Mortgage Musings

7/2/10

2010-07-02T10:21:00.001-07:00

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

6/30/10

2010-07-02T10:20:00.000-07:00

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

6/29/10

2010-07-02T10:19:00.000-07:00

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

Mortgage Market Review - 6/28/10

2010-06-28T08:54:00.000-07:00

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

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

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

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

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

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

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

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

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

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

6/25/10

2010-06-25T09:20:00.001-07:00

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

6/24/10

2010-06-25T09:19:00.002-07:00

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

6/23/10

2010-06-25T09:19:00.001-07:00

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

6/22/10

2010-06-25T09:18:00.000-07:00

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

Mortgage Market Review - 6/21/10

2010-06-21T09:22:00.000-07:00

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

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

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

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

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

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

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

6/18/10

2010-06-19T09:43:00.001-07:00

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

6/17/10

2010-06-19T09:42:00.002-07:00

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

6/16/10

2010-06-19T09:42:00.001-07:00

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

6/15/10

2010-06-19T09:41:00.000-07:00

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

Mortgage Market Review - 6/14/10

2010-06-14T08:59:00.000-07:00

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

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

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

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

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

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

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

6/11/10

2010-06-11T10:59:00.001-07:00

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

6/10/10

2010-06-11T10:58:00.002-07:00

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

6/9/10

2010-06-11T10:58:00.001-07:00

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

6/8/10

2010-06-11T10:57:00.000-07:00

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

Mortgage Market Review - 6/7/10

2010-06-07T09:55:00.001-07:00

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

Fred

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

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

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

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

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

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

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

6/4/10

2010-06-04T08:42:00.002-07:00

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

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

6/3/10

2010-06-04T08:42:00.001-07:00

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

6/2/10

2010-06-04T08:41:00.000-07:00

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

Mortgage Market Review - 6/1/10

2010-06-01T10:11:00.000-07:00

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

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

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

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

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

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

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

5/28/10

2010-05-28T10:12:00.001-07:00

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

2010-05-28T10:11:00.004-07:00

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

2010-05-28T10:11:00.003-07:00

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

5/25/10

2010-05-28T10:11:00.001-07:00

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

Mortgage Market Review - 5/24/10

2010-05-24T09:36:00.000-07:00

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

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

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

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

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

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

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

5/21/10

2010-05-21T13:25:00.001-07:00

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

2010-05-21T13:24:00.004-07:00

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

2010-05-21T13:24:00.003-07:00

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

2010-05-21T13:24:00.001-07:00

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

Mortgage Market Review - 5/17/10

2010-05-17T09:39:00.000-07:00

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

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

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

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

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

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

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

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

5/14/10

2010-05-14T09:12:00.004-07:00

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

2010-05-14T09:12:00.003-07:00

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

2010-05-14T09:12:00.001-07:00

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

2010-05-14T09:11:00.000-07:00

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

Mortgage Market Review - 5/10/10

2010-05-10T09:59:00.000-07:00

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

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

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

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

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

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

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

5/7/10

2010-05-07T13:27:00.004-07:00

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

2010-05-07T13:27:00.003-07:00

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

5/5/10

2010-05-07T13:27:00.001-07:00

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

5/4/10

2010-05-07T13:25:00.000-07:00

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

Mortgage Market Review - 5/3/10

2010-05-03T09:20:00.000-07:00

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

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

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

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

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

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

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

4/30/10

2010-04-30T10:21:00.003-07:00

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

2010-04-30T10:21:00.001-07:00

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

4/28/10

2010-04-30T10:20:00.002-07:00

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

2010-04-30T10:20:00.001-07:00

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

Mortgage Market Review - 4/26/10

2010-04-26T09:27:00.000-07:00

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

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

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

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

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

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

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

4/22/10

2010-04-26T09:26:00.002-07:00

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

2010-04-26T09:26:00.001-07:00

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

2010-04-26T09:25:00.000-07:00

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

Mortgage Market Review - 4/19/10

2010-04-19T08:56:00.000-07:00

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

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

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

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

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

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

Some Humor:

Dear Tide:

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

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

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

4/16/10

2010-04-16T09:57:00.001-07:00

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

2010-04-16T09:56:00.004-07:00

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

2010-04-16T09:56:00.003-07:00

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

2010-04-16T09:56:00.001-07:00

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

4/9/10

2010-04-09T08:36:00.003-07:00

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

2010-04-09T08:36:00.001-07:00

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

2010-04-09T08:35:00.002-07:00

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

2010-04-09T08:35:00.001-07:00

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

Mortgage Market Review - 4/5/10

2010-04-05T09:19:00.000-07:00

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.

4/2/10

2010-04-02T09:12:00.001-07:00

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

2010-04-02T09:11:00.002-07:00

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

2010-04-02T09:11:00.001-07:00

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

2010-04-02T09:10:00.000-07:00

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.

Mortgage Market Review - 3/29/10

2010-03-29T08:59:00.000-07:00

Good morning. It’s no secret that many homeowner’s are having serious problems paying their mortgage payments. On March 26th, the administration revamped the Home Affordability Mortgage Program to assist borrowers with modification of their 1st and in some cases, 2nd mortgages. In some cases they are forgiving certain balances of the loans. Information is still coming out, but there is good information at https://www.hmpadmin.com/portal/index.html. Another good site is http://www.makinghomeaffordable.gov/about.html which has an excellent FAQ page.

I hope you enjoy the “review” this week. Please let me know if you have any questions. Thanks for taking the time to look this over. I hope you find it useful and informative. To Your Success!!!!
Fred

This Morning…Monday, March 29, 2010:
The only data for today has already arrived. Personal Income was expected +.2% but came out as unchanged for February. Personal consumption expenditures were expected to rise, and did, coming out at +.3%. After the data, bonds and stocks didn’t do much. Mortgage rates are about unchanged from Friday’s closing levels.

Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates considerably higher. Two of the three Treasury auctions resulted in poor foreign demand for US debt instruments and unfortunately that carried over into the mortgage backed securities market causing prices to fall and rates to rise. A combination of the increasing US Government budget deficit, continued problems with Greece and European debt were the primary culprits, along with some signs that our economy is picking up a little steam (stocks are hitting 18-month highs). The data hurt us with weekly jobless claims coming in better than expected and existing home sales also beating estimates. Durable goods orders data was mixed with ex-transportation figures considerably stronger than expected. Ouch.

This Week:
This week is an interesting one with the Employment Report on Friday as the most important release. Today (as mentioned above) we had Personal Income & Consumption and the PCE Price Index, Tuesday the S&P/Case-Shiller Home Price Index & Consumer Confidence, Wednesday the Chicago Purchasing Managers Index, Thursday we have Initial Jobless Claims, Construction Spending, and the ISM Manufacturing data, and then on Friday we’ll see the employment data. This is a rather peculiar release date since it is Good Friday and all markets except the bond market will be closed. Unemployment is expected to stay unchanged at 9.7%

EconomicIndicator
Personal Income and Outlays
Monday, March 29,8:30 am, et
Up 0.1%,Up 0.3%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Prices-Core
Monday, March 29,8:30 am, et
Up 0.1%
Important. An indication of inflationary pressures at the producer level. Weakness may lead to lower rates.
Consumer Confidence
Tuesday, March 30,10:00 am, et
49.0
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
ADP Employment
Wednesday, March 31,8:30 am, et
Up 45k
Important. An indication of employment. Weakness in payrolls may bring lower rates.
Factory Orders
Wednesday, March 31,10:00 am, et
Up 0.5%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Construction Spending
Thursday, April 1,10:00 am, et
Down 1.0%
Low importance. An indication of economic strength. A significant decrease may lead to lower rates.
ISM Index
Thursday, April 1,10:00 am, et
57.0
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Employment
Friday, April 2,8:30 am, et
Unemp. @ 9.7%,Payrolls +150k
Very important. An increase in unemployment or weakness in payrolls may bring lower rates.

Market Forecast:
Overall, I expect to see the most movement in rates either Thursday or Friday. Friday is the most important day of the week with the employment numbers being released, but we will likely see a fair amount of movement in rates Thursday morning also. I am expecting tomorrow or Wednesday to be the calmest day of the week, but we should still see some changes to rates those days. In general, it will probably be pretty active week. Also worth noting is that fact that the stock markets will be closed Friday in observance of the Good Friday holiday, but the bond market will open for trading until noon. This will likely create additional volatility in bonds Thursday afternoon and especially Friday morning.

Some Humor:
Two elderly women were out driving in a large car, both could barely see over the dashboard. As they were cruising along, they came to an intersection. The stoplight was red, but they just went on through. The woman in the passenger seat thought to herself "I must be losing it. I could have sworn we just went through a red light."
After a few more minutes, they came to another intersection and the light was red again.
Again, they went right through. The woman in the passenger seat was almost sure that the light had been red but was really concerned that she was losing it. She was getting nervous.
At the next intersection, sure enough, the light was red and they went on through. So, she turned to the other woman and said, "Mildred, do you know that we just ran through three red lights in a row? You could have killed us both!" Mildred turned to her and said, "Crap, am I driving?"

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.

3/26/10

2010-03-26T11:31:00.002-07:00

Mortgage rates stabilized a bit today as mortgage bonds make gains on top of Treasuries, tightening up big time. A less steep yield curve and lower volatility as things are calming down after Wednesday’s perfect storm are helping to stabilize rates this morning. Consumer sentiment data came in better than expected and Greenspan is apparently concerned about our “fiscal situation” and the Obama administration unveiled details to expand the HAMP program incenting investors to do cut loan balances and payments to help unemployed borrowers. Its Friday. Lets hope next week is better for mortgages…

3/24/10

2010-03-26T11:31:00.001-07:00

Mortgage securities did receive a little boost yesterday from Treasury's Geithner. Rates and prices improved slightly. We also had Fed Governor Yellen on the tape yesterday, saying that she believes that although the labor market is stabilizing at a high level of unemployment and inflation should stay low, and that the housing market has stalled. And we are in the middle of yet another 3-day period of auctions. With inflation expected to be tame, and the Fed expected to leave short-term rates low for an extended period, the argument can certainly be made to own some fixed-rate securities. This morning we’ve had Durable Goods +.5% for February, versus +3.9% in January and new home sales, expected to be better by 1.9%, fell 2.2%. After the strong news mortgage rates are worse this morning.

3/23/10

2010-03-26T11:30:00.000-07:00

Most rate prices improved a bit today as mortgage bonds are trying to hold on to gains from Monday. Treasuries are near unchanged ahead of today’s 2-year auction. Economic data was limited again today in the form of a slightly better than expected drop in existing homes sales for February and a slight advancement of mid Atlantic manufacturing activity. The stock market indices continue to grind higher with the Dow up over 30-points at the moment. Treasury Secretary Geithner is on Capitol Hill discussing the future of Fannie and Freddie. Big stuff. 7 days remain of Fed purchases of MBS. For now we wait.

Mortgage Market Review - 3/22/10

2010-03-22T08:48:00.000-07:00

Good morning. I hope you enjoyed the beautiful weather on Saturday and were able to get out and enjoy it. As a reminder, if you are still thinking about purchasing a home, don’t forget that the end of the first time home buyer tax credit is in sight, and I have heard nothing about any extensions. Borrowers need to be in contract by April 30 and close by June 30. The tax credit is available for everyone who is purchasing a home (up to $8K for 1st time buyers and $6,500.00 for current homeowners).

One of the most popular videos on You Tube (with over 2 million hits!) has been the “Embrace Life” video. This started out as an advertisement for seat belts and has turned into an online sensation due to the beauty of the way it states itself. It’s worth a look if you haven’t seen it. It can be found at http://www.youtube.com/watch?v=h-8PBx7isoM. I hope you have a great week. Please let me know if you have any questions and thanks for taking the time to look this over. I hope you find it informative and useful.

Fred

This Morning…Monday, March 22, 2010:
There is no relevant economic data being posted today and the interest rate market is moving with the equities market. This morning, the bond market has opened in positive territory as stocks react negatively to the healthcare bill and concerns about Greece again. The health care bill was passed late yesterday which came as no surprise to the market; the Dems had the votes and used them to pass the most encompassing health bill ever. It was all Dems, with no Republican voting for it. This morning the markets are struggling to figure out which stocks will benefit and which will take a hit. The stock markets have opened slightly in negative ground with the Dow currently down 14 points and the Nasdaq down 3 points. The bond market is up slightly and currently mortgage rates are unchanged from Friday’s close.

Last Week:
Mortgage bond prices rose last week helping mortgage interest rates improve slightly. We started the week on a positive note with rates falling amid tame inflation readings. The producer price index fell 0.6% and the core rose 0.1%. The headline figure was the lowest since July 2009. Weekly jobless claims showed the employment situation remained poor. Unfortunately we saw the market fall a bit pushing rates higher Thursday afternoon following the announcement of the size of the upcoming Treasury auctions and amid fear of future rate hikes.

This Week:
This week we will see the Treasury auctioning off another $118 billion, with the usual questions about demand from foreign investors. Certainly there is little fear of inflation eating away fixed-income earnings. There is no news today, but tomorrow we have Existing Home Sales (expected to be down just under1%) and Wednesday New Home Sales (expected to be up 1.5%). Durable Goods is also scheduled for Wednesday. Thursday is Initial Jobless Claims along with Personal Income and Consumption, and on Friday we have a report on first quarter Gross Domestic Product (GDP) along with Consumer Sentiment from the University of Michigan.

EconomicIndicator
Existing Home Sales
Tuesday, March 23,10:00 am, et
Down 0.9%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
2-year Treasury Note Auction
Tuesday, March 23,1:15 pm, et
None
Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders
Wednesday, March 24,8:30 am, et
Up 0.5%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
New Home Sales
Wednesday, March 24, 10:00 am, et
Up 1.5%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction
Wednesday, March 24, 1:15 pm, et
None
Important. $42 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
7-year Treasury Note Auction
Thursday, March 25,1:15 pm, et
None
Important. $32 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q4 GDP third estimate
Friday, March 26,8:30 am, et
Up 5.8%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Friday, March 26,10:00 am, et
71
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Market Forecast:
Overall, it is difficult to label one particular day as the most important of the week. The single most important report will likely be the Durable Goods Orders, but none of the week’s data has the potential to be a major market mover. Supply concerns will continue to weigh heavily upon the bond market with the continued record Treasury auctions. If foreign demand falters mortgage interest rates could be pressured higher. If the stock markets move lower, we should see gains in bonds and improvements in mortgage rates. But, if stocks move higher, pressure in bonds is possible, leading to higher mortgage pricing. I suspect that this week will be a little calmer for mortgage rates than the past couple weeks have been.As I mentioned, the durable goods and gross domestic product (GDP) data will be the most important releases this week and is one the most important reports during any given quarter. GDP is a measure of US economic output and spending. The report is significant in that it provides investors, analysts, traders, and economists with a comprehensive report of the direction of the economy. In addition, it also influences the decisions of Federal Reserve policy makers, Congressional budget employees, and corporate financial planners.

Some Humor:
A man walks into a bar, notices a very large jar on the counter, and sees that it's filled to the rim with $10 bills. He guesses there must be at least ten thousand dollars in it. He approaches the bartender and asks, "What's with the money in the jar?"
"Well..., you pay $10, and if you pass three tests, you get all the money in the jar and the keys to a brand new Lexus."
The man certainly isn't going to pass this up, so he asks, "What are the three tests?"
"You gotta pay first," says the bartender, "those are the rules."
So, after thinking it over a while, the man gives the bartender $10 which he stuffs into the jar.
"Okay," says the bartender, "here's what you need to do. First - You have to drink a whole quart of tequila, in 60 seconds or less, and you can't make a face while doing it.
"Second - There's a pit bull chained in the back with a bad tooth. You have to remove that tooth with your bare hands.
"Third - There's a 90-year old lady upstairs who's never had sex. You have to take care of that problem."
The man is stunned! "I know I paid my $10 -- but I'm not an idiot! I won't do it! You'd have to be nuts to drink a quart of tequila and then do all those other things!"
"Your call," says the bartender, "but, your money stays where it is."
As time goes on, the man has a few more drinks and finally says, "Where's the damn tequila?!"He grabs the bottle with both hands and drinks it as fast as he can. Tears stream down both cheeks -- but he doesn't make a face -- and he drinks it in 58 seconds!
Next, he staggers out the back door where he sees the pit bull chained to a pole. Soon, the people inside the bar hear loud growling, screaming, and sounds of a terrible fight -- then nothing but silence!
Just when they think that the man surely must be dead, he staggers back into the bar. His clothes are ripped to shreds and he's bleeding from bites and gashes all over his body. He drunkenly says, "Now..., where's that old woman with the bad tooth?"

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.

3/19/10

2010-03-19T09:09:00.002-07:00

As opposed to today, which has no scheduled economic news (aside from many folks watching the results of the NCAA basketball tournament), yesterday we had quite a bit. The CPI came out at unchanged in February, slightly less inflationary than expected. The core rate, ex-food and energy, was +.1%, as expected. Year-over-year numbers for CPI showed an increase that was well within expectations and certainly indicative of a suitable amount of inflation at the consumer level. Initial claims for jobless insurance came out about as expected at 457,000, with continuing claims coming in at 4.579 million. Later in the morning we also saw the Conference Board’s Leading Economic Indicators increase for the 11th straight month – impressive, and consistent with the belief that the economy has bottomed out and is slowly strengthening. The “Philly Fed” came out slightly stronger than expected, which also helped the equity markets but to the detriment of bonds. In fact, stocks have improved for 8 straight days.
With no news today, we find mortgage rates slightly worse this morning.

3/18/10

2010-03-19T09:09:00.001-07:00

Most rate prices are slightly worse as mortgage bonds are unable to hold onto yesterday’s grind higher. Minimal selling, a flatter yield curve and lower volatility is helping MBS perform well this week despite the impending Fed exit and repeated days of stock market gains. Another bit of bond friendly data was released today with an unchanged consumer price index reading suggesting inflation is well contained. Still ugly initial jobless claims and a wider account deficit were reported as well. Leading economic indicators came in as expected and the Philly Fed survey suggested improved manufacturing conditions and employment despite the weather issues. Following this release we are seeing some pressure on bonds as Treasuries are showing weakness, taking some wind out of mortgages sending them into negative territory. Today we find much Fed speak defending their role in regulating financial institutions against proposed legislation that would limit their domain to only the larger banks. Meanwhile, the Fed has a mere 9 business days left as the backstop bid for MBS…

3/17/10

2010-03-19T09:08:00.002-07:00

In honor of St. Patrick’s Day…
Paddy was driving down the street in a sweat because he had an important meeting and couldn't find a parking place. Looking up to heaven he said, “Lord take pity on me. If you find me a parking place I will go to Mass every Sunday for the rest of me life and give up me Irish whiskey!”Miraculously, a parking place appeared.Paddy looked up again and said, “Never mind, I found one.”

The FOMC’s statement yesterday didn’t surprise anyone as they will maintain the current Fed rate for an “extended period.” Since markets don’t like surprises, and there were none, rates stayed about the same though there was improvement in the stock market.
For this morning’s market, ahead of the Producer Price Index, rates were down and stock market futures were pointing to yet another improvement. The February PPI was -.6%, mostly due to energy costs; ex-food and energy the core rate was +.1% (as expected). The year-over-year numbers were also satisfactory, and overall it does appear that inflation is not a big deal. After the numbers we find mortgage prices a shade worse.
Nothing left today but Bernanke's testimony this afternoon and watching the equity markets.

3/16/10

2010-03-19T09:08:00.001-07:00

Most rate prices are a bit improved this morning as mortgage bonds hold onto modest improvements from Monday. Treasuries are helping boost mortgages ahead of the Fed’s rate decision due at 11:15am today. The Fed is expected to leave the funds rate unchanged and reiterate its “extended period” language of keeping it at its current range of 0 - .250% and while some are voicing concern over this policy, today’s economic news gives the current Fed stance breathing room in the form of lower import prices (inflation from abroad) and poor housing starts. And while weather appears to be a large part of the housing start data, it is clear the housing market in general is still in the proverbial toilet with a looming wave of foreclosures coming. A trifecta of Obama economic advisors voiced a similar view of the employment picture, predicting the jobless rate will remain elevated for an extended period of time. Given this environment, the Fed will be in no hurry to raise rates. Stay tuned for the release as the market will parse the verbiage carefully and volatility could result. However, few expect much market moving statements including anything to alter the planned expiration of the MBS purchase program.

Mortgage Market Review - 3/15/10

2010-03-15T08:42:00.000-07:00

Good morning. I found a pretty funny graph online. It is the water consumption in Edmonton during the US/Canada hockey game. You’ll notice that most everyone waited to go to the bathroom while the game was being played. There’s a HUGE jump in the water usage right after the medal ceremony. Check it out at http://www.patspapers.com/blog/item/what_if_everybody_flushed_at_once_Edmonton_water_gold_medal_hockey_game/

As I mentioned in the Daily Updates last week (email me to subscribe!), foreclosure filings increased in February at “only” a 6% year-over-year rate, the slowest in four years, and actually declined from January’s number. Nevada was still #1” for the 38th month in a row: 1 in every 102 Nevada homes received a filing, more than four times the national rate. It’s a sad situation. I hope you have a great day today. Thanks for taking the time to read this over. I hope you find it useful and informative. Please let me know if you have any questions.

Fred

This Morning…Monday, March 15, 2010:
Somewhat of a quiet start this morning; At 9:30 the stock market opened fractionally better, after trading lower all morning the DJIA opened a little better but the NASDAQ and S&P were slightly weaker. Not much in the news today, February industrial production, expected unchanged, was up 0.1%. There was no reaction to the report in stocks or bonds.

Last Week:
There wasn’t too much to report last week. Mortgage bond prices fell, applying slight upward pressure on home loan rates. The market remained very volatile within a narrow range. With the lack of data the first portion of the week, oil prices factored into trading. Oil remained above $80 a barrel, which reignited inflation concerns. The retail sales report released Friday was much stronger than expected, indicating the US economy may be getting stronger. This had a slightly negative impact on rates.

This Week:
As opposed to last week, this week is full of scheduled economic news to move the equity and bond markets, the most important being the inflation twins, PPI and CPI. Today we have the Empire State Manufacturing Survey, along with Industrial Production and Capacity Utilization. Tomorrow we have some Import & Export numbers, and New Residential Construction. Wednesday is the Producer Price Index; Thursday is Initial Claims, the Consumer Price Index, and the Philly Fed. The Fed meeting Tuesday afternoon will be the most important event this week. The inflation data from both the consumer and producer sides will also take center stage. Signs of inflation are generally not received well by the mortgage bond market. If inflation remains in check, mortgage bonds could benefit.

EconomicIndicator
Industrial Production
Monday, March 15,9:15 am, et
Up 0.1%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Capacity Utilization
Monday, March 15,9:15 am, et
72.3%
Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates.
Housing Starts
Tuesday, March 16,8:30 am, et
Down 0.6%
Important. A measure of housing sector strength. A larger than expected decrease may lead to lower rates.
Fed Meeting Adjourns
Tuesday, March 16,2:15 pm, et
No change
Important. Few expect the Fed to raise rates, but some volatility may surround the adjournment of this meeting.
Producer Price Index
Wednesday, March 17,8:30 am, et
Unchanged,Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Decreases may lead to lower rates.
Consumer Price Index
Thursday, March 18,8:30 am, et
Unchanged,Core up 0.1%
Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates.
Leading Economic Indicators
Thursday, March 18,10:00 am, et
Up 0.2%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey
Thursday, March 18,10:00 am, et
17.5
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.

Market Forecast:
Overall, look for Thursday to be the most important day of the week due to the CPI release, but Tuesday’s FOMC meeting can also heavily influence the markets. Wednesday may also be an active day for rates with the PPI on tap. Friday will probably be the calmest day for mortgage rates, but it appears there is a good possibility of seeing plenty of movement in rates the next several days.

The clock is ticking on the end of the MBS buying by the Fed, and the expiration of the homebuyers tax credit at the end of April. With the government exiting direct assistance to the mortgage and housing markets there are many worried it will curtail any additional improvement in the sector as mortgage interest rates will increase and with no additional incentives would-be borrowers will back away. It all depends on the employment sector; if new jobs begin to appear that would offset the loss of the homeowners tax credit. We are already hearing some interesting forecasts for the employment estimates, one economist at Morgan Stanley is forecasting 300K new jobs created in March. If he is correct markets will take it and run, interest rates will increase and equity markets will rally. Jobs are the key to the housing sector's rebound; until the employment markets stabilize the economic outlook will remain clouded.

Some Humor (slightly off color):
A farmer stopped by the local mechanic shop to have his truck fixed. They couldn't do it while he waited, so he said he didn't live far and would just walk home.
On the way he stopped at the hardware store and bought a bucket and a gallon of paint. He then stopped by the feed store and picked up a couple of chickens and a goose. However, struggling outside the store he now had a problem - how to carry his entire purchases home.
While he was scratching his head he was approached by a little old lady who told him she was lost. She asked, "Can you tell me how to get to 1603 Mockingbird Lane?"
The farmer said, "Well, as a matter of fact, my farm is very close to that house. I would walk you there, but I can't carry all of this."
The old lady suggested, "Why don't you put the can of paint in the bucket. Carry the bucket in one hand, put a chicken under each arm and carry the goose in your other hand?"
"Why, thank you very much,” he said, and proceeded to walk the old girl home.
On the way he says, "Let's take a short cut and go down this alley. We'll be there in no time." The little old lady looked him over cautiously, and then said, "I am a lonely widow without a husband to defend me. How do I know that when we get in the alley you won't hold me up against the wall and have your way with me?"
The farmer said, "Holy smokes lady! I'm carrying a bucket, a gallon of paint, two chickens and a goose. How in the world could I possibly hold you up against the wall and do that?"
The old lady replied, "Set the goose down, cover him with the bucket, put the paint on top of the bucket, and I'll hold the chickens.”

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.

3/12/10

2010-03-12T09:20:00.003-08:00

There wasn’t much news yesterday with the exception of the 30-yr bond sale which went pretty well. This morning’s Retail Sales figure, expected to show a slight decrease, was up .3%, excluding autos were up .8%. Overall, these were strong numbers for a market that hasn’t had much news lately, and should push the equity markets higher. Interest rates, however, as you would expect were not helped by this, and mortgage prices are slightly worse this morning. Have a great weekend.

3/11/10

2010-03-12T09:20:00.001-08:00

Most rate prices backed off a bit from yesterday’s re-price as mortgage bonds keep playing back and forth in a narrow range. This tightening is a bit baffling given the Fed’s impending departure from buying as low volatility and low supply appear to be keeping the convexity players and higher yield seekers at bay—for now. This morning we are seeing some pull back to the upper coupons and more selling in the lower so rate sheet rates are under pressure. Today brings the final installment of this week’s auctions with an offering of $13 Billion in 30 year-notes. Yesterday’s 10 year was so-so but good enough to help MBS perform well. Those additional gains have been wiped out so far this morning but let’s see what the auction results around 10am will bring. Stocks are trimming earlier losses as gains in large cap tech shares offset worries about money tightening in China. Better than expected trade balance and jobless claim data was released today with little effect on markets.

3/10/10

2010-03-12T09:19:00.002-08:00

Yesterday’s 3-yr T-note auction of $40 billion was the fifth consecutive month of this size, and the auction went well. We’ve had three days (including today) of no real economic news, so supply (mortgage selling and the Treasury auctions) is continuing to be the main driver in the market. We have 10-yr notes to buy today and mortgage prices are about unchanged from Tuesday’s close.

3/9/10

2010-03-12T09:19:00.001-08:00

Today we start yet another Treasury auction, with the usual worries about financing our increasing debt. Who will buy the $74 billion? The usual suspects come to mind, and let’s hope that demand is strong because otherwise we could see all rates shoot up in a hurry. Given that there isn’t much data until the end of the week (weekly unemployment claims on Thursday and February retail sales on Friday), these auctions will be important. Mortgage prices are roughly the same this morning.

Mortgage Market Review - 3/8/10

2010-03-08T08:59:00.000-08:00

This Morning…Monday, March 8, 2010:
There is weaker start in the rate markets this morning. In Asia stocks rallied on better employment reports, in Europe retail sales were better than expected. At 9:30 the DJIA opened +5. There is no relevant economic data scheduled for release today. This makes it likely that any changes to mortgage pricing will come from swings in stock prices. If the stock markets move higher from current levels, we may see bonds worsen and mortgage rates revise higher later today. If the major stock indexes move lower, mortgage rates may follow suit.

Last Week:
Last week rates were moved around by economic data. The stock market rallied, defying those that continue to expect a big decline. January personal income was less than expected, while personal spending was strong at +0.5%. February auto sales were expected to have increased, and they did; the only company that reported a decline was Toyota. The February employment report last Friday capped a good week for the various economic reports with the unemployment rate holding steady at 9.7%. On the housing front; January pending home sales jumped 12.3% from December. By Friday rates had improved slightly, but then the better-than-expected employment number pushed rates slightly higher

This Week:
This week won’t have as much to chew on and expect stocks to factor into trading the early portion of the week with very little data on tap. The Treasury auctions will be the focus throughout the middle portion of the week. Strong foreign demand would likely help mortgage bonds also. The jobless figures and retail sales data will be the focus for the end of the week.

Economic Indicator
3-year Treasury Note Auction
Tuesday, March 9,1:15 pm, et
None
Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction
Wednesday, March 10,1:15 pm, et
None
Important. $21 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, March 11,8:30 am, et
450k
Moderately important. An indication of the employment situation. A large increase may bring lower rates.
Trade Data
Thursday, March 11,8:30 am, et
$40.3 billion deficit
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
30-year Treasury Bond Auction
Thursday, March 11,1:15 pm, et
None
Important. $13 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Retail Sales
Friday, March, 12,8:30 am, et
Up 0.1%
Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.
U of Michigan Consumer Sentiment
Friday, March, 12,10:00 am, et
73.6
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Market Forecast:
Overall, it will likely be another fairly active week in the mortgage market. Friday will probably be the most important day of the week with the Retail Sales report due, while the calmest day could be today or tomorrow, depending on the stock markets. I am expecting to see the most movement in rates the latter part of the week.
There is a real threat that continued global economic turmoil might keep foreign investors from purchasing mortgage bonds in the future. The Treasury auctions this week will be important in determining the current appetite of foreign investors for dollar denominated securities. If this week’s auctions are poorly bid mortgage bond prices could fall pressuring mortgage interest rates higher.

Some Humor:
One afternoon a long time Senator was riding in his limousine when he saw two men along the roadside eating grass. Disturbed, he ordered his driver to stop and he got out to investigate.

He asked one man, "Why are you eating grass?"

"We don't have any money for food," the poor man replied. "We have to eat grass."

"Well, then, you can come with me to my house and I'll feed you," the Senator said.

"But sir, I have a wife and two children with me. They are over there, under that tree."

"Bring them along," the Senator replied.

Turning to the other poor man he stated, "You come with us, also."

The second man, in a pitiful voice, then said, "But sir, I also have a wife and SIX children with me!"

"Bring them all, as well," the Senator answered.

They all entered the car, which was no easy task, even for a car as large as the limousine was. Once underway, one of the poor fellows turned to the Senator and said, "Sir, you are too kind. Thank you for taking all of us with you."

The Senator replied, "Glad to do it. You'll really love my place. The grass is almost a foot high."

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.

3/5/10

2010-03-05T11:39:00.004-08:00

Both the stock and bond markets improved on Thursday, which was nice to see. Both the initial and continuing jobless claims posted week-over-week drops, causing traders to ratchet their estimates for today’s jobs data downward, and pending home sales dropped. Greece began selling 5 billion Euros of 10-yr debt after promising to reduce Europe's largest budget deficit, which included wage cuts that has prompted more protests. Right now, the futures market is pricing in an 86% chance that the Fed keeps rates somewhere between 0% and .25% through June 23rd, 2010. But a rumor swept the markets yesterday that a very large buyer in 4.5% securities moved mortgages relative to Treasury rates. Supply from lenders (read: locks) has increased lately as rates have crept back down.
This morning’s news, however, has really moved interest rates initially. Non-Farm Payroll “only” dropped by 36,000, and the unemployment rate held steady at 9.7%. Hourly Earnings were up, and the average workweek was down slightly. Rates shot up on the news, as did the stock markets. Call it a knee-jerk reaction, and sometimes you wonder if the market conveniently forgets that the unemployment rate is still near 10%, but stock market futures did indeed rally on the news, and mortgage prices worsened by upwards of .250 in price.

3/4/10

2010-03-05T11:39:00.003-08:00

Mortgage prices got off to a softer start Wednesday as the Non-Manufacturing ISM number showed an unexpected increase. The 8:15AM EST ADP employment number suddenly had analysts lowering their forecasts for tomorrows Non-Farm Payroll number, and the estimates now seem to be -60,000 jobs with an unemployment rate of 9.8%. The Fed’s Beige Book (which is a report of the various Fed districts) showed some improvement but with soft labor markets and a weak commercial real estate sector.
Today we have Jobless Claims, some productivity numbers, and Factory Orders, along with the Treasury announcing the amounts of next week’s 3, 10, and 30-year auctions. And tomorrow we could see some volatility with the unemployment data. Greece is still in the spotlight as investors are still wary, but most agree that a bailout is likely with Greece issuing a 10-yr note and a meeting scheduled for tomorrow between the Greek Prime Minister and the German Chancellor. Currently mortgage prices are roughly unchanged.

3/3/10

2010-03-05T11:39:00.001-08:00

Greece announced a well-publicized $5.4 billion plan to cut its deficit (3rd one in 3 months), which of course has their workers protesting. Taking a longer term view, these measures should help the country. Depending on the news from Greece, money either flows in to or out of our Treasury market with 10-yr Notes in Greece yield about 6 %. ADP showed February private sector jobs declining 20,000, with a back-month revision. Later this morning we’ll see some ISM numbers, and the Beige Book, but overnight (and for now) the rate markets are pretty quiet

3/2/10

2010-03-05T11:38:00.000-08:00

Yesterday we learned that in January Personal Income increased .1% but that Personal Spending Increased by .5%. So much for that savings rate, which hits its lowest level since 2008. In addition, the ISM Manufacturing Index for February fell slightly from January’s levels, and Construction Spending dropped as expected. The decline in construction spending was led by a fall in private nonresidential construction spending, which more than offset a moderate increase in residential construction.
With a slight break in the scheduled news today, the rate markets are pretty quiet and close to unchanged from yesterday, although the stock markets appear poised to continue rallying.

Mortgage Market Review - 3/1/10

2010-03-01T12:44:00.000-08:00

This Morning…Monday, March 1, 2010:
Treasuries and mortgages started unchanged early this morning. At 8:30 Jan personal income and spending income ame in a bit lower than expected. There was no market reaction to the data in either equity markets or the bond market. At 9:30 the DJIA opened +46, the 10 yr at 9:30 unchanged and mortgage prices are flat.

Last Week:
Mortgage bond prices rebounded a bit last week pushing mortgage interest rates slightly lower. The majority of the data came in bond friendly. Weaker than expected consumer confidence data Tuesday helped mortgage interest rates improve. The Treasury auctions showed decent foreign demand. The gross domestic product price deflator component showed a smaller price increase than expected while the consumer spending component also came in weaker than expected. Existing home sales fell a surprising 7.1%, considerably weaker than the expected 1% increase. The week wasn't a good one for the economic bulls, and particularly those that think the housing markets are making a turn.

This Week:
This week is full of news, beginning with Personal Income & Consumption and Construction Spending today, along with the Institute of Supply Managers Index. Tomorrow we have a break, and then on Wednesday we have the ADP employment number (which doesn’t include government jobs), the ISM services number, and the Beige Book from the Fed. Thursday is Jobless Claims, 4th quarter Productivity, Factory Orders, and Pending Home Sales. Lastly, Friday we have the usual set of employment data, which is the biggest economic event of the week. Look for a decrease of about 20,000 jobs in February and for the unemployment rate to increase to 9.8% from 9.7%. There are also many that believe the decline in jobs will be more than that, and the unemployment rate will be closing back toward 10%. It will unquestionably be a volatile week for interest rates.

EconomicIndicator
Personal Income and Outlays
Monday, March 1,8:30 am, et
Income up 0.4%,Outlays up 0.4%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Price Index
Monday, March 1,8:30 am, et
Up 0.1%
Important. An indication of inflationary pressures. Decreases may lead to lower rates.
Construction Spending
Monday, March 1,10:00 am, et
Down 0.6%
Low importance. An indication of economic strength. A significant decrease may lead to lower rates.
ISM Index
Monday, March 1,10:00 am, et
58.0
Important. A measure of manufacturer sentiment. A large decline may lead to lower mortgage rates.
ADP Employment
Wednesday, March 3,8:30 am, et
-15k
Important. An indication of employment. Weakness may bring lower rates.
Fed "Beige Book"
Wednesday, March 3,2:00 pm, et
None
Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
Revised Q4 Productivity
Thursday, March 4,8:30 am, et
Up 6.2%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Factory Orders
Thursday, March 4,10:00 am, et
Up 1.2%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Employment
Friday, March 5,8:30 am, et
Unemp. @ 9.8%,Payrolls -25k
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Consumer Credit
Friday, March 5,3:00 pm, et
Down $4.1 billion
Low importance. A significantly large increase may lead to lower mortgage interest rates.

Market Forecast:
Overall, look for a fairly active week for mortgage rates. The abundance of fundamental data this week provides a good opportunity for mortgages to improve. If the data shows weakness in the economy with little or no inflationary pressures then it is possible for mortgage bonds to rally resulting in mortgage interest rate decreases. However, if the data shows that the economy is rebounding or any significant signs of inflation, mortgage bonds may fall pushing mortgage interest rates higher.
This week brings us the release of six economic reports to be concerned with. Friday is undoubtedly the biggest day of the week and it is fairly safe to label Tuesday the least important with no relevant data scheduled for release. We may see movement in rates several days this week but Look for the week to become increasingly volatile at mid-week as players make adjustments for employment data.

Some Humor:
Two Irishmen, Patrick & Michael, were adrift in a lifeboat following a dramatic escape from a burning freighter.
While rummaging through the boat's provisions, Patrick stumbled across an old lamp. Secretly hoping that a genie would appear, he rubbed the lamp vigorously. To the amazement of Patrick, a genie came forth. This particular genie, however, stated that he could only deliver one wish, not the standard three. Without giving much thought to the matter, Patrick blurted out, "Make the entire ocean into Guinness Beer!"
The genie clapped his hands with a deafening crash, and immediately the entire sea turned into the finest brew ever sampled by mortals. Simultaneously, the genie vanished. Only the gentle lapping of Guinness on the hull broke the stillness as the two men considered their circumstances.
Michael looked disgustedly at Patrick whose wish had been granted. After a long, tension-filled moment, he spoke: "Nice going Patrick! Now we're going to have to pee in the boat!

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.errors.

2/26/10

2010-02-26T12:22:00.004-08:00

Most rate prices are level as mortgage bonds hold onto gains and Treasuries grind lower. The 10-year yield is back down below 3.625% this morning—the lowest since Feb 10. Bonds are benefitting from continued turmoil in the sovereign debt arena—i.e. Greece—and worse than expected existing home sales and consumer sentiment which are trumping better than expected GDP and business activity numbers. Today’s home and consumer data validates yesterday’s bad news, bolstering bearish sentiment. Adding to bond friendliness we have the expected month end balanced fund tactical asset allocations out of stocks and into bonds. Well, the Fed is down to digging deep in its pocket as only $9 Billion per week remains in its allocated MBS piggy bank ($11 Billion was spent in the last week). That equates to less than $2 Billion per week--not enough to soak up all of originator supply--which could make for some interesting sessions ahead. Rates are low. Have a great weekend.

2/25/10

2010-02-26T12:22:00.003-08:00

Yesterday’s $42 billion 5-yr auction did not go well and had the lowest bids since July. Not good. The Bernanke testimony (rates need to remain low), along with the much worse-than-expected New Homes Sales data, muddled the picture somewhat for investors yesterday.
The New Home Sales data was particularly bad. In January sales dropped 11%, the worst on record and erasing all the gains from last year. Nationwide, inventory represents over a 9 month supply – the highest in almost a year. And year-over-year the median price for a new home fell in January by 2.4%, to $203,500 from $208,600 a year ago. Regionally, January new-home sales dropped 35.1% in the Northeast, 11.9% in the West, and 9.5% in the South. Sales rose 2.1% in the Midwest.
This morning the markets are being pushed around by Jobless Claims, the GDP, a 7-yr note auction, and continued testimony from Ben Bernanke. Durable Goods were up for January and Jobless Claims showed an increase. Immediately after the news mortgage prices are better this morning.

2/24/10

2010-02-26T12:22:00.001-08:00

Today we have New Home Sales, a 5-yr auction, and Ben Bernanke’s testimony for the Federal Reserve’s semi-annual monetary policy report to Congress. Last week the Fed raised the discount rate by 0.25 point to 0.75 percent, said the term of these direct loans to banks will revert to overnight next month from 28 days currently, and left Fed Funds unchanged at 0-.25%. There has been nothing to suggest an extension or expansion of the MBS purchase program, which ends March 31st, so it will be interesting to see what he says. Currently mortgage prices are a shade better.

2/23/10

2010-02-26T12:21:00.000-08:00

Most rate prices improved today as mortgage bonds rally along with Treasuries off of worse than expected consumer sentiment data released this morning that has the 10-year yield back down to 3.72%. Not surprisingly, stocks are lower with the Dow down 75-points at the moment. Many analysts are indicating they do not think mortgage rates will jump right after the Fed stops buying at the end of March. Many believe private money will come in—although they do admit spreads with Treasuries will have to widen somewhat—and take up the slack, somewhat due to the Fannie and Freddie impending buybacks that will given investors capital to reinvest in mortgages. The two main drivers of rates post Fed will be where the Treasury market is (as mortgages are relative to them) and at what time and pace the Fed decides to start selling all those MBS is has purchased. Time will tell…

Mortgage Market Review - 2/22/10

2010-02-22T09:45:00.000-08:00

This Morning…Monday, February 22, 2010:
Most rate prices are slightly improved today as mortgage bonds tighten with Treasuries after last week’s beating. Stocks are lower, still bruised from the Fed’s hiking of the discount rate last week and uncertainty over Greece’s debt crisis despite positive manufacturing data released this morning.

Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates considerably higher. The bond market took a hit as inflation concerns emerged after the stronger than expected producer price index data. Producer prices surged in January amid higher energy costs to almost double expectations. The Fed made a surprise rate hike to the discount rate that also resulted in mortgage rate increases. The only positive was the tame consumer inflation reading Friday morning but we were unable to rebound from the earlier losses. Unfortunately rates rose over ¼% for the week.

This Week:
As we head into the last week of February, today is void of economic news. Tomorrow we have the Case-Shiller 20-city Index, along with Consumer Confidence which will set the tone for trading this week.. Wednesday holds New Home Sales which is expected to be up over 2%. Thursday we have the standard Jobless Claims, and also Durable Goods. Friday is the Chicago Purchasing Manager’s Survey, and Existing Home Sales which is expected to be up almost 1%. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday and a Bernanke speech on Wednesday.

EconomicIndicator
Consumer Confidence
Tuesday, Feb. 23,10:00 am, et
55.0
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction
Tuesday, Feb. 23,1:00 pm, et
None
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
New Home Sales
Wednesday, Feb. 24, 10:00 am, et
Up 2.3%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction
Wednesday, Feb. 24, 1:00 pm, et
None
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders
Thursday, Feb 25,8:30 am, et
Up 1.5%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
Weekly Jobless Claims
Thursday, Feb 25,8:30 am, et
460k
Important. Higher jobless claims may lead to lower mortgage interest rates.
7-year Treasury Note Auction
Thursday, Feb 25,1:00 pm, et
None
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q4 GDP second estimate
Friday, Feb. 26,8:30 am, et
Up 5.6%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Friday, Feb. 26,10:00 am, et
73.9
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Existing Home Sales
Friday, Feb. 26,10:00 am, et
Up 0.9%
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.

Market Forecast:
There should be plenty of movement in bond prices and mortgage rates this week. I think we will see the most movement either Wednesday or Thursday, but Friday may be fairly active also.
The Federal Reserve caught market participants by surprise with their 25 basis point discount rate hike last week. While analysts were split on whether the Fed would raise rates this year, that question has now been answered. The move resulted in volatility in most of the US financial markets. The discount rate is the interest rate charged to commercial banks on loans they receive from the Fed. The rate hike is an effort to pull back the aid provided by extraordinary low rates amid the global economic decline. The Fed specifically noted the move was needed "in light of continued improvement in financial market conditions." Many analysts noted the earlier warnings from Fed Bernanke that rate hikes were coming but very few, if any, expected the move this soon.
While the rate hike resulted in mortgage bond price weakness in the short-term, the long-term outlook is less certain. Most analysts believe inflation remains in check, but at the same time the Fed purchasing of MBS will soon be over. Interest rates are headed higher, in a choppy pattern but up. The path won't be straight up and analysts do not expect rates to increase more than another ½% through the rest of the year. As for any potential for a sizeable decline in rates; it will take a solid break in the equity markets which at this point doesn't seem likely. A cautious approach to "float" and "lock" decisions is prudent taking the current market conditions into consideration.

Some Humor:
A psychiatrist was conducting a group therapy session with four young mothers and their small children.
"You all have obsessions," he observed.
To the first mother, he said, "Mary, you are obsessed with eating. You've even named your daughter Candy."
He turned to the second Mom: "Ann, your obsession is with money. Again it manifests itself in your child's name, Penny."
He turned to the third Mom: "Joyce, your obsession is alcohol. This too shows itself in your child's name, Brandy."
At this point, the fourth mother, Kathy, quietly got up, took her little boy by the hand, and whispered, "Come on, Dick, this guy has no idea what he's talking about. Let's pick up Peter and Willy from school and go get dinner."

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

2/19/10

2010-02-19T10:07:00.001-08:00

The only news out this morning was the Consumer Price Index, which showed that consumer prices rose less than expected in January: The core rate, excluding food and energy fell for the first time since 1982. After the news the 10-yr is basically unchanged at 3.80% and mortgage rates are worse by about .125 from yesterday afternoon.

2/18/10

2010-02-19T10:06:00.002-08:00

Most rate prices are worse today as mortgage bonds continue yesterday’s slide into negative territory after the FOMC minutes headline highlighted some members’ preference for selling MBS sooner than later. The selloff trend has extended after the release of bond unfriendly data in the form of higher producer prices, better than expected manufacturing and leading economic indicator data. The benchmark 10-year Treasury yield has broken through its resistance level and is now pushing 3.80%. We’re in open waters folks so be careful as selloffs can take on a life of their own. Lenders are in the middle of re-prices as we type. Stock market indices are slightly positive as this is really a bond story ahead of the Fed’s exit and the anxiety of valuations when the private market has to come back to the table…

2/17/10

2010-02-19T10:06:00.001-08:00

Most rate prices worsened today as mortgage bonds give up yesterday’s modest gains and much of the price improvements. Mortgages are tight with Treasuries which opened weaker after better than expected housing starts and industrial production data was released this morning. Higher than expected import prices were largely due to higher oil prices as investors read this data as market neutral. Stock market indices are again in positive territory, putting pressure on bonds as the Dow is back comfortably above the 10,000 mark.

Mortgage Market Review - 2/16/10

2010-02-16T09:21:00.001-08:00

This Morning…Monday, February 16, 2010:
Tuesday’s bond market has opened in negative territory due early gains in stocks. The stock markets are kicking-off the holiday shortened week with noticeable gains. The Dow is currently up 50 points while the Nasdaq has gained 7 points. The bond market is currently down which has pushed mortgage rates slightly higher.

Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates slightly higher. The early part of the week saw a reversal of the recent flight to quality buying of US investments as talks hinted of a Greek bailout by Germany. German Chancellor Merkel dashed those hopes late in the week causing turmoil in the European Union. As a result global investor funds returned to the US bond market. Rates improved Friday morning, which helped recover some of the earlier losses. Unfortunately rates still rose overall for the week by about 1/8 of a discount point.

This Week:
This week, the most significant economic data are the PPI and CPI siblings: the monthly inflation reports. The Producer Price Index comes out Thursday, and the Consumer Price Index comes out Friday. Besides those, we have little of importance today. Tomorrow we have Housing Starts and Building Permits, Industrial Production and Capacity Utilization, along with the FOMC Minutes from the January 27 Fed meeting. Throw in some Import Prices tomorrow, Leading Indicators, Jobless Claims, and the Philly Fed Thursday, and we have a pretty busy and potentially volatile week.

EconomicIndicator
Presidents Day
Monday, Feb. 15

Important. Extended holiday weekend may result in volatility when trading resumes Tuesday.
Housing Starts
Wednesday, Feb. 17,8:30 am, et
Up 0.4%
Important. A measure of housing sector strength. Weakness may lead to lower rates.
Industrial Production
Wednesday, Feb. 17,9:15 am, et
Up 0.8%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Capacity Utilization
Wednesday, Feb. 17,9:15 am, et
72.2%
Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.
Producer Price Index
Thursday, Feb. 18,8:30 am, et
Up 0.7%,Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.
Leading Economic Indicators
Thursday, Feb. 18,10:00 am, et
Up 0.5%
Important. An indication of future economic activity. Weakness may lead to lower rates.
Philadelphia Fed Survey
Thursday, Feb. 18,10:00 am, et
17.5
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Consumer Price Index
Friday, Feb. 19,8:30 am, et
Up 0.3%,Core up 0.2%
Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates.

Market Forecast:
Overall, the most important day of the week will likely be Friday with the very important Consumer Price Index being released, but Thursday may also be active days for mortgage rates due to the Producer Price Index being posted. We also cannot forget about tomorrow’s FOMC minutes as they may be a non-factor but also have the potential to heavily influence the markets and mortgage pricing. In other words, be prepared for an active week in the markets and mortgage rates.

Some Humor:
An Amish boy and his father were in a mall. They were amazed by almost everything they saw, but especially by two shiny, silver walls that could move apart and then slide back together again.
The boy asked, "What is this Father?"
The father (never having seen an elevator) responded, "Son, I have never seen anything like this in my life, I don't know what it is!"
While the boy and his father were watching with amazement, an overweight old lady in a wheel chair moved up to the moving walls and pressed a button.
The walls opened and the lady rolled between them into a small room. The walls closed and the boy and his father watched the small circular numbers above the walls light up sequentially. They continued to watch until it reached the last number and then the numbers began to light in the reverse order.
Finally the walls opened up again and a gorgeous 24-year-old blond stepped out.
The father said quietly to his son....."Go get your mother."

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

2/12/10

2010-02-12T11:11:00.002-08:00

Yesterday’s bond auction was below expectations as the 30-yr yield came in at the cheapest level since June. But at least it is out of the way! This morning the delayed Retail Sales figure was released. Sales rose more than expected in January, according to the Commerce Department, after falling in December. Sales, compared to January ’09, were up 4.7 percent. We are seeing a bit of a bounce in bond-land, with mortgage rates slightly lower this morning. Have a nice 3-day weekend.

2/11/10

2010-02-12T11:11:00.001-08:00

Most rates are level to slightly better than yesterday’s re-price for the worse as mortgage bonds attempt to hold onto some reclaimed losses from late in the session on Wednesday. Treasuries are weakening ahead of today’s 30-year Auction. If Tuesday’s and Wednesday’s auctions are any indication, it doesn’t look good. However MBS are tightening with Treasuries at the moment helping keep rate sheet prices intact—for now. Stocks initially negative have done an about face and are now trading higher, adding pressure to bonds. Jobless claims came in better than expected but had little effect on the market. Tomorrow brings retail sales and consumer confidence. Today’s auction results due out around 10am.

2/10/10

2010-02-12T11:10:00.002-08:00

Good morning. Most rates worsened again today as mortgage rates continue to slide from their recent highs on Friday ahead of today’s 10-year auction. Stocks opened down as questions surfaced over Europe’s resolve to triage Greece’s debt crisis, helping bonds hold their levels. Bernanke’s press release was a sneak preview of what might be in the cards for the Fed’s tightening. He indicated that nothing would be implemented until the economy was back in better shape, but the markets took this release--and it’s not-to-be-delayed by the weather urgency—as a hint it may happen sooner than he suggested. The economic releases did little to move the markets—they were all worse than expected. Not good news…

2/9/10

2010-02-12T11:10:00.001-08:00

Most rate prices are worse today as mortgage bonds continue to slide with Treasuries ahead of today’s 3-year note auction. Bonds are under pressure this morning as the stock market bounces back with the Dow back up over 10,000 as investors are buoyed by hopes of a Greek bailout plan as well as positive comments from analysts on industrial stocks. Today we are seeing some improvement since market open as the Dow recedes below 10,000 again in back and forth trading…

Mortgage Market Review - 2/8/10

2010-02-08T08:26:00.000-08:00

Good morning. What a game yesterday! Even non football enthusiasts had to admit it was a good one. If you missed the ads, you can find ALL of them at http://superbowlads.fanhouse.com/?sem=1&ncid=AOLSPR00170000000009&otim=1265644718&spid=36198916. On a complete aside, a few days ago CNBC reported that it costs 2 cents to make a penny and 10 cents to make a nickel. Lastly, I thought that I knew what a bank was, until I saw this… http://uncyclopedia.wikia.com/wiki/Banker. Have a great week and please let me know if you have any questions. Thanks for taking the time to look this over. I hope you find it informative and useful.

Fred

This Morning…Monday, February 8, 2010:
Monday’s bond market has opened in negative territory despite a negative open in stocks. The Dow and Nasdaq are both showing early losses with the Dow and Nasdaq down. The bond market is currently down, which should keep this morning’s mortgage rates near Friday’s morning levels. It should be a generally quiet trade today unless there is a very big move in stock indexes.

Last Week:
Mortgage bond prices rose last week pushing mortgage interest rates just slightly lower. Reignited fear of a global economic meltdown sent money into the mortgage bond market in flight to quality buying. The news reports were permeated with worries about European debt payment defaults. Greece and a few other countries were noted as specific concerns. The employment report Friday morning was mixed with unemployment not as bad as expected (down 9.7% from 10.0%) but a larger than expected drop in payrolls.

This Week:
This week the government will auction a total of $81 billion in 3-year, 10-year and 30-year Treasury securities. Strong foreign demand will likely help the entire bond market. There is no economic news today, nor really any tomorrow of any consequence. Wednesday the 10th we will see some Trade Balance figures, and on Thursday Retail Sales (likely the headline figure this week), Jobless Claims, and Business Inventories. Friday we finish off the light week with the University of Michigan Consumer Sentiment Survey.

EconomicIndicator
3-year Note Auction
Tuesday, Feb. 9,1:00 pm, et
None
Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Wednesday, Feb. 10,8:30 am, et
$35 billion deficit
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
10-year Note Auction
Wednesday, Feb. 10,1:00 pm, et
None
Important. $25 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, Feb. 11,8:30 am, et
475k
Important. An indication of the employment situation. Higher claims could lead to lower rates.
Retail Sales
Thursday, Feb. 11,8:30 am, et
Up 0.4%
Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Business Inventories
Thursday, Feb. 11,10:00 am, et
Up 0.4%
Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates.
30-year Bond Auction
Thursday, Feb. 11,1:00 pm, et
None
Important. $16 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
U of Michigan Consumer Sentiment
Friday, Feb. 12,10:00 am, et
74.6
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Market Forecast:
Overall, look for Thursday to be the most important of the day of the week due to the importance of the Retail Sales report. But, I suspect that we may see movement in mortgage rates several days this week. I am still holding a cautious approach stance towards mortgage rates and believe that the risk of floating a rate outweighs the potential gains.

Some Humor:
A Cajun who died went to hell.
The devil assigned him the usual punishment: he put him in the mass pit where the heat was melting others.
The devil came back sometime later surprised to find the Cajun just sitting around, not even misting, much less sweating. "How come you're not so much as sweating here where everyone else is screaming for relief from the heat?"
The Cajun laughed and said, "Man, I was raised in the bayous of Sout Looziana. Dis ain't nothin' but May in Lafayette to me!"
The devil decided to really put the Cajun through it. He put him in a sealed off cave in the pit with open blazes and four extra furnaces blasting.
When he came back, days later, the Cajun was sitting pretty, had barely begun to bead up with sweat.
The devil was outraged. "How is this possible!? You should be melted to a shrieking puddle in these conditions!"
The Cajun laughed even harder than before. "Hey, man! I done tole you. I was raised in Sout Looziana. You tink dis is heat?! Dis ain't nothin' but August in Jennings!"
So the devil thought, "Alright, a little reverse ought to do the trick." He put the Cajun into a corner of hell where no heat ever reached. It was freezing; and, to add to the Cajun's misery, he added massive icebergs and blasting frozen air. When he returned, the Cajun was shivering with ice hanging from every part of him; but he was grinning like it was Christmas.
Exasperated, the devil asked, "HOW!? How is it possible?! You're impervious to heat, and here you sit in conditions you can't be used to...freezing cold; and yet you're happier than ever. WHY?!"
The Cajun kept grinning and said, "Dis mean de Saints done won da Super Bowl?!!"

The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

2/5/10

2010-02-05T09:04:00.002-08:00

Good morning. Yesterday’s stock market drop dominated the financial news and the markets did not pay much attention to Non-Farm Productivity increasing over 6% during the fourth quarter of 2009. Efficiency in the last nine months of 2009 soared at the fastest pace since 1966 as companies cut worker hours even after sales stabilized. And Factory Orders for November were up 1%, better than expected. But the focus, and one of the reasons given for stocks taking a beating, was on Jobless Claims which hit a 7-week high.
There is certainly a lot to be nervous about. There is the concern that around-the-world budget deficits will need to be financed by issuing more debt. Oil prices declined over 5% while gold prices also fell, down over 4%. This morning, Non-Farm Payrolls fell 20,000 in January which was less than expected. Conversely the Unemployment Rate dropped to 9.7%, once again highlighting the fact that a sharp increase in the number of people giving up looking for work helped to depress the jobless rate. After this news surprisingly, mortgage prices are holding steady.