the release of the April Fed meeting. Thursday is Initial Jobless Claims, the Philly Fed Survey, and Leading Economic Indicators. Friday zip.
EconomicIndicator
Producer Price Index
Tuesday, May 18,8:30 am, et
Up 0.2%,Core up 0.1%
Important. A measure of inflation at the producer level. Lower figures may lead to lower rates.
Housing Starts
Tuesday, May 18,8:30 am, et
420k
Important. A measure of housing sector strength. Larger than expected decreases may lead to lower rates.
Consumer Price Index
Wednesday, May 19,8:30 am, et
Up 0.2%,Core up 0.1%
Important. An indication of inflationary pressures at the consumer level. Decreases may lead to lower rates.
Weekly Jobless Claims
Thursday, May 20,8:30 am, et
410k
Moderately important. An increase in claims may bring lower rates.
Leading Economic Indicators
Thursday, May 20,10:00 am, et
Up 1.2%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey
Thursday, May 20,10:00 am, et
21.5
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Market Forecast:
Overall, it appears it is going to be another active week for the mortgage market. We have two inflation readings that are very important to the bond market the middle part of the week. Stock market volatility will likely also affect bond trading again this week, so we may see movement in rates several days. The consumer price index Wednesday will be the most important event this week. The housing data, producer price index, and leading economic indicators data may also move the market. Market participants expect the consumer price relatively tame this week. Inflation friendly data may lead to improvements in mortgage interest rates. However, unexpected consumer price spikes may push interest rates higher in the short-term. . If the stock markets remain fairly calm, I would guess the middle part of the week will probably be the most important for mortgage pricing. A cautious approach to float/lock decisions is prudent.
Some Humor: (my apologies…it’s a “blond” joke)
A blonde gal decides to go shoe shopping, and stops in at many fashionable stores with no luck. No one seemed to have what she was looking for, which was a pair of alligator shoes.
After becoming very frustrated with the attitude of one of the shopkeepers, the young blonde declared, “Well, then, maybe I'll just go out and catch my own alligator and get a pair of alligator shoes for free!”
The shopkeeper replied with a sly smile, “Well, little lady, why don't you go on and give it a try?” The blonde headed off to the swamp, determined to catch an alligator. Later in the day, as the shopkeeper was driving home, he spotted the same young woman standing waist deep in the murky water, shotgun in hand.
As he brought his car to a stop, he saw a huge 9-foot gator swimming rapidly toward her. With lightning reflexes, the blonde took aim, shot the creature, and hauled it up onto the slippery bank. Nearby were 7 more dead gators all lying belly up. The shopkeeper stood on the bank, watching in silent amazement as the blonde struggled mightily and barely managed to flip thegator onto its back.
Then, rolling her eyes heavenward, she screamed in frustration, “Darn it! This one’s barefoot too!”
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Today, as has been the case, the potential for volatility will remain extreme. So far in the early trade markets are quiet but very stressed. The euro is currently trading higher and supporting equity markets. No scheduled data points for the rest of the day. As for equity markets, currently bearish and likely to work lower. That said however, the stock market in past periods of softness has always managed to work higher.
Last Week:
Mortgage bond prices rose last week applying pressure on mortgage interest rates. The week started on negative footing when the European Union poured a trillion dollars into efforts to stabilize Greece. Stocks across the globe rallied at the expense of bonds. Fortunately that was short-lived, as traders remain concerned the efforts will not stop future economic turmoil in Europe. Last week’s news confirmed that there is overall consensus that the US is on some type of recovery. The trade numbers showed growth, retail sales were up, industrial production and capacity utilization were up, and initial jobless claims were down. On Friday, bond prices improved and rates dropped, primarily based on continued European problems. These problems are not going to go away any time soon, so look for more volatility.
This Week:
This week, the sovereign debt concerns in Europe will continue to be the focus; the euro currency is collapsing and we expect more of it this week. A weakening euro, or stated another way, the strengthening dollar, reduces the US export trade as US goods become more costly. There are also a couple of important releases this week. Today we already had the Empire State Manufacturing Survey. Tomorrow we have Residential Construction with Housing Starts and Building Permits, and the Producer Price Index. Wednesday we have the Consumer Price Index, to check just how much of the increase or decrease in PPI is being passed along to us consumers, and the release of the April Fed meeting. Thursday is Initial Jobless Claims, the Philly Fed Survey, and Leading Economic Indicators. Friday zip.
EconomicIndicator
Producer Price Index
Tuesday, May 18,8:30 am, et
Up 0.2%,Core up 0.1%
Important. A measure of inflation at the producer level. Lower figures may lead to lower rates.
Housing Starts
Tuesday, May 18,8:30 am, et
420k
Important. A measure of housing sector strength. Larger than expected decreases may lead to lower rates.
Consumer Price Index
Wednesday, May 19,8:30 am, et
Up 0.2%,Core up 0.1%
Important. An indication of inflationary pressures at the consumer level. Decreases may lead to lower rates.
Weekly Jobless Claims
Thursday, May 20,8:30 am, et
410k
Moderately important. An increase in claims may bring lower rates.
Leading Economic Indicators
Thursday, May 20,10:00 am, et
Up 1.2%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey
Thursday, May 20,10:00 am, et
21.5
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Market Forecast:
Overall, it appears it is going to be another active week for the mortgage market. We have two inflation readings that are very important to the bond market the middle part of the week. Stock market volatility will likely also affect bond trading again this week, so we may see movement in rates several days. The consumer price index Wednesday will be the most important event this week. The housing data, producer price index, and leading economic indicators data may also move the market. Market participants expect the consumer price relatively tame this week. Inflation friendly data may lead to improvements in mortgage interest rates. However, unexpected consumer price spikes may push interest rates higher in the short-term. . If the stock markets remain fairly calm, I would guess the middle part of the week will probably be the most important for mortgage pricing. A cautious approach to float/lock decisions is prudent.
Some Humor: (my apologies…it’s a “blond” joke)
A blonde gal decides to go shoe shopping, and stops in at many fashionable stores with no luck. No one seemed to have what she was looking for, which was a pair of alligator shoes.
After becoming very frustrated with the attitude of one of the shopkeepers, the young blonde declared, “Well, then, maybe I'll just go out and catch my own alligator and get a pair of alligator shoes for free!”
The shopkeeper replied with a sly smile, “Well, little lady, why don't you go on and give it a try?” The blonde headed off to the swamp, determined to catch an alligator. Later in the day, as the shopkeeper was driving home, he spotted the same young woman standing waist deep in the murky water, shotgun in hand.
As he brought his car to a stop, he saw a huge 9-foot gator swimming rapidly toward her. With lightning reflexes, the blonde took aim, shot the creature, and hauled it up onto the slippery bank. Nearby were 7 more dead gators all lying belly up. The shopkeeper stood on the bank, watching in silent amazement as the blonde struggled mightily and barely managed to flip thegator onto its back.
Then, rolling her eyes heavenward, she screamed in frustration, “Darn it! This one’s barefoot too!”
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, May 14, 2010
5/14/10
Unlike the last four days, today we have lots of scheduled news. We have already had Retail Sales which came in a little higher than expected (Retail Sales have gained in 12 out of the last 13 months). Today we also have Industrial Production and Capacity Utilization, both expected higher. And then we have Factory Orders and the University of Michigan Consumer Sentiment Survey numbers – also expected higher. Industrial Production dropped by almost 15% during the recession (which apparently ended almost a year ago) IP has posted gains in each and every month since July 2009 and, in the process, has regained about 35% of what it lost – it is expected to rise about .5% this time around. After Retail Sales we have the mortgage prices slightly better.
5/13/10
Mortgage bonds continue to tighten with Treasuries from their wide of a week ago ahead of today’s 30yr auction. Meanwhile in domestic news released today, import prices rose largely on seasonal oil prices, netting a positive read on inflation and jobless claims remained stubbornly above expectations. The stock markets have traded in negative territory as investors are concerned after the jobless claim data was released and financials are pressured as US prosecutors and the SEC probe into past mortgage deals and whether banks misled investors with fraudulent ratings information. Folks, this will be one to watch…
5/12/10
Most rate prices improved slightly today as mortgage bonds hold onto much of yesterday afternoon gains. Bonds benefitted yesterday from strong overseas demand and a well bid 3yr Treasury auction. Tomorrow brings another auction, import price and jobless claim data. Yesterdays auction was strong…let’s hope for a repeat today.
5/11/10
Most rate prices are modestly improved today as mortgage bonds attempt to hold onto yesterday’s closing levels in choppy trading. Bonds were up earlier this morning but have erased those gains as the stocks have paired earlier losses. Today brings the first of 3 auctions this week with 3yr notes. Scheduled econ news is limited to positive business confidence surveys and inventory figures—not any real market movers here. Fed speak is dominant with several figures making the rounds. Yesterday’s euro euphoria seems to have dimmed a bit today as the reality of “fixing” the debt crisis is causing some to sober up and ask tough questions. Simply throwing money isn’t enough…structural reform will need to happen and it only takes a replay of the Greek rioting tapes to get the picture. Today could be bumpy.
Monday, May 10, 2010
Mortgage Market Review - 5/10/10
This Morning…Monday, May 10, 2010:
Monday’s bond market has opened down sharply following news that the European Union has agreed to a bailout for Greece. The news has helped erase concerns about the global economy that the situation brought and fueled a stock market rally that has the Dow up over 410 points and the Nasdaq up 102 points. Unfortunately this proposed stability in the Eurpoean market has had a negative impact of mortgage rates which are higher this morning.
Last Week:
Mortgage bond prices rose last week pushing mortgage interest rates lower. Trading was once again dominated by foreign influences as the Greek debt concerns spread across the globe. US stocks fell precipitously Thursday afternoon. At one point the DOW was down over 900 points. This sent a flood of investor funds into mortgage bonds helping rates improve. The data for the week was mixed with higher than expected unemployment and a larger than expected payrolls figure. Oil prices fell to around $77/barrel, which helped alleviate inflation concerns. Overall interest rates recovered most of the losses from the week before.
This Week:
There is $78 billion of supply to bid this week. Tomorrow we have 3-yr notes to sell, Wednesday, 10-yr’s, and on Thursday, 30-yr bonds. Aside from that, the most significant economic data this week will be Friday's Retail Sales report, along with Industrial Production and Capacity Utilization. Import Prices, the Trade Balance, and Consumer Sentiment will round out a light week – there is nothing today. In case you haven’t noticed, gasoline prices are the highest they’ve been since October 2008.
EconomicIndicator
3-year Treasury Note Auction
Tuesday, May 11,1:15 pm, et
None
Important. $38 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Wednesday, May 12,8:30 am, et
$39.5 billion deficit
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
10-year Treasury Note Auction
Wednesday, May 12,1:15 pm, et
None
Important. $24 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, May 13,8:30 am, et
410k
Moderately important. An increase in claims may bring lower rates.
30-year Treasury Bond Auction
Thursday, May 13,1:15 pm, et
None
Important. $16 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Retail Sales
Friday, May 14,8:30 am, et
Up 0.4%
Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Industrial Production
Friday, May 14,9:15 am, et
Up 0.5%
Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization
Friday, May 14,9:15 am, et
73.3%
Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates.
U Michigan Consumer Sentiment
Friday, May 14,10:00 am, et
73
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
The retail sales data Friday will be the most important event this week.
Overall, it likely will be another active week for mortgage rates. Besides Europe’s important economic news, look for the stock markets to be a major influence on trading. The most important day of the week is Friday with three reports on the agenda, including the sales data. The Treasury auctions will also take center stage as market participants cautiously await the result to determine foreign investor appetite for US debt instruments.
Today’s volatility does not come as a surprise and may actually end up making today the most active day of the week if Friday’s data does not reveal any significant variances.
Some Humor:
A barber kisses his wife goodbye and heads into work. Later that morning, a guy stuck his head into a barbershop and asked, “How long before I can get a haircut?”
The barber looked around the shop full of customers and said, “About 2 hours.”
The guy left.
A few days later, the same guy stuck his head in the door and asked, “How long before I can get a haircut?”
The barber looked around at the shop and said, “About 3 hours.”
The guy left.
A week later, the same guy stuck his head in the shop and asked, “How long before I can get a haircut?”
The barber looked around the shop and said, “About an hour and a half.”
The guy left.
The barber turned to his friend and said, “Hey, Bob, do me a favor. Follow that guy and see where he goes. He keeps asking how long he has to wait for a haircut, but then he doesn't ever come back.”
A little while later, Bob returned to the shop, laughing hysterically.
The barber asked, “So, where does that guy go when he leaves?”
Bob looked up and said, “Your house!”
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Monday’s bond market has opened down sharply following news that the European Union has agreed to a bailout for Greece. The news has helped erase concerns about the global economy that the situation brought and fueled a stock market rally that has the Dow up over 410 points and the Nasdaq up 102 points. Unfortunately this proposed stability in the Eurpoean market has had a negative impact of mortgage rates which are higher this morning.
Last Week:
Mortgage bond prices rose last week pushing mortgage interest rates lower. Trading was once again dominated by foreign influences as the Greek debt concerns spread across the globe. US stocks fell precipitously Thursday afternoon. At one point the DOW was down over 900 points. This sent a flood of investor funds into mortgage bonds helping rates improve. The data for the week was mixed with higher than expected unemployment and a larger than expected payrolls figure. Oil prices fell to around $77/barrel, which helped alleviate inflation concerns. Overall interest rates recovered most of the losses from the week before.
This Week:
There is $78 billion of supply to bid this week. Tomorrow we have 3-yr notes to sell, Wednesday, 10-yr’s, and on Thursday, 30-yr bonds. Aside from that, the most significant economic data this week will be Friday's Retail Sales report, along with Industrial Production and Capacity Utilization. Import Prices, the Trade Balance, and Consumer Sentiment will round out a light week – there is nothing today. In case you haven’t noticed, gasoline prices are the highest they’ve been since October 2008.
EconomicIndicator
3-year Treasury Note Auction
Tuesday, May 11,1:15 pm, et
None
Important. $38 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Wednesday, May 12,8:30 am, et
$39.5 billion deficit
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
10-year Treasury Note Auction
Wednesday, May 12,1:15 pm, et
None
Important. $24 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, May 13,8:30 am, et
410k
Moderately important. An increase in claims may bring lower rates.
30-year Treasury Bond Auction
Thursday, May 13,1:15 pm, et
None
Important. $16 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Retail Sales
Friday, May 14,8:30 am, et
Up 0.4%
Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Industrial Production
Friday, May 14,9:15 am, et
Up 0.5%
Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization
Friday, May 14,9:15 am, et
73.3%
Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates.
U Michigan Consumer Sentiment
Friday, May 14,10:00 am, et
73
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
The retail sales data Friday will be the most important event this week.
Overall, it likely will be another active week for mortgage rates. Besides Europe’s important economic news, look for the stock markets to be a major influence on trading. The most important day of the week is Friday with three reports on the agenda, including the sales data. The Treasury auctions will also take center stage as market participants cautiously await the result to determine foreign investor appetite for US debt instruments.
Today’s volatility does not come as a surprise and may actually end up making today the most active day of the week if Friday’s data does not reveal any significant variances.
Some Humor:
A barber kisses his wife goodbye and heads into work. Later that morning, a guy stuck his head into a barbershop and asked, “How long before I can get a haircut?”
The barber looked around the shop full of customers and said, “About 2 hours.”
The guy left.
A few days later, the same guy stuck his head in the door and asked, “How long before I can get a haircut?”
The barber looked around at the shop and said, “About 3 hours.”
The guy left.
A week later, the same guy stuck his head in the shop and asked, “How long before I can get a haircut?”
The barber looked around the shop and said, “About an hour and a half.”
The guy left.
The barber turned to his friend and said, “Hey, Bob, do me a favor. Follow that guy and see where he goes. He keeps asking how long he has to wait for a haircut, but then he doesn't ever come back.”
A little while later, Bob returned to the shop, laughing hysterically.
The barber asked, “So, where does that guy go when he leaves?”
Bob looked up and said, “Your house!”
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, May 7, 2010
5/7/10
This morning Non-farm Payroll came in at +290,000, the Unemployment Rate came in at 9.9%, and Hourly Earnings were unchanged. It is a strong gain for payrolls, along with some upward revisions in prior months. Just like a spring, markets tend to bounce or retract a little after a big move. We’re seeing that this morning, with stocks up, mortgage rates have worsened a bit.
5/6/10
Yesterday we had the ADP National Employment report, which measures private sector employment. The numbers are much better than they were a year ago but still high on a relative basis. Tomorrow we have the Non farm Payroll numbers and forecasts seem to be running around+225k or +150k excluding census workers, with the unemployment rate perhaps moving lower to 9.6% versus 9.7% in March.
Today we will have another day of credit crisis hearings in Washington DC, along with a number of Fed speakers. The economic news scheduled is pretty much limited to Initial Claims which dropped slightly as expected. After this news the mortgage rates are stable this morning.
Today we will have another day of credit crisis hearings in Washington DC, along with a number of Fed speakers. The economic news scheduled is pretty much limited to Initial Claims which dropped slightly as expected. After this news the mortgage rates are stable this morning.
5/5/10
Yesterday we had some economic news of note, the first being Pending Home Sales. The index was up in March, with sales in the South up 13%, up 2% in the West, up 1% in the Midwest, but fell 3.3% in the Northeast. Second, Factory Orders here in the US were up in March.
This morning we had the ADP private-payroll number for April which showed job growth coming in at 32,000. After these, and in the face of further stock sell-offs, mortgage prices are better.
This morning we had the ADP private-payroll number for April which showed job growth coming in at 32,000. After these, and in the face of further stock sell-offs, mortgage prices are better.
5/4/10
Yesterday was not a particularly busy day on mortgage trading desks, although rates were a little higher to start the day. We did have a fair amount of news, all of it reflecting economic recovery. The ISM Manufacturing Index increased in April and growing at its fastest pace since 2004. Construction Spending increased .2% from the revised February number (private construction. Today we will have Factory Orders and Pending Home Sales, and ahead of that we have a rally: This morning mortgage prices are slightly improved.
Monday, May 3, 2010
Mortgage Market Review - 5/3/10
This Morning…Monday, May 3, 2010:
Monday’s bond market has opened in negative territory following early stock strength. The stock markets are starting the week in positive ground after Greece accepted a bailout package that should help stabilize the country’s financial system. There were two reports released this morning that were relevant to mortgage rates. The first was March’s Personal Income & Outlays that showed a rise in income and an increase in spending. Both of these readings matched forecasts, minimizing its impact on mortgage rates. The second report of the day was one of the more important releases of the week. The Institute for Supply Management (ISM) posted their manufacturing index for April which was slightly lower than forecasts but an increase from the previous month. This indicates that more surveyed manufacturers felt business improved during the month than last month. That can be considered negative for bonds, but since the reading did not exceed forecasts, its impact on the markets has been minimal.
Last Week:
Trading was dominated last week by foreign influences as the Greek debt concerns spread throughout Europe. Analysts point to Spain and Portugal as additional areas of concern. Fortunately, this sent global investor funds into US Treasury bonds and mortgage-backed securities. Real GDP grew during the first quarter, consumer confidence rose in April, and weekly first-time unemployment claims fell. This was good news for our economy. Unfortunately, our debt continues to grow as does overall unemployment (hovering around 10%).
This Week:
This week shows quite a bit of news. We started today with Personal Income & Consumption (Spending) as mentioned above. Tomorrow we have Pending Home Sales, Wednesday the ISM Services number and ADP private-sector employment figures. Thursday is Initial Jobless Claims and some productivity and costs numbers. Friday is the biggest economic event with the employment report containing Non-farm Payroll, the Unemployment Rate, Hourly Earnings, etc.
EconomicIndicator
Personal Income and Outlays
Monday, May 3,8:30 am, et
Up 0.2%Up 0.6%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
ISM Index
Monday, May 3,10:00 am, et
59.6
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Factory Orders
Tuesday, May 4,10:00 am, et
Down 0.8%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
ADP Employment
Wednesday, May 5,8:30 am, et
Jobs +20K
Important. An indication of employment. A large decrease in payrolls may bring lower rates.
Preliminary Q1 Productivity
Thursday, May 6,8:30 am, et
Up 3.1%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Employment
Friday, May 7,8:30 am, et
Jobs +175KUmemp @ 9.7%
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Market Forecast:
Overall, I believe Friday will be the most important day of the week with the employment data being posted. It can easily erase the week’s accumulated gains or losses in mortgage rates if it shows any surprises. The productivity data to be released Thursday also is a major release. The middle part of the week will likely be the calmest, but I still suggest proceeding cautiously.
Some Humor:
Two doctors, a psychiatrist and a proctologist, opened an office in a small town and put up a sign reading: "Dr. Smith and Dr. Jones: Hysterias and Posteriors."
The town council was not happy with the sign, so the doctors changed it to read, "Schizoids and Hemorrhoids."
This was not acceptable either, so in an effort to satisfy the council, they changed the sign to "Catatonics and High Colonics." No go.
Next, they tried "Manic Depressives and Anal Retentives." Thumbs down again. Then came "Minds and Behinds." Still no good.
Another attempt resulted in "Lost Souls and Butt Holes." Unacceptable again!
So they tried "Analysis and Anal Cysts." Not a chance.
"Nuts and Butts?" No way.
"Freaks and Cheeks?" Still no go.
"Loons and Moons?" Forget it. A
lmost at their wit's end, the doctors finally came up with: "Dr. Smith and Dr. Jones, Odds and Ends."
Everyone loved it.
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Monday’s bond market has opened in negative territory following early stock strength. The stock markets are starting the week in positive ground after Greece accepted a bailout package that should help stabilize the country’s financial system. There were two reports released this morning that were relevant to mortgage rates. The first was March’s Personal Income & Outlays that showed a rise in income and an increase in spending. Both of these readings matched forecasts, minimizing its impact on mortgage rates. The second report of the day was one of the more important releases of the week. The Institute for Supply Management (ISM) posted their manufacturing index for April which was slightly lower than forecasts but an increase from the previous month. This indicates that more surveyed manufacturers felt business improved during the month than last month. That can be considered negative for bonds, but since the reading did not exceed forecasts, its impact on the markets has been minimal.
Last Week:
Trading was dominated last week by foreign influences as the Greek debt concerns spread throughout Europe. Analysts point to Spain and Portugal as additional areas of concern. Fortunately, this sent global investor funds into US Treasury bonds and mortgage-backed securities. Real GDP grew during the first quarter, consumer confidence rose in April, and weekly first-time unemployment claims fell. This was good news for our economy. Unfortunately, our debt continues to grow as does overall unemployment (hovering around 10%).
This Week:
This week shows quite a bit of news. We started today with Personal Income & Consumption (Spending) as mentioned above. Tomorrow we have Pending Home Sales, Wednesday the ISM Services number and ADP private-sector employment figures. Thursday is Initial Jobless Claims and some productivity and costs numbers. Friday is the biggest economic event with the employment report containing Non-farm Payroll, the Unemployment Rate, Hourly Earnings, etc.
EconomicIndicator
Personal Income and Outlays
Monday, May 3,8:30 am, et
Up 0.2%Up 0.6%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
ISM Index
Monday, May 3,10:00 am, et
59.6
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Factory Orders
Tuesday, May 4,10:00 am, et
Down 0.8%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
ADP Employment
Wednesday, May 5,8:30 am, et
Jobs +20K
Important. An indication of employment. A large decrease in payrolls may bring lower rates.
Preliminary Q1 Productivity
Thursday, May 6,8:30 am, et
Up 3.1%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Employment
Friday, May 7,8:30 am, et
Jobs +175KUmemp @ 9.7%
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Market Forecast:
Overall, I believe Friday will be the most important day of the week with the employment data being posted. It can easily erase the week’s accumulated gains or losses in mortgage rates if it shows any surprises. The productivity data to be released Thursday also is a major release. The middle part of the week will likely be the calmest, but I still suggest proceeding cautiously.
Some Humor:
Two doctors, a psychiatrist and a proctologist, opened an office in a small town and put up a sign reading: "Dr. Smith and Dr. Jones: Hysterias and Posteriors."
The town council was not happy with the sign, so the doctors changed it to read, "Schizoids and Hemorrhoids."
This was not acceptable either, so in an effort to satisfy the council, they changed the sign to "Catatonics and High Colonics." No go.
Next, they tried "Manic Depressives and Anal Retentives." Thumbs down again. Then came "Minds and Behinds." Still no good.
Another attempt resulted in "Lost Souls and Butt Holes." Unacceptable again!
So they tried "Analysis and Anal Cysts." Not a chance.
"Nuts and Butts?" No way.
"Freaks and Cheeks?" Still no go.
"Loons and Moons?" Forget it. A
lmost at their wit's end, the doctors finally came up with: "Dr. Smith and Dr. Jones, Odds and Ends."
Everyone loved it.
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
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