Mortgage Rates


Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com




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Friday, January 21, 2011


Treasuries and mortgages opened a little better this morning after rates increased yesterday on strong economic data in housing, weekly jobless claims and the Philly Fed business data. The benchmark 10 yr note yield increased to 3.45% close to 3.50% level that has supported long term rates for 25 trading sessions, mortgage prices fell and their rate increased but also still in their trading range.

There is nothing on the schedule today, no data and no Fed speakers now until after the FOMC meeting next Wednesday. The bond market will likely take direction from how equity markets perform today. In early pre-market trade the key stock indexes were pointing to a better open at 9:30. With the indexes improving at 9:15 this morning the rate markets, after opening better were losing momentum. At 8:30 mtgs +.25 bp, at 9:15 -.03 bp; the 10 yr note at 8:30 up 10/32 at 9:13 +3/32 at 3.44% -1 bp.

US stock market is opening better this morning following Europe's markets higher. The euro currency is strong against the dollar this morning on News out of Germany; he Ifo Institute’s business climate index, based on a survey of 7,000 German executives, was 110.3 in January, up from the 109.9 median of 41 forecasts in a Bloomberg News survey. That’s the highest since records for a reunified Germany began in 1991.

I realize we speak of the 10 yr trading range almost everyday, but it is important especially now where the 10 yr is trading this morning and what lies ahead next week. With the 10 yr at 3.45% at 9:30, the stock market strong on the open and next week's Treasury borrowing and the FOMC meeting, the 10 today may make a move to test its high yield at 3.50% that has held the rate increases in check since mid-Dec. Technicians are well aware of the easily noted range, a break above 3.50% would likely add more selling and push the rate up to 3.55% the reactionary high of a few weeks ago that was immediately rejected.

At 9:30 the DJIA opened +50, the 10 yr note -1/32 at 3.46% and mortgage prices -4/32 (.12 bp).

With interest rate markets close to their key support levels this morning today's trading needs close attention. Its early, but so far so good, the 10 is still holding its range as is the mortgage market-----but it is early. Hard to handicap today with nothing in the way of news or data to think about.