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Wednesday, November 30, 2011
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, November 30, 2011
Treasuries and mortgages being hit early this morning on news that the US and five other central banks injected liquidity into markets in move to lower currency swap rates. The move is aimed at easing strains in markets and boosting the central banks’ capacity to support the global financial system. The interest rate has been reduced to the dollar overnight index swap rate plus 50 basis points, or half a percentage point, from 100 basis points, and the program was extended to Feb. 1, 2013, the Fed said in a statement in Washington. European stocks extended their gains, the euro advanced against the dollar; treasuries and MBSs fell after the announcement. With the program, the Fed lends dollars to the ECB and other central banks in exchange for currencies including euros. The central banks lend dollars to commercial banks in their jurisdictions through an auction process.
The next hit to the bond market came at 8:15 on the ADP employment report; ADP was widely expected to report non-farm private jobs at +125K to +130K. ADP said private jobs increased 206K. Analysts are now re-working their estimates for job growth when the BLS employment report is released on Friday morning. Prior to the report estimates were for an increase of 150K private jobs from the BLS. Last month, ADP’s initial figures showed a 110,000 gain for October, while the Labor Department’s data two days later showed an increase of 104,000 in private payrolls.
Prior to the actual open of stocks the DJIA at 9:00 was +275. The 10 yr note at 9:00 -28/32 at 2.08% above its 20 and 40 day moving averages. Mortgage prices at 9:00 -6/32 (.18 bp) frm yesterday's close. As the case has been, the volatility in the rate markets is confined mainly to treasuries. Treasuries have been highly volatile over the past three months as European leaders tried to convince investors that nations in the region will be able to pay their debts. The U.S. 10-year yield rose to 2.42% on Oct. 28, after reaching a record low 1.67% on Sept. 23.
By 9:30 the 10 yr note which hit 2.10% early on was back to 2.06 and mortgage prices moved back to unchanged after being down 10/32 (.31 bp) at 8:30. The DJIA opened +243, the 10 yr at 2.06% and mortgage prices -4/32 (.12 bp).
At 9:45 the Nov Chicago purchasing mangers' index, expected at 59.0 frm 58.4, jumped to 62.6; the components, employment at 56.9 frm 62.3, new orders 70.2 frm 61.3 and prices pd 60.2 frm 66.0. The headline much better than thought and added to the ADP jobs report pushed the DJIA to +388 at 9:50.
At 10:00 Sept pending home sales, contracts signed but not yet closed, was thought to be +0.1%. NAR reported pending sales jumped 10.4%; yr.yr pending sales +9.6%. More positive news.
Later this afternoon (2:00 pm) the Fed will release its Beige Book, the Fed's detailed economic report from all 12 Fed districts. Normally not much in it that markets are not already aware of but at times the details do attract interest. In this case it probably won't will all attention on the employment report on Friday and the continual unfolding drama out of Europe.
Some positive movement in the world of central banks, better job growth than thought and the regional Chicago PM index all combine to send equity indexes roaring higher and pushing treasury interest rates higher. We have mentioned numerous times over the last couple of months that US long term rates would find it a huge hill to climb to trade for any extended time under 2.00%. The 10 yr, driver for mortgages, has tried a number of times since Sept to hold under 2.00% but has not been able to hold. We believe US long term rates are about as low as they may fall based on the present fundamentals. That said, Europe is a time bomb, if defaults actually occur it would change our outlook; until then at the 2.00% area is about the best we expect.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, November 30, 2011
Treasuries and mortgages being hit early this morning on news that the US and five other central banks injected liquidity into markets in move to lower currency swap rates. The move is aimed at easing strains in markets and boosting the central banks’ capacity to support the global financial system. The interest rate has been reduced to the dollar overnight index swap rate plus 50 basis points, or half a percentage point, from 100 basis points, and the program was extended to Feb. 1, 2013, the Fed said in a statement in Washington. European stocks extended their gains, the euro advanced against the dollar; treasuries and MBSs fell after the announcement. With the program, the Fed lends dollars to the ECB and other central banks in exchange for currencies including euros. The central banks lend dollars to commercial banks in their jurisdictions through an auction process.
The next hit to the bond market came at 8:15 on the ADP employment report; ADP was widely expected to report non-farm private jobs at +125K to +130K. ADP said private jobs increased 206K. Analysts are now re-working their estimates for job growth when the BLS employment report is released on Friday morning. Prior to the report estimates were for an increase of 150K private jobs from the BLS. Last month, ADP’s initial figures showed a 110,000 gain for October, while the Labor Department’s data two days later showed an increase of 104,000 in private payrolls.
Prior to the actual open of stocks the DJIA at 9:00 was +275. The 10 yr note at 9:00 -28/32 at 2.08% above its 20 and 40 day moving averages. Mortgage prices at 9:00 -6/32 (.18 bp) frm yesterday's close. As the case has been, the volatility in the rate markets is confined mainly to treasuries. Treasuries have been highly volatile over the past three months as European leaders tried to convince investors that nations in the region will be able to pay their debts. The U.S. 10-year yield rose to 2.42% on Oct. 28, after reaching a record low 1.67% on Sept. 23.
By 9:30 the 10 yr note which hit 2.10% early on was back to 2.06 and mortgage prices moved back to unchanged after being down 10/32 (.31 bp) at 8:30. The DJIA opened +243, the 10 yr at 2.06% and mortgage prices -4/32 (.12 bp).
At 9:45 the Nov Chicago purchasing mangers' index, expected at 59.0 frm 58.4, jumped to 62.6; the components, employment at 56.9 frm 62.3, new orders 70.2 frm 61.3 and prices pd 60.2 frm 66.0. The headline much better than thought and added to the ADP jobs report pushed the DJIA to +388 at 9:50.
At 10:00 Sept pending home sales, contracts signed but not yet closed, was thought to be +0.1%. NAR reported pending sales jumped 10.4%; yr.yr pending sales +9.6%. More positive news.
Later this afternoon (2:00 pm) the Fed will release its Beige Book, the Fed's detailed economic report from all 12 Fed districts. Normally not much in it that markets are not already aware of but at times the details do attract interest. In this case it probably won't will all attention on the employment report on Friday and the continual unfolding drama out of Europe.
Some positive movement in the world of central banks, better job growth than thought and the regional Chicago PM index all combine to send equity indexes roaring higher and pushing treasury interest rates higher. We have mentioned numerous times over the last couple of months that US long term rates would find it a huge hill to climb to trade for any extended time under 2.00%. The 10 yr, driver for mortgages, has tried a number of times since Sept to hold under 2.00% but has not been able to hold. We believe US long term rates are about as low as they may fall based on the present fundamentals. That said, Europe is a time bomb, if defaults actually occur it would change our outlook; until then at the 2.00% area is about the best we expect.
Tuesday, November 29, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, November 29, 2011
Treasuries and mortgages turned nicely better yesterday afternoon after opening weaker in the morning; most lenders re-priced as MBS prices at the end of the day were 50 bp better than at 9:30. The 10 yr climbed to 2.08% early then fell to 1.95% and closed at 1.97% unchanged while the stock market rallied to push the DJIA +291 and the NASDAQ +86. Treasury 10-year note yields traded at less than 2% for a sixth day as Italy once again paid above 7% in its debt auctions and the European Central Bank failed to fully offset the extra liquidity created by its bond purchase program. Retail sales over the weekend were much stronger than what markets were expecting. The bond market was supported by comments from a few Fed officials that the Fed should think about increasing purchases of MBSs to keep rates low and hopefully support the housing sector that so far has not shown any progress.
This morning Sept Case/Shiller home price index was a little better than expected, down 0.6% for the 20 city and -0.4% for the 10 city price, forecasts were for a decline of 3.0% on the 20 city. Yr/yr the 20 city prices were down 3.6% while the 10 city down 3.3%. As usual it got very little attention from traders, nothing new; prices continue to fall.
At 9:30 the DJIA opened unchanged, the 10 yr note traded -9/32 at 2.00% +3 bp and mortgage prices -4/32 (.12 bp).
At 10:00 the Conference Board reported Nov consumer confidence index 56.0 frm 40.9 last month against forecasts of 44.0, the expectations index jumped to 67.8 frm 50.0. Strong increase in consumers' attitudes and the highest index since July. The reaction so far has been subdued, not much initial reaction to the better confidence readings.
Also at 10:00 the Sept FHFA home price index, expected unchanged, increased 0.9%; yr/yr -2.2%.
Today finance ministers will meet in Europe (again) in an effort to solve the impossible, the debt crisis contagion that is spreading through Europe like the Bubonic Plague. The 17-member monetary union meet in Brussels today to debate using their bailout fund, the Financial Stability Facility, to insure sovereign debt with guarantees. Europe's stock markets are weaker this morning before the meeting to discuss insuring a portion of bonds issued by debt-stricken countries. Investors and financial markets are continuing to lose confidence in Europe's ability to stop the debt crisis contagion from spreading though the region and eventually to the US as Europe is sure to re-enter recession. The ECB failed to fully offset the extra liquidity created by its bond purchases for the first time in seven months, a sign of mounting tensions among euro-area banks. The ECB tries to drain bank liquidity in the same amounts it buys bonds from Italy and Spain; the offering today for 7 day term deposits didn't match up as euro banks did not bid enough to cover the bond buys. The ECB worrying about inflation wants to offset purchases with short term deposits from banks.
This is employment week, traders and investors pay a lot of attention to Europe these days but US employment is also critical. Tomorrow ADP will release their estimate for private jobs in Nov, the forecast is an increase of 125K jobs. Friday the official BLS data is expected to show an increase of 118K non-farm jobs and +133K non-farm private jobs with the unemployment rate unchanged at 9.0%.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, November 29, 2011
Treasuries and mortgages turned nicely better yesterday afternoon after opening weaker in the morning; most lenders re-priced as MBS prices at the end of the day were 50 bp better than at 9:30. The 10 yr climbed to 2.08% early then fell to 1.95% and closed at 1.97% unchanged while the stock market rallied to push the DJIA +291 and the NASDAQ +86. Treasury 10-year note yields traded at less than 2% for a sixth day as Italy once again paid above 7% in its debt auctions and the European Central Bank failed to fully offset the extra liquidity created by its bond purchase program. Retail sales over the weekend were much stronger than what markets were expecting. The bond market was supported by comments from a few Fed officials that the Fed should think about increasing purchases of MBSs to keep rates low and hopefully support the housing sector that so far has not shown any progress.
This morning Sept Case/Shiller home price index was a little better than expected, down 0.6% for the 20 city and -0.4% for the 10 city price, forecasts were for a decline of 3.0% on the 20 city. Yr/yr the 20 city prices were down 3.6% while the 10 city down 3.3%. As usual it got very little attention from traders, nothing new; prices continue to fall.
At 9:30 the DJIA opened unchanged, the 10 yr note traded -9/32 at 2.00% +3 bp and mortgage prices -4/32 (.12 bp).
At 10:00 the Conference Board reported Nov consumer confidence index 56.0 frm 40.9 last month against forecasts of 44.0, the expectations index jumped to 67.8 frm 50.0. Strong increase in consumers' attitudes and the highest index since July. The reaction so far has been subdued, not much initial reaction to the better confidence readings.
Also at 10:00 the Sept FHFA home price index, expected unchanged, increased 0.9%; yr/yr -2.2%.
Today finance ministers will meet in Europe (again) in an effort to solve the impossible, the debt crisis contagion that is spreading through Europe like the Bubonic Plague. The 17-member monetary union meet in Brussels today to debate using their bailout fund, the Financial Stability Facility, to insure sovereign debt with guarantees. Europe's stock markets are weaker this morning before the meeting to discuss insuring a portion of bonds issued by debt-stricken countries. Investors and financial markets are continuing to lose confidence in Europe's ability to stop the debt crisis contagion from spreading though the region and eventually to the US as Europe is sure to re-enter recession. The ECB failed to fully offset the extra liquidity created by its bond purchases for the first time in seven months, a sign of mounting tensions among euro-area banks. The ECB tries to drain bank liquidity in the same amounts it buys bonds from Italy and Spain; the offering today for 7 day term deposits didn't match up as euro banks did not bid enough to cover the bond buys. The ECB worrying about inflation wants to offset purchases with short term deposits from banks.
This is employment week, traders and investors pay a lot of attention to Europe these days but US employment is also critical. Tomorrow ADP will release their estimate for private jobs in Nov, the forecast is an increase of 125K jobs. Friday the official BLS data is expected to show an increase of 118K non-farm jobs and +133K non-farm private jobs with the unemployment rate unchanged at 9.0%.
Monday, November 28, 2011
Sunday, November 27, 2011
Friday, November 25, 2011
Thursday, November 24, 2011
Wednesday, November 23, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, November 23, 2011
Three economic reports this morning at 8:30; weekly jobless claims were up 2K to 393K, last week's claims were revised to 391K frm 388K, continuing claims were up 68K to 3.691 mil. Overall claims were about as expected. Oct personal income was expected up 0.3%, it increased +0.4% the highest since March; personal spending was expected up 0.3%, as reported spending up 0.1%, the personal savings rate at 3.5% was up frm 3.3% in Sept. Oct durable goods orders expected -1.0% was -0.7%, excluding volatile transportation orders up 0.7% with forecasts of unchanged. Prior to the three reports the 10 yr traded unchanged at 1.93% where there is resistance, at 9:00 the 10 -5/32 to 1.94% and mortgage prices -7/32 (.22 bp).
The 8:30 data was mostly in line with forecasts but treasuries and mortgages being hit this morning as the contagion in Europe may be infecting Germany now. Germany tried to sell bunds but the auction failed miserably. It failed to reach its maximum sales target of 6 billion euros ($8B) at an auction of securities due in January 2022. Total bids amounted to 3.889 billion euros, falling short by 35%, according to data from the Bundesbank. The securities were sold at a yield of 1.98%. Germany the rock of the EU unable to sell its debt is worrisome and another shock to markets. The ECB was said to have bought more Italian bonds today, but no direct confirmation frm the ECB. In Greece, Greece's central bank warned the country has one last chance to reshape its economy and stay in the euro region, the country’s central bank said, adding to European Union pressure on Greek political leaders to move decisively on economic revamping.
In Europe and China the purchasing mgrs indexes are declining as Europe heads for another recession and dragging the world down with it. Europe needs so much money to head off the potential of sovereign defaults that it is becoming clear that in the end of it all there will be defaults of a lot of debt that will drag Europe's banking system into crisis. Rating agencies are poised to lower credit ratings for France, with the failure of German bund sales today France is likely to see a downgrade within a week or so.
At 9:30 the stock market opened weaker; the DJIA started down -95 and continued to decline, NASDAQ -20; the 10- yr note yield at 1.96% +3 bp. Mortgage prices at 9:30 -9/32 (.28 bp).
At 9:55 the U. of Michigan consumer sentiment index, expected at 64.6 frm 64.2, was 64.1; at the end of Oct the index was 60.4, the 12 month out expectation index unchanged at 52.
Finally today, at 1:00 Treasury will auction the third auction this week with $29B of 7 yr notes. The 2 and 5 yr auctions on Monday and Tuesday saw strong demand, likely the 7 will also be well bid.
The key 10 yr note hit a chart resistance level at 1.93% the low yield on 11/9, frm there the 10 jumped to 2.12% before returning to 1.93%. While rtes are higher this morning and prices lower, with equity markets falling and Europe spinning rapidly rates in the US should not increase much. That said, the technical failure so far at 1.93% is something to keep in mind. The safety moves to treasuries recently has slowed; Europe news has been continuously bad yet the 10 yr note yield has generally steady suggesting investors are better positioned now. Volatility will continue as uncertainty dominates all thinking these days.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, November 23, 2011
Three economic reports this morning at 8:30; weekly jobless claims were up 2K to 393K, last week's claims were revised to 391K frm 388K, continuing claims were up 68K to 3.691 mil. Overall claims were about as expected. Oct personal income was expected up 0.3%, it increased +0.4% the highest since March; personal spending was expected up 0.3%, as reported spending up 0.1%, the personal savings rate at 3.5% was up frm 3.3% in Sept. Oct durable goods orders expected -1.0% was -0.7%, excluding volatile transportation orders up 0.7% with forecasts of unchanged. Prior to the three reports the 10 yr traded unchanged at 1.93% where there is resistance, at 9:00 the 10 -5/32 to 1.94% and mortgage prices -7/32 (.22 bp).
The 8:30 data was mostly in line with forecasts but treasuries and mortgages being hit this morning as the contagion in Europe may be infecting Germany now. Germany tried to sell bunds but the auction failed miserably. It failed to reach its maximum sales target of 6 billion euros ($8B) at an auction of securities due in January 2022. Total bids amounted to 3.889 billion euros, falling short by 35%, according to data from the Bundesbank. The securities were sold at a yield of 1.98%. Germany the rock of the EU unable to sell its debt is worrisome and another shock to markets. The ECB was said to have bought more Italian bonds today, but no direct confirmation frm the ECB. In Greece, Greece's central bank warned the country has one last chance to reshape its economy and stay in the euro region, the country’s central bank said, adding to European Union pressure on Greek political leaders to move decisively on economic revamping.
In Europe and China the purchasing mgrs indexes are declining as Europe heads for another recession and dragging the world down with it. Europe needs so much money to head off the potential of sovereign defaults that it is becoming clear that in the end of it all there will be defaults of a lot of debt that will drag Europe's banking system into crisis. Rating agencies are poised to lower credit ratings for France, with the failure of German bund sales today France is likely to see a downgrade within a week or so.
At 9:30 the stock market opened weaker; the DJIA started down -95 and continued to decline, NASDAQ -20; the 10- yr note yield at 1.96% +3 bp. Mortgage prices at 9:30 -9/32 (.28 bp).
At 9:55 the U. of Michigan consumer sentiment index, expected at 64.6 frm 64.2, was 64.1; at the end of Oct the index was 60.4, the 12 month out expectation index unchanged at 52.
Finally today, at 1:00 Treasury will auction the third auction this week with $29B of 7 yr notes. The 2 and 5 yr auctions on Monday and Tuesday saw strong demand, likely the 7 will also be well bid.
The key 10 yr note hit a chart resistance level at 1.93% the low yield on 11/9, frm there the 10 jumped to 2.12% before returning to 1.93%. While rtes are higher this morning and prices lower, with equity markets falling and Europe spinning rapidly rates in the US should not increase much. That said, the technical failure so far at 1.93% is something to keep in mind. The safety moves to treasuries recently has slowed; Europe news has been continuously bad yet the 10 yr note yield has generally steady suggesting investors are better positioned now. Volatility will continue as uncertainty dominates all thinking these days.
Tuesday, November 22, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, November 22, 2011
Prior to 8:30 the bond and mortgage markets were slightly weaker in price with stock indexes better. At 8:30 more not so good news, the Q3 preliminary GDP data was weaker than expected and weaker than last month's advance report. Q3 GDP was revised from +2.5% to +2.0% with forecasts of +2.3% to +2.5%; consumer spending +2.3% frm +2.4%, business investment +14.8% frm +16.3%, all sales +3.6% unchanged from the advance report. The reaction turned the 10 yr note from -5/32 to +6/32 at 8:40, mortgage prices frm -3/32 to =2/32 and the stock indexes slightly lower.
The revision lower to Q3 GDP sets up a redo of the estimates for Q4 which had been talked at 3.0%; that is unlikely now. The weaker economy won't sit well with equity markets, the key indexes opening weaker this morning after the DJIA closed down 248 points yesterday.
In Europe it is still the same, no positive news. Germany is the key and so far it will not step up and take command, can't blame it though as every EU country in the final analysis will look inward first. Germany rejected calls from allies and investors to do more to counter market turmoil as Spain’s financing costs surged and pressure mounted on Greek political leaders to submit written commitments to austerity measures. Bond yields in France, Spain and Italy climbed as the absence of progress toward enacting a month-old comprehensive crisis-fighting package; Spain's leaders saying the country cannot afford 7.0% interest rates. Greece’s New Democracy party, was told by the president of the European Commission to quit playing “political games” and drop his refusal to pledge written support for Greek budget cuts as a condition for the next installment of international aid.
One more failure by elected officials to do the country's business. Nothing from the Super Committee. The committee had no chance to begin with as members of both parties were pleased to just let it go by. It is all about elections for Congress and the Administration; failing to cut spending by $1.2T simply lets spending cuts and taxes die for the next year. The cuts were to begin 2013 not next year; by 2013 there may be an entirely different political make up in Congress so any real attempt to deal with spending cuts didn't matter much with the Super Dud Committee.
At 9:30 the DJIA opened down 50, the 10 yr at 1.96% unch and mortgage prices +1/32 (.03 bp).
At 1:00 Treasury will borrow $35B of 5 yr notes in its auction; yesterday's 2 yr note found solid bidding. At 2:00 the Fed will release the minutes of the 11/2 FOMC meeting.
Thanksgiving week is short with most investors ending the week tomorrow (Wed), although the US markets will trade in shortened sessions. Volume this week in trading activity is thin and possibly affecting the wide swings in equities, the bond market is holding under 2.00% on the 10 yr but isn't showing much strength given the soft equity markets and the troubles in Europe. Safe haven buying of US treasuries is waning recently as more investors simply take to the sidelines; not buying equities, gold or interest rates. Gold today is opening better but has fallen over $100.00 on the past week.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, November 22, 2011
Prior to 8:30 the bond and mortgage markets were slightly weaker in price with stock indexes better. At 8:30 more not so good news, the Q3 preliminary GDP data was weaker than expected and weaker than last month's advance report. Q3 GDP was revised from +2.5% to +2.0% with forecasts of +2.3% to +2.5%; consumer spending +2.3% frm +2.4%, business investment +14.8% frm +16.3%, all sales +3.6% unchanged from the advance report. The reaction turned the 10 yr note from -5/32 to +6/32 at 8:40, mortgage prices frm -3/32 to =2/32 and the stock indexes slightly lower.
The revision lower to Q3 GDP sets up a redo of the estimates for Q4 which had been talked at 3.0%; that is unlikely now. The weaker economy won't sit well with equity markets, the key indexes opening weaker this morning after the DJIA closed down 248 points yesterday.
In Europe it is still the same, no positive news. Germany is the key and so far it will not step up and take command, can't blame it though as every EU country in the final analysis will look inward first. Germany rejected calls from allies and investors to do more to counter market turmoil as Spain’s financing costs surged and pressure mounted on Greek political leaders to submit written commitments to austerity measures. Bond yields in France, Spain and Italy climbed as the absence of progress toward enacting a month-old comprehensive crisis-fighting package; Spain's leaders saying the country cannot afford 7.0% interest rates. Greece’s New Democracy party, was told by the president of the European Commission to quit playing “political games” and drop his refusal to pledge written support for Greek budget cuts as a condition for the next installment of international aid.
One more failure by elected officials to do the country's business. Nothing from the Super Committee. The committee had no chance to begin with as members of both parties were pleased to just let it go by. It is all about elections for Congress and the Administration; failing to cut spending by $1.2T simply lets spending cuts and taxes die for the next year. The cuts were to begin 2013 not next year; by 2013 there may be an entirely different political make up in Congress so any real attempt to deal with spending cuts didn't matter much with the Super Dud Committee.
At 9:30 the DJIA opened down 50, the 10 yr at 1.96% unch and mortgage prices +1/32 (.03 bp).
At 1:00 Treasury will borrow $35B of 5 yr notes in its auction; yesterday's 2 yr note found solid bidding. At 2:00 the Fed will release the minutes of the 11/2 FOMC meeting.
Thanksgiving week is short with most investors ending the week tomorrow (Wed), although the US markets will trade in shortened sessions. Volume this week in trading activity is thin and possibly affecting the wide swings in equities, the bond market is holding under 2.00% on the 10 yr but isn't showing much strength given the soft equity markets and the troubles in Europe. Safe haven buying of US treasuries is waning recently as more investors simply take to the sidelines; not buying equities, gold or interest rates. Gold today is opening better but has fallen over $100.00 on the past week.
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, November 22, 2011
Prior to 8:30 the bond and mortgage markets were slightly weaker in price with stock indexes better. At 8:30 more not so good news, the Q3 preliminary GDP data was weaker than expected and weaker than last month's advance report. Q3 GDP was revised from +2.5% to +2.0% with forecasts of +2.3% to +2.5%; consumer spending +2.3% frm +2.4%, business investment +14.8% frm +16.3%, all sales +3.6% unchanged from the advance report. The reaction turned the 10 yr note from -5/32 to +6/32 at 8:40, mortgage prices frm -3/32 to =2/32 and the stock indexes slightly lower.
The revision lower to Q3 GDP sets up a redo of the estimates for Q4 which had been talked at 3.0%; that is unlikely now. The weaker economy won't sit well with equity markets, the key indexes opening weaker this morning after the DJIA closed down 248 points yesterday.
In Europe it is still the same, no positive news. Germany is the key and so far it will not step up and take command, can't blame it though as every EU country in the final analysis will look inward first. Germany rejected calls from allies and investors to do more to counter market turmoil as Spain’s financing costs surged and pressure mounted on Greek political leaders to submit written commitments to austerity measures. Bond yields in France, Spain and Italy climbed as the absence of progress toward enacting a month-old comprehensive crisis-fighting package; Spain's leaders saying the country cannot afford 7.0% interest rates. Greece’s New Democracy party, was told by the president of the European Commission to quit playing “political games” and drop his refusal to pledge written support for Greek budget cuts as a condition for the next installment of international aid.
One more failure by elected officials to do the country's business. Nothing from the Super Committee. The committee had no chance to begin with as members of both parties were pleased to just let it go by. It is all about elections for Congress and the Administration; failing to cut spending by $1.2T simply lets spending cuts and taxes die for the next year. The cuts were to begin 2013 not next year; by 2013 there may be an entirely different political make up in Congress so any real attempt to deal with spending cuts didn't matter much with the Super Dud Committee.
At 9:30 the DJIA opened down 50, the 10 yr at 1.96% unch and mortgage prices +1/32 (.03 bp).
At 1:00 Treasury will borrow $35B of 5 yr notes in its auction; yesterday's 2 yr note found solid bidding. At 2:00 the Fed will release the minutes of the 11/2 FOMC meeting.
Thanksgiving week is short with most investors ending the week tomorrow (Wed), although the US markets will trade in shortened sessions. Volume this week in trading activity is thin and possibly affecting the wide swings in equities, the bond market is holding under 2.00% on the 10 yr but isn't showing much strength given the soft equity markets and the troubles in Europe. Safe haven buying of US treasuries is waning recently as more investors simply take to the sidelines; not buying equities, gold or interest rates. Gold today is opening better but has fallen over $100.00 on the past week.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, November 22, 2011
Prior to 8:30 the bond and mortgage markets were slightly weaker in price with stock indexes better. At 8:30 more not so good news, the Q3 preliminary GDP data was weaker than expected and weaker than last month's advance report. Q3 GDP was revised from +2.5% to +2.0% with forecasts of +2.3% to +2.5%; consumer spending +2.3% frm +2.4%, business investment +14.8% frm +16.3%, all sales +3.6% unchanged from the advance report. The reaction turned the 10 yr note from -5/32 to +6/32 at 8:40, mortgage prices frm -3/32 to =2/32 and the stock indexes slightly lower.
The revision lower to Q3 GDP sets up a redo of the estimates for Q4 which had been talked at 3.0%; that is unlikely now. The weaker economy won't sit well with equity markets, the key indexes opening weaker this morning after the DJIA closed down 248 points yesterday.
In Europe it is still the same, no positive news. Germany is the key and so far it will not step up and take command, can't blame it though as every EU country in the final analysis will look inward first. Germany rejected calls from allies and investors to do more to counter market turmoil as Spain’s financing costs surged and pressure mounted on Greek political leaders to submit written commitments to austerity measures. Bond yields in France, Spain and Italy climbed as the absence of progress toward enacting a month-old comprehensive crisis-fighting package; Spain's leaders saying the country cannot afford 7.0% interest rates. Greece’s New Democracy party, was told by the president of the European Commission to quit playing “political games” and drop his refusal to pledge written support for Greek budget cuts as a condition for the next installment of international aid.
One more failure by elected officials to do the country's business. Nothing from the Super Committee. The committee had no chance to begin with as members of both parties were pleased to just let it go by. It is all about elections for Congress and the Administration; failing to cut spending by $1.2T simply lets spending cuts and taxes die for the next year. The cuts were to begin 2013 not next year; by 2013 there may be an entirely different political make up in Congress so any real attempt to deal with spending cuts didn't matter much with the Super Dud Committee.
At 9:30 the DJIA opened down 50, the 10 yr at 1.96% unch and mortgage prices +1/32 (.03 bp).
At 1:00 Treasury will borrow $35B of 5 yr notes in its auction; yesterday's 2 yr note found solid bidding. At 2:00 the Fed will release the minutes of the 11/2 FOMC meeting.
Thanksgiving week is short with most investors ending the week tomorrow (Wed), although the US markets will trade in shortened sessions. Volume this week in trading activity is thin and possibly affecting the wide swings in equities, the bond market is holding under 2.00% on the 10 yr but isn't showing much strength given the soft equity markets and the troubles in Europe. Safe haven buying of US treasuries is waning recently as more investors simply take to the sidelines; not buying equities, gold or interest rates. Gold today is opening better but has fallen over $100.00 on the past week.
Monday, November 21, 2011
Mortgage Rate Update
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Monday, November 21, 2011
Treasury rates a little lower this with the stock market opening weaker. That the Super Committee has failed to reach any compromise is driving markets this morning. The bond and mortgage markets should hold through the week but unlikely to decline in rates much. It will be a short week with Thanksgiving on Thursday and a skeleton crew on Friday with most taking the day off. The rest of the world doesn't do Thanksgiving so outside the US its business as usual. The only data today is Oct existing home sales; Tuesday has the second look at Q3 GDP, Wednesday is loaded with data including weekly jobless claims normally released on Thursdays.
The Super Committee has already admitted defeat with its deadline on Wednesday. No compromises on taxes and spending cuts so automatic spending cuts will occur totaling $1.2T including cuts in some of the social programs. That these is the automatic cuts supposed to occur it is unlikely that in the end there will be no cuts as Congress and the Administration won't step and do it. 2012 is all about the election a year from now, given the impasse between Republicans and Democrats the year won't likely see anything of real substance in relation to budgets and spending with both parties unwilling to take their responsibilities seriously----what politicians take seriously is being re-elected.
Treasury will auction $99B of notes beginning Monday with $35B of 2 yr notes, Tuesday $35B of 5 yr notes and Wednesday $29B of 7 yr notes. Europe still holds US markets by the throat with 5 of the EU countries facing debt crisis and three countries currently changing governments in attempts to deal with huge austerity plans that will increase taxes and cut large chunks out of spending.
The 10 yr note trades around 2.00% and seems to find resistance when its yield moves below 2.00%; mortgages continue to lag treasuries as the move lower in rates is primarily into treasuries as insurance against continuing uncertainty in Europe.
The DJIA opened -125, the 10 yr at 9:30 +13/32 at 1.96% -5 bp while mortgage prices at 9:30 +4/32 (.12 bp).
At 10:00 Oct existing home sales expected down 1.2% were up 1.4% to 4.97 mil annualized; the median sales price $162.500 -4.2% yr/yr, 28% of sales were distressed sales, down from 30% in Sept. There is an 8 month supply based on current sales down 2.2% frm Sept. There was no immediate reaction to the better report.
This Week's Economic Calendar:
Monday;
10:00 am Oct existing home sales (as reported
1:00 pm $35B 2 yr note auction
Tuesday;
8:30 am Q3 GDP advance report (+2.5% unch frm last month's prelim report)
1:00 pm $35B 5 yr note auction
2:00 pm FOMC minutes frm 11/2 meeting
Wednesday;
7:00 am weekly MBA mortgage applications
8:30 am weekly jobless claims (+3K to 391K)
Oct personal income & spending (income +0.3%, spending +0.3%)
Oct durable goods orders (-0.9%, ex transportation orders 0.0%)
9:55 U. of Michigan consumer sentiment index (64.2 frm 64.2)
1:00 pm $29B 7 yr note auction
Thursday;
All Markets Closed
Friday;
Early closes for all markets
The Bundesbank commenting today that growth in Germany, Europe’s largest economy, may slow to a near standstill next year as the region’s debt crisis saps demand for exports. Europe is on the path of another recession as it cannot come up with a way to deal with the massive debts accumulated by Southern Europe countries.
The bond market continues to move with equity markets, that isn't likely to change anytime soon. As stocks fall on failure of the Super Committee, the weakening outlook for the global economies and now increasing fears S&P and the other rating agencies may once again lower US economic outlook and cut our debt rating again. Even if the agencies lower US debt ratings it isn't likely to impact our rate markets directly as the US will still be the place for worldwide investors to seek safety in the present chaotic world.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Monday, November 21, 2011
Treasury rates a little lower this with the stock market opening weaker. That the Super Committee has failed to reach any compromise is driving markets this morning. The bond and mortgage markets should hold through the week but unlikely to decline in rates much. It will be a short week with Thanksgiving on Thursday and a skeleton crew on Friday with most taking the day off. The rest of the world doesn't do Thanksgiving so outside the US its business as usual. The only data today is Oct existing home sales; Tuesday has the second look at Q3 GDP, Wednesday is loaded with data including weekly jobless claims normally released on Thursdays.
The Super Committee has already admitted defeat with its deadline on Wednesday. No compromises on taxes and spending cuts so automatic spending cuts will occur totaling $1.2T including cuts in some of the social programs. That these is the automatic cuts supposed to occur it is unlikely that in the end there will be no cuts as Congress and the Administration won't step and do it. 2012 is all about the election a year from now, given the impasse between Republicans and Democrats the year won't likely see anything of real substance in relation to budgets and spending with both parties unwilling to take their responsibilities seriously----what politicians take seriously is being re-elected.
Treasury will auction $99B of notes beginning Monday with $35B of 2 yr notes, Tuesday $35B of 5 yr notes and Wednesday $29B of 7 yr notes. Europe still holds US markets by the throat with 5 of the EU countries facing debt crisis and three countries currently changing governments in attempts to deal with huge austerity plans that will increase taxes and cut large chunks out of spending.
The 10 yr note trades around 2.00% and seems to find resistance when its yield moves below 2.00%; mortgages continue to lag treasuries as the move lower in rates is primarily into treasuries as insurance against continuing uncertainty in Europe.
The DJIA opened -125, the 10 yr at 9:30 +13/32 at 1.96% -5 bp while mortgage prices at 9:30 +4/32 (.12 bp).
At 10:00 Oct existing home sales expected down 1.2% were up 1.4% to 4.97 mil annualized; the median sales price $162.500 -4.2% yr/yr, 28% of sales were distressed sales, down from 30% in Sept. There is an 8 month supply based on current sales down 2.2% frm Sept. There was no immediate reaction to the better report.
This Week's Economic Calendar:
Monday;
10:00 am Oct existing home sales (as reported
1:00 pm $35B 2 yr note auction
Tuesday;
8:30 am Q3 GDP advance report (+2.5% unch frm last month's prelim report)
1:00 pm $35B 5 yr note auction
2:00 pm FOMC minutes frm 11/2 meeting
Wednesday;
7:00 am weekly MBA mortgage applications
8:30 am weekly jobless claims (+3K to 391K)
Oct personal income & spending (income +0.3%, spending +0.3%)
Oct durable goods orders (-0.9%, ex transportation orders 0.0%)
9:55 U. of Michigan consumer sentiment index (64.2 frm 64.2)
1:00 pm $29B 7 yr note auction
Thursday;
All Markets Closed
Friday;
Early closes for all markets
The Bundesbank commenting today that growth in Germany, Europe’s largest economy, may slow to a near standstill next year as the region’s debt crisis saps demand for exports. Europe is on the path of another recession as it cannot come up with a way to deal with the massive debts accumulated by Southern Europe countries.
The bond market continues to move with equity markets, that isn't likely to change anytime soon. As stocks fall on failure of the Super Committee, the weakening outlook for the global economies and now increasing fears S&P and the other rating agencies may once again lower US economic outlook and cut our debt rating again. Even if the agencies lower US debt ratings it isn't likely to impact our rate markets directly as the US will still be the place for worldwide investors to seek safety in the present chaotic world.
Sunday, November 20, 2011
Friday, November 18, 2011
Mortgage Rates
Interest rates started a little higher this morning but are holding well after the 10 yr closed at 1.97% yesterday. Early this morning the 10 yr traded at 2.03% at 7:30, but by 9:00 it fell back to 1.99%. Mortgage prices a little lower in line with the 10 yr price decline; stock indexes were pointing to a better open at 9:30 (at 9:30 the DJIA opened +40). There was no economic data today until 10:00 when Oct leading economic indicators, expected up 0.6%, increased 0.9%; Sept revised to +0.1% frm 0.2%. The LEI suggests the economy is holding and improving a little. There was no noticeable reaction to the better report. At 10:05 the 10- yr at 2.00% +3 bp and mortgage prices -.12 bp. Although LEI is better the outlook for employment still is dismal.
In Europe the ECB was in again buying Italian and Spanish bonds keeping their rates under what is considered a key rate at 7.00%. A rate over 7.00% for Italian bonds is being considered as the level that has to hold if Italy and Spain have any chance of avoiding defaults because the austerity cuts at higher rates would be impossible to achieve. European officials may start talks with the International Monetary Fund on a mechanism for the ECB to lend to the IMF for sovereign bailouts in the region, Dow Jones Newswires reported. Agreement on the proposal between ECB and IMF may result in an announcement at a European Union summit on Dec. 9, Dow Jones said, citing two unidentified people with direct knowledge of the matter. Sounds nice but we won't hold our breath that a workable plan will emerge; it hasn't happened in the last 2 yrs.
The ECB is continuing to buy Italian and Spanish debt, how that is being justified is unsure since the EU treaty precludes the central bank from buying individual country bonds. Nevertheless it is doing it and it seems the only actual activity in the region. With the EU teetering on the edge of potential breakup all the rules are subject to change. Germany continues to resist the intervention by the ECB, and Germany is at increasing odds with France over how to deal with the debt crisis. The longer the crisis drags on the more EU countries will turn inward toward their own interests above those of the EU as a group. Germany is already thinking outside the box of the EU.
A little better to start today in the equity markets but no assurance the key indexes can improve. A stronger equity market today would work against the rate markets; not something new though, that has been the trade fro months----higher indexes equals lower prices in rate markets.
Yesterday the 10 yr closed under 2.00% and increased the bullish technical outlook. The 10 remains slightly below 2.00% this morning, the longer it holds the better the outlook fro mortgage rates. The relative strength in the bond market is increasing and more of our studies are turning more positive. That said, even with Europe and safe haven moves, if US equity markets rally it will take a toll on rates.
Interest rates started a little higher this morning but are holding well after the 10 yr closed at 1.97% yesterday. Early this morning the 10 yr traded at 2.03% at 7:30, but by 9:00 it fell back to 1.99%. Mortgage prices a little lower in line with the 10 yr price decline; stock indexes were pointing to a better open at 9:30 (at 9:30 the DJIA opened +40). There was no economic data today until 10:00 when Oct leading economic indicators, expected up 0.6%, increased 0.9%; Sept revised to +0.1% frm 0.2%. The LEI suggests the economy is holding and improving a little. There was no noticeable reaction to the better report. At 10:05 the 10- yr at 2.00% +3 bp and mortgage prices -.12 bp. Although LEI is better the outlook for employment still is dismal.
In Europe the ECB was in again buying Italian and Spanish bonds keeping their rates under what is considered a key rate at 7.00%. A rate over 7.00% for Italian bonds is being considered as the level that has to hold if Italy and Spain have any chance of avoiding defaults because the austerity cuts at higher rates would be impossible to achieve. European officials may start talks with the International Monetary Fund on a mechanism for the ECB to lend to the IMF for sovereign bailouts in the region, Dow Jones Newswires reported. Agreement on the proposal between ECB and IMF may result in an announcement at a European Union summit on Dec. 9, Dow Jones said, citing two unidentified people with direct knowledge of the matter. Sounds nice but we won't hold our breath that a workable plan will emerge; it hasn't happened in the last 2 yrs.
The ECB is continuing to buy Italian and Spanish debt, how that is being justified is unsure since the EU treaty precludes the central bank from buying individual country bonds. Nevertheless it is doing it and it seems the only actual activity in the region. With the EU teetering on the edge of potential breakup all the rules are subject to change. Germany continues to resist the intervention by the ECB, and Germany is at increasing odds with France over how to deal with the debt crisis. The longer the crisis drags on the more EU countries will turn inward toward their own interests above those of the EU as a group. Germany is already thinking outside the box of the EU.
A little better to start today in the equity markets but no assurance the key indexes can improve. A stronger equity market today would work against the rate markets; not something new though, that has been the trade fro months----higher indexes equals lower prices in rate markets.
Yesterday the 10 yr closed under 2.00% and increased the bullish technical outlook. The 10 remains slightly below 2.00% this morning, the longer it holds the better the outlook fro mortgage rates. The relative strength in the bond market is increasing and more of our studies are turning more positive. That said, even with Europe and safe haven moves, if US equity markets rally it will take a toll on rates.
Thursday, November 17, 2011
Mortgage Rate Update
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, November 17, 2011
Before the 8:30 data this morning the 10 yr note traded at 1.97%, after the 8:30 economic reports the 10 yr back to 2.03% at 9:00 am. Weekly jobless claims were down 5K to 388K last week, estimates were for an increase of 5K to 10K. Weekly claims last week were revised to 393K frm 390K originally reported. The claims lowest since April 2nd 2011. Continuing claims fell to 3.608 mil frm 3.665 mil. Oct housing starts and permits also at 8:30; starts were expected to be down 8.0% as reported -0.3% at 628K. Sept starts revised lower to +7.7% frm +15.0%. Single family starts up 3.9% while multi-family starts -8.3%. Permits up 10.9% to 653K the best since March 2010. The two reports turned stock indexes frm weaker to better, at 9:00 the DJIA +40 after being off 50.
In Europe more talk but nothing of substance in terms of progress. Now France and Germany squabbling; Germany's Angela Merkel rejected French calls to deploy the European Central Bank as a crisis backstop, defying global leaders and investors calling for more urgent action to halt the turmoil. ECB itself has also resisted calls to provide more support. Mario Draghi, the Italian who took over as president of the central bank this month, said Nov. 3 that backstopping government borrowing lies outside the ECB’s responsibility. The spread between French and German 10-year yields widened to as much as 204 basis points today as France sold 6.98 billion euros ($9.38 billion) of notes. Spanish bonds sank, driving 10- year yields to the highest since the euro was introduced in 1999, as borrowing costs climbed to the most in at least seven years at an auction of securities. The ECB said to be buying more Italian debt today after buying yesterday; the Italian 10 yr traded above 7.00% early this morning triggering some safe haven buying in US treasuries, now at 6.95% and the US 10 yr back over 2.00%.
At 9:30 the DJIA opened -13, 10 yr 2.02% +2 bp and mortgage prices -3/32 (.09 bp) frm yesterday's close.
At 10:00 a few minutes ago the key Nov Philadelphia Fed business index, expected at 9.0 frm 8.7 in Oct, earlier this week the index was expected at 6.8. As released the index was weaker at 3.6, prices pd component 22.8 frm 20.0, new orders 1.3 frm 7.8, employment component 12.0 frm 1.4. Employment better but new orders and the overall index weaker than expected. There isn't much initial reaction to the report. An index above zero is considered expansion, below zero, contraction.
The 10 yr and mortgage markets continue to trade in very tight ranges, two weeks with little change. Early today the 10 traded at 1.97%, at 10:00 back to 2.00%. Two factors for US rates; Europe and the US equity markets. Stock indexes turned up at 10:05 this morning and immediately the mtg market slipped a little. We still have somewhat positive technicals but overall the recent activity is neural with little changes.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, November 17, 2011
Before the 8:30 data this morning the 10 yr note traded at 1.97%, after the 8:30 economic reports the 10 yr back to 2.03% at 9:00 am. Weekly jobless claims were down 5K to 388K last week, estimates were for an increase of 5K to 10K. Weekly claims last week were revised to 393K frm 390K originally reported. The claims lowest since April 2nd 2011. Continuing claims fell to 3.608 mil frm 3.665 mil. Oct housing starts and permits also at 8:30; starts were expected to be down 8.0% as reported -0.3% at 628K. Sept starts revised lower to +7.7% frm +15.0%. Single family starts up 3.9% while multi-family starts -8.3%. Permits up 10.9% to 653K the best since March 2010. The two reports turned stock indexes frm weaker to better, at 9:00 the DJIA +40 after being off 50.
In Europe more talk but nothing of substance in terms of progress. Now France and Germany squabbling; Germany's Angela Merkel rejected French calls to deploy the European Central Bank as a crisis backstop, defying global leaders and investors calling for more urgent action to halt the turmoil. ECB itself has also resisted calls to provide more support. Mario Draghi, the Italian who took over as president of the central bank this month, said Nov. 3 that backstopping government borrowing lies outside the ECB’s responsibility. The spread between French and German 10-year yields widened to as much as 204 basis points today as France sold 6.98 billion euros ($9.38 billion) of notes. Spanish bonds sank, driving 10- year yields to the highest since the euro was introduced in 1999, as borrowing costs climbed to the most in at least seven years at an auction of securities. The ECB said to be buying more Italian debt today after buying yesterday; the Italian 10 yr traded above 7.00% early this morning triggering some safe haven buying in US treasuries, now at 6.95% and the US 10 yr back over 2.00%.
At 9:30 the DJIA opened -13, 10 yr 2.02% +2 bp and mortgage prices -3/32 (.09 bp) frm yesterday's close.
At 10:00 a few minutes ago the key Nov Philadelphia Fed business index, expected at 9.0 frm 8.7 in Oct, earlier this week the index was expected at 6.8. As released the index was weaker at 3.6, prices pd component 22.8 frm 20.0, new orders 1.3 frm 7.8, employment component 12.0 frm 1.4. Employment better but new orders and the overall index weaker than expected. There isn't much initial reaction to the report. An index above zero is considered expansion, below zero, contraction.
The 10 yr and mortgage markets continue to trade in very tight ranges, two weeks with little change. Early today the 10 traded at 1.97%, at 10:00 back to 2.00%. Two factors for US rates; Europe and the US equity markets. Stock indexes turned up at 10:05 this morning and immediately the mtg market slipped a little. We still have somewhat positive technicals but overall the recent activity is neural with little changes.
Wednesday, November 16, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, November 16, 2011
Prior to 8:30 this morning the 10 yr note quiet but down 4/32 to 2.05%, mortgages down 4/32 (.12 bp). At 8:30 Oct CPI was -0.1% against forecasts of unch; the core (ex food and energy) +0.1% in line with estimates. Yr/yr overall CPI +3.5%, ex food and energy +2/1%. The slightly better inflation report turned the 10 to +6/32 to 2.03% -1 bp on the day, and mortgage prices up 1/32 (.03 bp). Early trade in stock indexes were weaker, the DJIA down 88 points. U.S. index futures and the euro fell after the Bank of England said failure to resolve Europe’s debt crisis may have “significant adverse effects” on the economy.
Europe continues to dictate to markets; about any sneeze from anyone in the region has some kind of reaction in global markets. Italian Prime Minister-designate Mario Monti will announce his new government today. Two days of consultations with parties, unions and employers left him “convinced” that Italy can overcome the crisis, he said yesterday. Italian bonds gained for the first day in three, with the 10-year yield falling 15 basis points to 6.92%. Italy’s deficit, at 4.6 percent of gross domestic product last year, is about the same as Germany’s, lower than that of France and less than half the U.K.’s, at 10.3 percent. Still, its debt load is bigger than that of Spain, Greece, Ireland and Portugal combined. German Chancellor Angela Merkel said Germany is prepared to cede some national sovereignty to the European Union to achieve closer economic and political ties.
Treasuries are on hold the last couple of weeks with little change in interest rates; the 10 yr note between 2.10% and 2.00% while mortgage prices equally flat. News out of Europe at the moment is generally constructive, at least no more shocks in the last few days. Still have a safe haven trade in US treasuries however, there is really no end in sight for Europe's debt problems. French banks troubled, Germans resisting additional support although Merkel sounded somewhat conciliatory but we have heard plenty of that over the last year.
Oct industrial production at 9:15 was better than estimates, up 0.7% with estimates at +0.4%, however Sept production was revised to -0.1% frm +0.2%. Oct factory usage increased to 77.8% frm 77.3% in Sept also better than expected. There was little reaction to the better data in stock and bond markets. Europe still trading with weaker markets, US is like the faithful dog that never leaves the master's side and these days Europe is the master and the US the faithful pup.
Crude oil this morning breached $100.00/barrel; at 9:15 $100.91 +$1.54 (see below for 9:50 level). Gold prices falling, down to $1760.00 -$22.00.
At 9:30 the DJIA opened very weak, down 130; the 10 yr at 2.02% -2 bp and mortgage prices +5/32 (.15 bp) on 30s.
At 10:00, a few minutes ago the Nov NAHB housing market index, expected at 18 increased to 21 the highest in a very long time; Oct index revised from 18 to 17.
As long as the 10 yr fails to break 2.00% the opportunity for lower mortgage rates is absent. MBS markets have been flat for over two weeks as has the 10 yr. Investors still hold somewhat of a bullish bias as a safe haven against the ever changing situation in Europe but for the last week or so there have been no additional shoes to drop. No shocks but no actual progress that is aimed at the banks in Europe that are in as bad if not worse shape than US bans found themselves in 2008 when Lehman failed and the sub prime bubble exploded. US banks were extremely leveraged just as Europe's banks are now.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, November 16, 2011
Prior to 8:30 this morning the 10 yr note quiet but down 4/32 to 2.05%, mortgages down 4/32 (.12 bp). At 8:30 Oct CPI was -0.1% against forecasts of unch; the core (ex food and energy) +0.1% in line with estimates. Yr/yr overall CPI +3.5%, ex food and energy +2/1%. The slightly better inflation report turned the 10 to +6/32 to 2.03% -1 bp on the day, and mortgage prices up 1/32 (.03 bp). Early trade in stock indexes were weaker, the DJIA down 88 points. U.S. index futures and the euro fell after the Bank of England said failure to resolve Europe’s debt crisis may have “significant adverse effects” on the economy.
Europe continues to dictate to markets; about any sneeze from anyone in the region has some kind of reaction in global markets. Italian Prime Minister-designate Mario Monti will announce his new government today. Two days of consultations with parties, unions and employers left him “convinced” that Italy can overcome the crisis, he said yesterday. Italian bonds gained for the first day in three, with the 10-year yield falling 15 basis points to 6.92%. Italy’s deficit, at 4.6 percent of gross domestic product last year, is about the same as Germany’s, lower than that of France and less than half the U.K.’s, at 10.3 percent. Still, its debt load is bigger than that of Spain, Greece, Ireland and Portugal combined. German Chancellor Angela Merkel said Germany is prepared to cede some national sovereignty to the European Union to achieve closer economic and political ties.
Treasuries are on hold the last couple of weeks with little change in interest rates; the 10 yr note between 2.10% and 2.00% while mortgage prices equally flat. News out of Europe at the moment is generally constructive, at least no more shocks in the last few days. Still have a safe haven trade in US treasuries however, there is really no end in sight for Europe's debt problems. French banks troubled, Germans resisting additional support although Merkel sounded somewhat conciliatory but we have heard plenty of that over the last year.
Oct industrial production at 9:15 was better than estimates, up 0.7% with estimates at +0.4%, however Sept production was revised to -0.1% frm +0.2%. Oct factory usage increased to 77.8% frm 77.3% in Sept also better than expected. There was little reaction to the better data in stock and bond markets. Europe still trading with weaker markets, US is like the faithful dog that never leaves the master's side and these days Europe is the master and the US the faithful pup.
Crude oil this morning breached $100.00/barrel; at 9:15 $100.91 +$1.54 (see below for 9:50 level). Gold prices falling, down to $1760.00 -$22.00.
At 9:30 the DJIA opened very weak, down 130; the 10 yr at 2.02% -2 bp and mortgage prices +5/32 (.15 bp) on 30s.
At 10:00, a few minutes ago the Nov NAHB housing market index, expected at 18 increased to 21 the highest in a very long time; Oct index revised from 18 to 17.
As long as the 10 yr fails to break 2.00% the opportunity for lower mortgage rates is absent. MBS markets have been flat for over two weeks as has the 10 yr. Investors still hold somewhat of a bullish bias as a safe haven against the ever changing situation in Europe but for the last week or so there have been no additional shoes to drop. No shocks but no actual progress that is aimed at the banks in Europe that are in as bad if not worse shape than US bans found themselves in 2008 when Lehman failed and the sub prime bubble exploded. US banks were extremely leveraged just as Europe's banks are now.
Tuesday, November 15, 2011
It is time to do an FHA streamline! Here is why. They are going to increase the monthly Mortgage Insurance.
http://ping.fm/a59W5
http://ping.fm/a59W5
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, November 15, 2011
Three economic reports at 8:30 this morning; Oct retail sales better than estimates, +0.5% overall and +0.6% ex auto sales, estimates were +0.4% and +0.2% respectively. Nov Empire State manufacturing index expected -0.8 frm -8.48 in Oct was +0.61; new orders component -2.07 frm +0.16, employment at -3.66 frm +3.77 and prices pd at 18.29 frm 22.47; any index lower than zero is considered contraction. The headline was better but the components didn't look so good with employment and new orders weaker. Oct PPI expected -0.2% overall and ex food and energy +0.1%; as reported the overall was -0.3% and the core unch. Yr/yr overall PPI +5.9% while the core yr/yr +2.8%. At the wholesale level inflation is rather tame.
Prior to the 8:30 data the 10 yr note once again traded down to 2.00%, once again it hasn't held as 2.00% is a brick wall for long term rates. Although the 1 has moved under 2.00% it hasn't been able to sustain it. Mortgage prices prior to 8:30 up 7/32 (.22 bp), at 9:00 +5/32 (.15 bp).
In Europe the economy continued to muddle along. The EU’s gross domestic product increased 0.2% from the previous three months, when it rose at the same pace, according to EU data. The euro weakened as the cost of insuring French bonds climbed to a record and Spanish yields rose at an auction. Mario Monti, Italy’s premier-in-waiting, faced political resistance on forming a Cabinet during talks in Rome yesterday. Monti wants a technocratic government without politicians, politicians in Italy refusing to go along. French and Italian interest rates increased today. Germany and Britain exchanging words over Britain's refusal to go along with a tax on financial transactions. 25% of Britain's lawmakers are calling for a referendum vote to exit the EU. Germany has been at the forefront of calls for a European transaction tax, a levy Britain is only willing to countenance if the U.S. and Asian nations join in to prevent financial services from deserting London’s financial center. The European Commission has proposed a plan that it says would raise 57 billion euros ($77B) a year.
The DJIA opened -12 points at 9:30, the 10 yr note +4/32 to 2.03% -1 bp and mortgage prices at 9:30 +3/32 (.09 bp).
At 10:00 Sept business inventories expected +0.1% were reported unchanged.
Chicago Fed Pres Evens out this morning advocating more easing from the Fed to lower the persistent high unemployment rate. Evens was the lone dissenter at the last FOMC meeting (11/2) when the FOMC decided to not announce anymore easing. Another Fed easing however won't reduce unemployment; all the easing so far hasn't done anything to lower unemployment.
We continue our concern that interest rates are running out of steam at the present levels. The 10 yr note hasn't been able to move below 2.00% and hold it; recent turmoil in Europe that isn't lessening but becoming worse hasn't generated the kind of safe haven moves into treasuries the last few weeks. Mortgage rates also finding resistance at present prices and yields. Although buying has slowed there isn't much to suggest interest rates should increase either; the 10 yr is comfortable between 2.10% and 2.00% while mortgage rates are stable at present rates. The equity market in the US and the chaos in Europe are the issues; this morning so far a good example, the 10 yr was holding positive with a gain that had the yield at 2.00% when the stock indexes were weaker. At 9:45 the key indexes went positive and took mortgages and the 10 yr back to unchanged.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, November 15, 2011
Three economic reports at 8:30 this morning; Oct retail sales better than estimates, +0.5% overall and +0.6% ex auto sales, estimates were +0.4% and +0.2% respectively. Nov Empire State manufacturing index expected -0.8 frm -8.48 in Oct was +0.61; new orders component -2.07 frm +0.16, employment at -3.66 frm +3.77 and prices pd at 18.29 frm 22.47; any index lower than zero is considered contraction. The headline was better but the components didn't look so good with employment and new orders weaker. Oct PPI expected -0.2% overall and ex food and energy +0.1%; as reported the overall was -0.3% and the core unch. Yr/yr overall PPI +5.9% while the core yr/yr +2.8%. At the wholesale level inflation is rather tame.
Prior to the 8:30 data the 10 yr note once again traded down to 2.00%, once again it hasn't held as 2.00% is a brick wall for long term rates. Although the 1 has moved under 2.00% it hasn't been able to sustain it. Mortgage prices prior to 8:30 up 7/32 (.22 bp), at 9:00 +5/32 (.15 bp).
In Europe the economy continued to muddle along. The EU’s gross domestic product increased 0.2% from the previous three months, when it rose at the same pace, according to EU data. The euro weakened as the cost of insuring French bonds climbed to a record and Spanish yields rose at an auction. Mario Monti, Italy’s premier-in-waiting, faced political resistance on forming a Cabinet during talks in Rome yesterday. Monti wants a technocratic government without politicians, politicians in Italy refusing to go along. French and Italian interest rates increased today. Germany and Britain exchanging words over Britain's refusal to go along with a tax on financial transactions. 25% of Britain's lawmakers are calling for a referendum vote to exit the EU. Germany has been at the forefront of calls for a European transaction tax, a levy Britain is only willing to countenance if the U.S. and Asian nations join in to prevent financial services from deserting London’s financial center. The European Commission has proposed a plan that it says would raise 57 billion euros ($77B) a year.
The DJIA opened -12 points at 9:30, the 10 yr note +4/32 to 2.03% -1 bp and mortgage prices at 9:30 +3/32 (.09 bp).
At 10:00 Sept business inventories expected +0.1% were reported unchanged.
Chicago Fed Pres Evens out this morning advocating more easing from the Fed to lower the persistent high unemployment rate. Evens was the lone dissenter at the last FOMC meeting (11/2) when the FOMC decided to not announce anymore easing. Another Fed easing however won't reduce unemployment; all the easing so far hasn't done anything to lower unemployment.
We continue our concern that interest rates are running out of steam at the present levels. The 10 yr note hasn't been able to move below 2.00% and hold it; recent turmoil in Europe that isn't lessening but becoming worse hasn't generated the kind of safe haven moves into treasuries the last few weeks. Mortgage rates also finding resistance at present prices and yields. Although buying has slowed there isn't much to suggest interest rates should increase either; the 10 yr is comfortable between 2.10% and 2.00% while mortgage rates are stable at present rates. The equity market in the US and the chaos in Europe are the issues; this morning so far a good example, the 10 yr was holding positive with a gain that had the yield at 2.00% when the stock indexes were weaker. At 9:45 the key indexes went positive and took mortgages and the 10 yr back to unchanged.
Monday, November 14, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Monday, November 14, 2011
Treasuries and mortgage markets were closed last Friday for Veteran's Day; the stock market and most other bourses were open. The DJIA rallied 259 points, NASDAQ +54 and the S&P +24. Likely had the bond market traded prices would have been lower. This morning the indexes prior to 9:30 were generally flat from Friday's closes. US interest rates are faltering at present levels; mortgage prices trading in a narrow range with the 10 yr note losing any momentum when it approaches 2.00%.
This week; still all about what comes from Europe as it continues to tilt at windmills unable financially to step up and cover the troubled countries that hang on the cliff of default. Italy made a positive step last week with Berlusconi agreeing to step down and a new leader in place (Monti), a financial guy, to form a technocratic government ( no politicians) to work out a budget that will save the country from defaulting. Italy is so big and carries more debt than the EU and ECB can handle. The bellwether 10 yr note still is unable to break below 2.00% with any momentum (2.09% early Monday morning). Mortgage prices and rates are stuck in a very tight range with very little change in rates for the last couple of weeks.
Italian bonds and stocks erased early gains and declined as Monti met with leaders of the country’s political parties to discuss Cabinet nominees. The yield on Italy’s benchmark 10-year bond rose 19 basis points to 6.64% this morning. The professor, as Monti is known, already faces resistance to appointing some politicians to his so-called technical Cabinet. Europe is a dead man walking when it comes to dealing with the debt crisis; even if the ECB wanted to pump funds to Italy, it doesn't have enough to make a dent in the debt. Germany and France will not pony up anymore funds as their citizens resist the financial stress it would out on each country.The inability to contain a regional debt crisis that started in Greece more than two years ago led to a surge in Italian bond yields as investors bet on which nation may need aid next. Monti, an economist and former adviser to Goldman Sachs Group Inc., will try to reassure investors that Italy can cut a 1.9 trillion-euro ($2.6 trillion) debt load and spur economic growth that has lagged behind the euro-region average for more than a decade.
Italy’s bond sale today highlighted investor skepticism that euro area’s leaders will struggle to push through reforms needed to end the debt crisis. Italian bonds today fell for the first time in three days, after the government sold 3 billion euros ($4.1 billion) of five-year notes, the maximum target, at the highest yield in more than 14 years. Rising yields highlighted the challenge facing the new government.
This week, no economic releases on Monday but we have a lot of key data through the rest of the week. Inflation reads, retail sales, reports on factory usage and output, housing starts and permits and the key Philly Fed business index. Economic releases recently have been secondary to the constant and confusing news that seeps out daily from Europe. This week leads into next week's short week with Thanksgiving holiday taking 2 days out of play and likely thin volume as investors wind down. The rate markets are stumbling at present levels, the longer the 10 yr fails to break 2.00% the more tedious the outlook becomes.
This Week's Economic Calendar:
Tuesday;
8:30 am Oct PPI (-0.2%, ex food and energy +0.1%)
Oct retail sales (+0.4%; ex auto sales +0.2%)
Nov Empire State manufacturing index (-0.8 frm -8.48 in Oct)
10:00 am Sept business inventories (+0.2%)
Wednesday;
7:00 am weekly MBA mortgage applications
8:30 am Oct CPI (0.0%, ex food and energy +0.1%)
9:15 Oct industrial production (+0.4%)
Oct capacity utilization (77.6% frm 77.4% in Sept)
10:00 am NAHB Nov housing mkt index (18 unch)
Thursday;
8:30 am weekly jobless claims (+10K to 400K; con't claims 3.648 mil frm 3.615 mil)
Oct housing starts and permits (starts -8.0%, permits +7.7%)
10:00 am Nov Philly Fed business index (6.8 frm 8.7)
Friday;
10:00 am Leading economic indicators (Oct +0.6%)
There has been little movement in mortgage or 10 yr note rates for the last two weeks; regardless of the momentary and constantly conflicting news from Europe US long term rates are hitting key resistance levels (2.00%) on the 10 yr note and mortgage rates hanging in a 10 basis point yield range. The longer the rate markets find resistance at current levels the more concerned we are that rates may have found a bottom. Traders and those that seek safety against turmoil in Europe appear to resist buying when the bellwether 10 yr falls to 2.00%; although the rate has dipped below 2.00%, when it occurs it lasts no longer than a few hours before bouncing back.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Monday, November 14, 2011
Treasuries and mortgage markets were closed last Friday for Veteran's Day; the stock market and most other bourses were open. The DJIA rallied 259 points, NASDAQ +54 and the S&P +24. Likely had the bond market traded prices would have been lower. This morning the indexes prior to 9:30 were generally flat from Friday's closes. US interest rates are faltering at present levels; mortgage prices trading in a narrow range with the 10 yr note losing any momentum when it approaches 2.00%.
This week; still all about what comes from Europe as it continues to tilt at windmills unable financially to step up and cover the troubled countries that hang on the cliff of default. Italy made a positive step last week with Berlusconi agreeing to step down and a new leader in place (Monti), a financial guy, to form a technocratic government ( no politicians) to work out a budget that will save the country from defaulting. Italy is so big and carries more debt than the EU and ECB can handle. The bellwether 10 yr note still is unable to break below 2.00% with any momentum (2.09% early Monday morning). Mortgage prices and rates are stuck in a very tight range with very little change in rates for the last couple of weeks.
Italian bonds and stocks erased early gains and declined as Monti met with leaders of the country’s political parties to discuss Cabinet nominees. The yield on Italy’s benchmark 10-year bond rose 19 basis points to 6.64% this morning. The professor, as Monti is known, already faces resistance to appointing some politicians to his so-called technical Cabinet. Europe is a dead man walking when it comes to dealing with the debt crisis; even if the ECB wanted to pump funds to Italy, it doesn't have enough to make a dent in the debt. Germany and France will not pony up anymore funds as their citizens resist the financial stress it would out on each country.The inability to contain a regional debt crisis that started in Greece more than two years ago led to a surge in Italian bond yields as investors bet on which nation may need aid next. Monti, an economist and former adviser to Goldman Sachs Group Inc., will try to reassure investors that Italy can cut a 1.9 trillion-euro ($2.6 trillion) debt load and spur economic growth that has lagged behind the euro-region average for more than a decade.
Italy’s bond sale today highlighted investor skepticism that euro area’s leaders will struggle to push through reforms needed to end the debt crisis. Italian bonds today fell for the first time in three days, after the government sold 3 billion euros ($4.1 billion) of five-year notes, the maximum target, at the highest yield in more than 14 years. Rising yields highlighted the challenge facing the new government.
This week, no economic releases on Monday but we have a lot of key data through the rest of the week. Inflation reads, retail sales, reports on factory usage and output, housing starts and permits and the key Philly Fed business index. Economic releases recently have been secondary to the constant and confusing news that seeps out daily from Europe. This week leads into next week's short week with Thanksgiving holiday taking 2 days out of play and likely thin volume as investors wind down. The rate markets are stumbling at present levels, the longer the 10 yr fails to break 2.00% the more tedious the outlook becomes.
This Week's Economic Calendar:
Tuesday;
8:30 am Oct PPI (-0.2%, ex food and energy +0.1%)
Oct retail sales (+0.4%; ex auto sales +0.2%)
Nov Empire State manufacturing index (-0.8 frm -8.48 in Oct)
10:00 am Sept business inventories (+0.2%)
Wednesday;
7:00 am weekly MBA mortgage applications
8:30 am Oct CPI (0.0%, ex food and energy +0.1%)
9:15 Oct industrial production (+0.4%)
Oct capacity utilization (77.6% frm 77.4% in Sept)
10:00 am NAHB Nov housing mkt index (18 unch)
Thursday;
8:30 am weekly jobless claims (+10K to 400K; con't claims 3.648 mil frm 3.615 mil)
Oct housing starts and permits (starts -8.0%, permits +7.7%)
10:00 am Nov Philly Fed business index (6.8 frm 8.7)
Friday;
10:00 am Leading economic indicators (Oct +0.6%)
There has been little movement in mortgage or 10 yr note rates for the last two weeks; regardless of the momentary and constantly conflicting news from Europe US long term rates are hitting key resistance levels (2.00%) on the 10 yr note and mortgage rates hanging in a 10 basis point yield range. The longer the rate markets find resistance at current levels the more concerned we are that rates may have found a bottom. Traders and those that seek safety against turmoil in Europe appear to resist buying when the bellwether 10 yr falls to 2.00%; although the rate has dipped below 2.00%, when it occurs it lasts no longer than a few hours before bouncing back.
Sunday, November 13, 2011
Saturday, November 12, 2011
Friday, November 11, 2011
Thursday, November 10, 2011
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Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website:
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, November 10, 2011
CollardPA
Europe continues to control US markets; yesterday there was a passing thought that Italy's debt problems would deal a serious blow to the country with its interest rates at record highs since the EU began. Yesterday another passing thought that the EU would eventually be restructured based on comments from French Pres Sarkozy that a two tier EU may be the best thing eventually. Yesterday the stock market dropped 389 points, the 10 yr note yield fell 12 basis points to close under 2.00% at 1.96%. That was yesterday; like it has been the last few weeks, one day its doom and gloom, the next not as bad. No one actually knows what will happen tomorrow; therein lies the difficulty in attempting to assess the situation on a day to day basis.
Yesterday there were comments from supposed knowledgeable people that the ECB was precluded from buying bonds from individual EU countries; obviously that isn't the case. We reported it as fact and one reason that the debt problems in the region were unlikely to be resolved for years and that there would be defaults in a number of countries. Overnight reports from the wires saying the ECB was in buying Italian bonds, so far no confirmation from the central bank. Italy did sell bills today, the demand was strong and for the moment markets are less concerned that Italy can not fund itself. The country sold 5 billion euros ($6.8B) of one-year bills at an average yield of 6.087% after yields yesterday on 10-year notes surged past the 7 percent level.
In Greece there is apparently a new leader that will form an interim government; former vice- president of the European Central Bank Lucas Papademos will head a national unity government for Greece, according to the country’s presidency.
At 8:30 this morning weekly jobless claims along with the every other day optimism about Europe driving stock indexes higher and interest rate prices lower. Weekly claims fell 10K to 390K the lowest claims in 7 months, expectations were fro unchanged at 400K; continuing claims also fell, from 3.707 mil to 3.615 mil.
Sept US trade balance declined to -$43.11B, if here is any consensus in the markets these days the forecast was for the balance to -$46.3B. Oct import prices fell 0.6% against estimates of -0.2%; export prices fell 2.1%.
At 1:00 this afternoon Treasury will complete borrowing $72B this week with $16B of 30 yr bonds. The 10 yr auction yesterday was weaker than traders were expecting, sending rates higher on the reaction before regaining strength into the close with the 10 at 1.96%. This morning the 10 yr is hovering at 2.05%.
At 9:30 the DJIA opened +126, NASDAQ +30, and the S&P +13; the 10 yr note 2.05% +9 bp and mortgage prices down 8/32 (.25 bp).
Attempting to trade on fundamentals these days is almost impossible with the constant changes happening in Europe. Looking solely at the technicals, the 10 yr note presently is sitting right on its 40 day average at 2.05% with its 20 day average at 2.09%. 30 yr FNMA MBS today trading below its 40 day and at the moment holding at its 20 day, similar to the 10 yr note. The relative strength in both markets is hanging at neutral. The overall technical picture slightly positive but not by much. That the 10 yr this morning is back over 2.00% somewhat negates its close yesterday below 2.00%. With US markets being completely dominated by what happens in Europe the outlook for US interest rates is in the end is impossible to anticipate. Bottom line; markets are adrift in a sea of uncertainty over Europe and the impact on the US economy.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website:
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, November 10, 2011
CollardPA
Europe continues to control US markets; yesterday there was a passing thought that Italy's debt problems would deal a serious blow to the country with its interest rates at record highs since the EU began. Yesterday another passing thought that the EU would eventually be restructured based on comments from French Pres Sarkozy that a two tier EU may be the best thing eventually. Yesterday the stock market dropped 389 points, the 10 yr note yield fell 12 basis points to close under 2.00% at 1.96%. That was yesterday; like it has been the last few weeks, one day its doom and gloom, the next not as bad. No one actually knows what will happen tomorrow; therein lies the difficulty in attempting to assess the situation on a day to day basis.
Yesterday there were comments from supposed knowledgeable people that the ECB was precluded from buying bonds from individual EU countries; obviously that isn't the case. We reported it as fact and one reason that the debt problems in the region were unlikely to be resolved for years and that there would be defaults in a number of countries. Overnight reports from the wires saying the ECB was in buying Italian bonds, so far no confirmation from the central bank. Italy did sell bills today, the demand was strong and for the moment markets are less concerned that Italy can not fund itself. The country sold 5 billion euros ($6.8B) of one-year bills at an average yield of 6.087% after yields yesterday on 10-year notes surged past the 7 percent level.
In Greece there is apparently a new leader that will form an interim government; former vice- president of the European Central Bank Lucas Papademos will head a national unity government for Greece, according to the country’s presidency.
At 8:30 this morning weekly jobless claims along with the every other day optimism about Europe driving stock indexes higher and interest rate prices lower. Weekly claims fell 10K to 390K the lowest claims in 7 months, expectations were fro unchanged at 400K; continuing claims also fell, from 3.707 mil to 3.615 mil.
Sept US trade balance declined to -$43.11B, if here is any consensus in the markets these days the forecast was for the balance to -$46.3B. Oct import prices fell 0.6% against estimates of -0.2%; export prices fell 2.1%.
At 1:00 this afternoon Treasury will complete borrowing $72B this week with $16B of 30 yr bonds. The 10 yr auction yesterday was weaker than traders were expecting, sending rates higher on the reaction before regaining strength into the close with the 10 at 1.96%. This morning the 10 yr is hovering at 2.05%.
At 9:30 the DJIA opened +126, NASDAQ +30, and the S&P +13; the 10 yr note 2.05% +9 bp and mortgage prices down 8/32 (.25 bp).
Attempting to trade on fundamentals these days is almost impossible with the constant changes happening in Europe. Looking solely at the technicals, the 10 yr note presently is sitting right on its 40 day average at 2.05% with its 20 day average at 2.09%. 30 yr FNMA MBS today trading below its 40 day and at the moment holding at its 20 day, similar to the 10 yr note. The relative strength in both markets is hanging at neutral. The overall technical picture slightly positive but not by much. That the 10 yr this morning is back over 2.00% somewhat negates its close yesterday below 2.00%. With US markets being completely dominated by what happens in Europe the outlook for US interest rates is in the end is impossible to anticipate. Bottom line; markets are adrift in a sea of uncertainty over Europe and the impact on the US economy.
Mortgage Rates
Forwarded exclusively by:
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, November 10, 2011
Europe continues to control US markets; yesterday there was a passing thought that Italy's debt problems would deal a serious blow to the country with its interest rates at record highs since the EU began. Yesterday another passing thought that the EU would eventually be restructured based on comments from French Pres Sarkozy that a two tier EU may be the best thing eventually. Yesterday the stock market dropped 389 points, the 10 yr note yield fell 12 basis points to close under 2.00% at 1.96%. That was yesterday; like it has been the last few weeks, one day its doom and gloom, the next not as bad. No one actually knows what will happen tomorrow; therein lies the difficulty in attempting to assess the situation on a day to day basis.
Yesterday there were comments from supposed knowledgeable people that the ECB was precluded from buying bonds from individual EU countries; obviously that isn't the case. We reported it as fact and one reason that the debt problems in the region were unlikely to be resolved for years and that there would be defaults in a number of countries. Overnight reports from the wires saying the ECB was in buying Italian bonds, so far no confirmation from the central bank. Italy did sell bills today, the demand was strong and for the moment markets are less concerned that Italy can not fund itself. The country sold 5 billion euros ($6.8B) of one-year bills at an average yield of 6.087% after yields yesterday on 10-year notes surged past the 7 percent level.
In Greece there is apparently a new leader that will form an interim government; former vice- president of the European Central Bank Lucas Papademos will head a national unity government for Greece, according to the country’s presidency.
At 8:30 this morning weekly jobless claims along with the every other day optimism about Europe driving stock indexes higher and interest rate prices lower. Weekly claims fell 10K to 390K the lowest claims in 7 months, expectations were fro unchanged at 400K; continuing claims also fell, from 3.707 mil to 3.615 mil.
Sept US trade balance declined to -$43.11B, if here is any consensus in the markets these days the forecast was for the balance to -$46.3B. Oct import prices fell 0.6% against estimates of -0.2%; export prices fell 2.1%.
At 1:00 this afternoon Treasury will complete borrowing $72B this week with $16B of 30 yr bonds. The 10 yr auction yesterday was weaker than traders were expecting, sending rates higher on the reaction before regaining strength into the close with the 10 at 1.96%. This morning the 10 yr is hovering at 2.05%.
At 9:30 the DJIA opened +126, NASDAQ +30, and the S&P +13; the 10 yr note 2.05% +9 bp and mortgage prices down 8/32 (.25 bp).
Attempting to trade on fundamentals these days is almost impossible with the constant changes happening in Europe. Looking solely at the technicals, the 10 yr note presently is sitting right on its 40 day average at 2.05% with its 20 day average at 2.09%. 30 yr FNMA MBS today trading below its 40 day and at the moment holding at its 20 day, similar to the 10 yr note. The relative strength in both markets is hanging at neutral. The overall technical picture slightly positive but not by much. That the 10 yr this morning is back over 2.00% somewhat negates its close yesterday below 2.00%. With US markets being completely dominated by what happens in Europe the outlook for US interest rates is in the end is impossible to anticipate. Bottom line; markets are adrift in a sea of uncertainty over Europe and the impact on the US economy.
To unsubscribe from TBWS Rate Alert e-mails, please click here.
Please do not reply directly to this e-mail. TBWS Rate Alert will not receive any reply message.
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Forwarded exclusively by:
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, November 10, 2011
Europe continues to control US markets; yesterday there was a passing thought that Italy's debt problems would deal a serious blow to the country with its interest rates at record highs since the EU began. Yesterday another passing thought that the EU would eventually be restructured based on comments from French Pres Sarkozy that a two tier EU may be the best thing eventually. Yesterday the stock market dropped 389 points, the 10 yr note yield fell 12 basis points to close under 2.00% at 1.96%. That was yesterday; like it has been the last few weeks, one day its doom and gloom, the next not as bad. No one actually knows what will happen tomorrow; therein lies the difficulty in attempting to assess the situation on a day to day basis.
Yesterday there were comments from supposed knowledgeable people that the ECB was precluded from buying bonds from individual EU countries; obviously that isn't the case. We reported it as fact and one reason that the debt problems in the region were unlikely to be resolved for years and that there would be defaults in a number of countries. Overnight reports from the wires saying the ECB was in buying Italian bonds, so far no confirmation from the central bank. Italy did sell bills today, the demand was strong and for the moment markets are less concerned that Italy can not fund itself. The country sold 5 billion euros ($6.8B) of one-year bills at an average yield of 6.087% after yields yesterday on 10-year notes surged past the 7 percent level.
In Greece there is apparently a new leader that will form an interim government; former vice- president of the European Central Bank Lucas Papademos will head a national unity government for Greece, according to the country’s presidency.
At 8:30 this morning weekly jobless claims along with the every other day optimism about Europe driving stock indexes higher and interest rate prices lower. Weekly claims fell 10K to 390K the lowest claims in 7 months, expectations were fro unchanged at 400K; continuing claims also fell, from 3.707 mil to 3.615 mil.
Sept US trade balance declined to -$43.11B, if here is any consensus in the markets these days the forecast was for the balance to -$46.3B. Oct import prices fell 0.6% against estimates of -0.2%; export prices fell 2.1%.
At 1:00 this afternoon Treasury will complete borrowing $72B this week with $16B of 30 yr bonds. The 10 yr auction yesterday was weaker than traders were expecting, sending rates higher on the reaction before regaining strength into the close with the 10 at 1.96%. This morning the 10 yr is hovering at 2.05%.
At 9:30 the DJIA opened +126, NASDAQ +30, and the S&P +13; the 10 yr note 2.05% +9 bp and mortgage prices down 8/32 (.25 bp).
Attempting to trade on fundamentals these days is almost impossible with the constant changes happening in Europe. Looking solely at the technicals, the 10 yr note presently is sitting right on its 40 day average at 2.05% with its 20 day average at 2.09%. 30 yr FNMA MBS today trading below its 40 day and at the moment holding at its 20 day, similar to the 10 yr note. The relative strength in both markets is hanging at neutral. The overall technical picture slightly positive but not by much. That the 10 yr this morning is back over 2.00% somewhat negates its close yesterday below 2.00%. With US markets being completely dominated by what happens in Europe the outlook for US interest rates is in the end is impossible to anticipate. Bottom line; markets are adrift in a sea of uncertainty over Europe and the impact on the US economy.
To unsubscribe from TBWS Rate Alert e-mails, please click here.
Please do not reply directly to this e-mail. TBWS Rate Alert will not receive any reply message.
For questions or comments, visit our Forums or Contact Support via SupportTeam@ratealert.com.
Wednesday, November 9, 2011
So have you heard the one about the markets that were highly susceptible to European headlines? There's no punch line. It's not a joke and there's really nothing funny about it.
Case in point, consider the fact that Treasury yields are significantly lower today, having fallen from around 2.07 to 1.96, but Mortgage Rates have barely budged! Reason being, the market-based panic created by concerns about the debt situation in the EU primarily benefits Treasuries. MBS (the bonds that most directly affect mortgage rates) don't have the same safe haven appeal and tend to underperform Treasuries at times like this. Thus, fairly flat mortgage rates while Treasuries rally.
Granted, we can (and often do, over on the MBS Commentary Blog) go into much more detail on this, but that's the gist. And on an even pithier note, the bottom line is that Best-Execution rates are unchanged vs yesterday. Some lenders are a touch higher or lower in terms of closing costs, but only in rare cases would you be looking at a change in a rate quote today.
Case in point, consider the fact that Treasury yields are significantly lower today, having fallen from around 2.07 to 1.96, but Mortgage Rates have barely budged! Reason being, the market-based panic created by concerns about the debt situation in the EU primarily benefits Treasuries. MBS (the bonds that most directly affect mortgage rates) don't have the same safe haven appeal and tend to underperform Treasuries at times like this. Thus, fairly flat mortgage rates while Treasuries rally.
Granted, we can (and often do, over on the MBS Commentary Blog) go into much more detail on this, but that's the gist. And on an even pithier note, the bottom line is that Best-Execution rates are unchanged vs yesterday. Some lenders are a touch higher or lower in terms of closing costs, but only in rare cases would you be looking at a change in a rate quote today.
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, November 09, 2011
The problems in Europe escalated overnight; yesterday in Italy Prime Minister Berlusconi’s offer to resign boosted optimism Italy would appoint a new leader who can tame the debt crisis. Europe and US stock markets rallied and interest rates increased on the idea that progress was being made. That all lasted about 20 hours; this morning Europe's equity markets are lower and in the US the DJIA opened down 200 points, the 10 yr at 9:30 +32/32 at 1.97% -11 bp and mortgage prices +11/32 (.34 bp).
French banks taking huge hits this morning on deposit factor for Italian bonds due in seven-to-10 years will be raised to 11.65%, the French unit of LCH Clearnet said. That compares with a charge of 6.65% announced last month. Clearing houses guarantee that investors’ trades are completed by standing in the middle of two counterparties, and raise margin requirements to protect themselves against losses should one side of the trade fail. French banks face collateral damage from the political turmoil that sent Italy’s bond yields to euro-era records. Austerity measures to balance Italy’s budget are also threatening growth in an economy that has lagged behind the European average for more than a decade, and may hurt the French banks’ consumer businesses.
Italy’s $2.6 trillion of debt is the world’s fourth-largest, behind the U.S., Japan and Germany, and more than that of Greece, Spain, Portugal and Ireland combined. Relative to gross domestic product, it is the highest in Europe after Greece, standing at about 120%.
Events in Europe continue to drive US markets, everyday analysts try to assess each event that occurs. Yesterday markets were motivated by Berlusconi's offer to resign after he failed to get necessary votes of confidence; US stocks rallied, US interest rates increased. This morning the US 10 yr note yield is trading once again just below 2.00% and US stock indexes are being hit hard in early trading. Yesterday markets believed the Italian crisis was on the path of being dealt with, today with margins increasing and Italy's 10 yr note at the highest ever since the EU was formed in 1999 another round of panic. Focus now will likely be on the ECB, whether it will step up and buy Italy's debt and take the pressure off-----for the moment.
Investors moving out of equities this morning and into treasuries on worsening outlook in Italy and the inability of all of Europe's various entities cannot agree on what to do. Over 2 yrs and the problems continue to worsen. G-20 leaders last week balked on having the IMF taking a larger roll; politicians running for cover and everyone looking out for number one. Europe is going to fall back into recession, as it does US equities will be drawn down; safety into treasuries is the likely outcome with possibly much lower rates. Talk is cheap as it is said, the 10 yr note, pacesetter for mortgage rates, while under 2.00% this morning has yet to sustain a close below 2.00% since late Sept when Operation Twist was announced and then it didn't hold long. Since then though the debt crisis in Europe has increased; improving the view that US rates could decline.
In the 'it doesn't matter' column this morning Sept wholesale inventories expected up 0.6%, were down 0.1% with inventory/sales ratio unchanged from August at 1.15 months.
At 1:00 this afternoon Treasury will auction $24B of 10 yr notes; yesterday the 3 went well. Today with rates lower the demand for the 10 will be interesting; a solid auction would add to the increasing bullishness.
The day is just getting underway; all focus will be on what if anything comes from the ECB and what the central bank will do to curb the explosion in Italian interest rates. Greece is still not making any quick headway in forming an new government but the attention is all on Italy at the moment.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, November 09, 2011
The problems in Europe escalated overnight; yesterday in Italy Prime Minister Berlusconi’s offer to resign boosted optimism Italy would appoint a new leader who can tame the debt crisis. Europe and US stock markets rallied and interest rates increased on the idea that progress was being made. That all lasted about 20 hours; this morning Europe's equity markets are lower and in the US the DJIA opened down 200 points, the 10 yr at 9:30 +32/32 at 1.97% -11 bp and mortgage prices +11/32 (.34 bp).
French banks taking huge hits this morning on deposit factor for Italian bonds due in seven-to-10 years will be raised to 11.65%, the French unit of LCH Clearnet said. That compares with a charge of 6.65% announced last month. Clearing houses guarantee that investors’ trades are completed by standing in the middle of two counterparties, and raise margin requirements to protect themselves against losses should one side of the trade fail. French banks face collateral damage from the political turmoil that sent Italy’s bond yields to euro-era records. Austerity measures to balance Italy’s budget are also threatening growth in an economy that has lagged behind the European average for more than a decade, and may hurt the French banks’ consumer businesses.
Italy’s $2.6 trillion of debt is the world’s fourth-largest, behind the U.S., Japan and Germany, and more than that of Greece, Spain, Portugal and Ireland combined. Relative to gross domestic product, it is the highest in Europe after Greece, standing at about 120%.
Events in Europe continue to drive US markets, everyday analysts try to assess each event that occurs. Yesterday markets were motivated by Berlusconi's offer to resign after he failed to get necessary votes of confidence; US stocks rallied, US interest rates increased. This morning the US 10 yr note yield is trading once again just below 2.00% and US stock indexes are being hit hard in early trading. Yesterday markets believed the Italian crisis was on the path of being dealt with, today with margins increasing and Italy's 10 yr note at the highest ever since the EU was formed in 1999 another round of panic. Focus now will likely be on the ECB, whether it will step up and buy Italy's debt and take the pressure off-----for the moment.
Investors moving out of equities this morning and into treasuries on worsening outlook in Italy and the inability of all of Europe's various entities cannot agree on what to do. Over 2 yrs and the problems continue to worsen. G-20 leaders last week balked on having the IMF taking a larger roll; politicians running for cover and everyone looking out for number one. Europe is going to fall back into recession, as it does US equities will be drawn down; safety into treasuries is the likely outcome with possibly much lower rates. Talk is cheap as it is said, the 10 yr note, pacesetter for mortgage rates, while under 2.00% this morning has yet to sustain a close below 2.00% since late Sept when Operation Twist was announced and then it didn't hold long. Since then though the debt crisis in Europe has increased; improving the view that US rates could decline.
In the 'it doesn't matter' column this morning Sept wholesale inventories expected up 0.6%, were down 0.1% with inventory/sales ratio unchanged from August at 1.15 months.
At 1:00 this afternoon Treasury will auction $24B of 10 yr notes; yesterday the 3 went well. Today with rates lower the demand for the 10 will be interesting; a solid auction would add to the increasing bullishness.
The day is just getting underway; all focus will be on what if anything comes from the ECB and what the central bank will do to curb the explosion in Italian interest rates. Greece is still not making any quick headway in forming an new government but the attention is all on Italy at the moment.
Tuesday, November 8, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, November 08, 2011
Generally a quiet start for the bond and mortgage markets this morning; at 9:00 the 10 yr -3/32 and MBSs +3/32 (.09 bp). Stock indexes in pre-open trading were better indicating a better open at 9:30. There are no economic reports today; the only thing in the US that we will be watching is Treasury's $32B 3 yr note auction. In Europe its Greece and Italy that need watching.
European banks are increasing sales of bonds on Italy, Spain, Greece, Portugal and Ireland. Banks are selling debt of southern European nations as investors punish companies with large holdings and regulators demand higher reserves to shoulder possible losses. The European Banking Authority is requiring lenders to boost capital by 106 billion euros after marking their government debt to market values. The trend may undermine European leaders’ efforts to lower borrowing costs for countries such as Greece and Italy, while generating larger writedowns and capital shortfalls.
Greece is working on setting up an interim government, what is described as a technical government run by people that are not seeking election. A good idea, tough decisions must be made on pensions, retirement age, job cuts and more.
Italy’s Chamber of Deputies began debate before a vote that will show whether Prime Minister Silvio Berlusconi has enough support to stay in power. The ballot is expected at 5:00 p.m. in Rome (about one hour from now), is on a routine report on last year’s budget plan that will reveal whether Berlusconi retains a majority in the 630-seat house. It’s the first such test since three party members defected to join the opposition and six others publicly called on the premier to quit.
In Britain more job losses that previously anticipated are likely. The scale of the job shedding underscores the growing risks to the economic outlook at a time when unemployment is at a 15- year high and the threat of the euro area splintering is rocking financial markets. Unions representing teachers, health workers and civil servants preparing to strike on Nov. 30 over plans to make government workers contribute more toward their pensions and retire later.
Europe can't avoid slipping back into recession, if it isn't already there now. The sovereign debts are so large that austerity, job losses, pay freezes cannot be properly implemented without dragging the region into deeper economic decline. We are left with the question of how much of the economic slide in Europe will impact US. The US will suffer on exports, how deeply is what analysts are beginning to try and assess.
The NFIB report on small businesses this morning isn't encouraging; "Owner optimism improved a smidge, mostly because the outlook for business conditions and real sales growth became less negative, but these two Index components are still solidly negative, more owners with negative forecast than a positive one. Hardly the basis for strong economic growth. There was no improvement in the labor market indicators so job creation will remain well short of that needed just to keep up with population growth much less reduce the unemployment rate. Capital expenditures remain depressed and there is little interest in investing in inventory. Few firms have any interest in expanding as well, leaving loan demand weak (about 2/3rds of all owners have no interest in a loan and borrowing activity is at a 38 year low level). More firms report negative sales trends than positive ones, consistent with consumer sentiment readings rivaling the 1980 recession levels. Unemployment remains at 9%, the stock market volatility is scary, house prices still weak, prospects for Europe aren’t great and the Administration’s policies continue to be disparaged by record numbers of households. The President calls for “bigger”, but if excessive government spending and deficits are what most consumers fear, then “bigger” will only depress consumers more as we follow a fiscal path that looks like Greece."
The 10 yr note is still unable to break 2.00%, MBSs equally unable to break into bullish technicals. It isn't news that interest rates are completely influenced by how equities trade; as long as stock indexes rally the rate markets will not improve. Safety moves on Europe's mess that push investors into treasuries continue but not as has been the case over the last few months. That said, the bond and mortgage markets are holding nicely at present levels. Generally a neutral condition now.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, November 08, 2011
Generally a quiet start for the bond and mortgage markets this morning; at 9:00 the 10 yr -3/32 and MBSs +3/32 (.09 bp). Stock indexes in pre-open trading were better indicating a better open at 9:30. There are no economic reports today; the only thing in the US that we will be watching is Treasury's $32B 3 yr note auction. In Europe its Greece and Italy that need watching.
European banks are increasing sales of bonds on Italy, Spain, Greece, Portugal and Ireland. Banks are selling debt of southern European nations as investors punish companies with large holdings and regulators demand higher reserves to shoulder possible losses. The European Banking Authority is requiring lenders to boost capital by 106 billion euros after marking their government debt to market values. The trend may undermine European leaders’ efforts to lower borrowing costs for countries such as Greece and Italy, while generating larger writedowns and capital shortfalls.
Greece is working on setting up an interim government, what is described as a technical government run by people that are not seeking election. A good idea, tough decisions must be made on pensions, retirement age, job cuts and more.
Italy’s Chamber of Deputies began debate before a vote that will show whether Prime Minister Silvio Berlusconi has enough support to stay in power. The ballot is expected at 5:00 p.m. in Rome (about one hour from now), is on a routine report on last year’s budget plan that will reveal whether Berlusconi retains a majority in the 630-seat house. It’s the first such test since three party members defected to join the opposition and six others publicly called on the premier to quit.
In Britain more job losses that previously anticipated are likely. The scale of the job shedding underscores the growing risks to the economic outlook at a time when unemployment is at a 15- year high and the threat of the euro area splintering is rocking financial markets. Unions representing teachers, health workers and civil servants preparing to strike on Nov. 30 over plans to make government workers contribute more toward their pensions and retire later.
Europe can't avoid slipping back into recession, if it isn't already there now. The sovereign debts are so large that austerity, job losses, pay freezes cannot be properly implemented without dragging the region into deeper economic decline. We are left with the question of how much of the economic slide in Europe will impact US. The US will suffer on exports, how deeply is what analysts are beginning to try and assess.
The NFIB report on small businesses this morning isn't encouraging; "Owner optimism improved a smidge, mostly because the outlook for business conditions and real sales growth became less negative, but these two Index components are still solidly negative, more owners with negative forecast than a positive one. Hardly the basis for strong economic growth. There was no improvement in the labor market indicators so job creation will remain well short of that needed just to keep up with population growth much less reduce the unemployment rate. Capital expenditures remain depressed and there is little interest in investing in inventory. Few firms have any interest in expanding as well, leaving loan demand weak (about 2/3rds of all owners have no interest in a loan and borrowing activity is at a 38 year low level). More firms report negative sales trends than positive ones, consistent with consumer sentiment readings rivaling the 1980 recession levels. Unemployment remains at 9%, the stock market volatility is scary, house prices still weak, prospects for Europe aren’t great and the Administration’s policies continue to be disparaged by record numbers of households. The President calls for “bigger”, but if excessive government spending and deficits are what most consumers fear, then “bigger” will only depress consumers more as we follow a fiscal path that looks like Greece."
The 10 yr note is still unable to break 2.00%, MBSs equally unable to break into bullish technicals. It isn't news that interest rates are completely influenced by how equities trade; as long as stock indexes rally the rate markets will not improve. Safety moves on Europe's mess that push investors into treasuries continue but not as has been the case over the last few months. That said, the bond and mortgage markets are holding nicely at present levels. Generally a neutral condition now.
Monday, November 7, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Monday, November 07, 2011
Treasuries and mortgages had a decent day last Friday; this morning the 10 yr note a little soft, down 3/32 at 9:00 and mortgage prices off 5/32 (.15 bp). No data today and not much this week. Treasury will sell $72B in note and bonds in its quarterly refunding on Tuesday through Thursday. The mess in Europe continues to be the dominant influence on US markets; over the weekend Greece politicians agreed to form a new government with Papandreou stepping down. A new government likely won't change much though; Greeks will still be required to accept vey serious cuts in spending that will impact more jobs and higher taxes in order to get more money frm the EU, IMF, EFSF, and ECB. Next up in the euro contagion, Italy; Berlusconi’s majority is unraveling before a key parliamentary vote tomorrow on the 2010 budget report after contagion from Europe’s sovereign debt crisis pushed the country’s borrowing costs to euro-era records. Debt problems in Europe will not go away for a very long time, if ever----without defaults.
After most focus on Greece in the last month, attention will now turn to Italy also. Italy, as we have previously noted, makes Greece's debt problems look like pocket change compared to what Italy faces. Its bond market is the third largest next to the US and Japan, the debt is about three times what Greece faces. The government is teetering with its prime minister losing support rapidly; two Berlusconi allies defected to the opposition last week, and a third quit last night. Six others called for Berlusconi to resign and seek a more broadly-backed government. Italy led an increase in the cost of insuring European sovereign debt on concern Prime Minister Berlusconi's government is collapsing as he faces a parliamentary budget vote tomorrow. Credit-default swaps on Italy climbed 13 basis points to 506 in London, approaching the record 534 set Sept. 22.
About the only economic release this week that will get attention is Thursday's weekly jobless claims currently expected to be up 3K to 400K; claims in the past six weeks have been hovering at 400K to 412K. Monday afternoon Sept consumer credit, a report we monitor closely, but doesn't get a lot of direct attention from traders; in August credit declined $9.5B, Sept is expected up $5.0B.
The 10 yr note and MBSs are both at pivotal levels; both testing their respective 20 and 40 day averages and both RSIs are at neutral levels. The 10 yr continues to struggle at 2.00% unable to move below it but equally unable to increase. Safety movement into US treasuries is keeping US rates from increasing while there is increasing conviction that the economy is improving.
This Week's Economic Calendar:
Monday;
3:00 pm Sept consumer credit (+$5.0B after declining $9.5B in August)
Tuesday;
1:00 PM 3 yr note auction ($32B)
Wednesday;
7:00 am weekly mortgage applications
10:00 am Sept wholesale inventories (+0.6%)
1:00 pm 10 yr note auction ($24B)
Thursday;
8:30 am weekly jobless claims (+3K to 400K; con't claims 3.69 mil frm 3.683 mil)
Oct import and export prices (N/A)
Sept trade balance (-$45.8B)
1:00 pm 30 yr bond auction ($16B)
2:00 pm Oct Treasury budget (-$105B)
Friday;
9:55 am Nov U. of Michigan consumer sentiment index (61.5 frm 60.9)
The DJIA opened -18 at 9:30; the 10 yr note -1/32 2.04% unch and mortgages a little weaker -5/32 (.15 bp).
The bellwether 10 yr note still is finding technical resistance whenever it approaches 2.00%; safety moves to US from Europe on fears of banks in Europe increasing. MBSs follow the 10 they too are working around technical levels, last week both markets rallied on Greece, this morning holding as the stock market is improving from the 9:30 open. Equity markets continue to set the direction for rate markets, last week the DJIA fell 248 points leading to the improvement in rate markets.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Monday, November 07, 2011
Treasuries and mortgages had a decent day last Friday; this morning the 10 yr note a little soft, down 3/32 at 9:00 and mortgage prices off 5/32 (.15 bp). No data today and not much this week. Treasury will sell $72B in note and bonds in its quarterly refunding on Tuesday through Thursday. The mess in Europe continues to be the dominant influence on US markets; over the weekend Greece politicians agreed to form a new government with Papandreou stepping down. A new government likely won't change much though; Greeks will still be required to accept vey serious cuts in spending that will impact more jobs and higher taxes in order to get more money frm the EU, IMF, EFSF, and ECB. Next up in the euro contagion, Italy; Berlusconi’s majority is unraveling before a key parliamentary vote tomorrow on the 2010 budget report after contagion from Europe’s sovereign debt crisis pushed the country’s borrowing costs to euro-era records. Debt problems in Europe will not go away for a very long time, if ever----without defaults.
After most focus on Greece in the last month, attention will now turn to Italy also. Italy, as we have previously noted, makes Greece's debt problems look like pocket change compared to what Italy faces. Its bond market is the third largest next to the US and Japan, the debt is about three times what Greece faces. The government is teetering with its prime minister losing support rapidly; two Berlusconi allies defected to the opposition last week, and a third quit last night. Six others called for Berlusconi to resign and seek a more broadly-backed government. Italy led an increase in the cost of insuring European sovereign debt on concern Prime Minister Berlusconi's government is collapsing as he faces a parliamentary budget vote tomorrow. Credit-default swaps on Italy climbed 13 basis points to 506 in London, approaching the record 534 set Sept. 22.
About the only economic release this week that will get attention is Thursday's weekly jobless claims currently expected to be up 3K to 400K; claims in the past six weeks have been hovering at 400K to 412K. Monday afternoon Sept consumer credit, a report we monitor closely, but doesn't get a lot of direct attention from traders; in August credit declined $9.5B, Sept is expected up $5.0B.
The 10 yr note and MBSs are both at pivotal levels; both testing their respective 20 and 40 day averages and both RSIs are at neutral levels. The 10 yr continues to struggle at 2.00% unable to move below it but equally unable to increase. Safety movement into US treasuries is keeping US rates from increasing while there is increasing conviction that the economy is improving.
This Week's Economic Calendar:
Monday;
3:00 pm Sept consumer credit (+$5.0B after declining $9.5B in August)
Tuesday;
1:00 PM 3 yr note auction ($32B)
Wednesday;
7:00 am weekly mortgage applications
10:00 am Sept wholesale inventories (+0.6%)
1:00 pm 10 yr note auction ($24B)
Thursday;
8:30 am weekly jobless claims (+3K to 400K; con't claims 3.69 mil frm 3.683 mil)
Oct import and export prices (N/A)
Sept trade balance (-$45.8B)
1:00 pm 30 yr bond auction ($16B)
2:00 pm Oct Treasury budget (-$105B)
Friday;
9:55 am Nov U. of Michigan consumer sentiment index (61.5 frm 60.9)
The DJIA opened -18 at 9:30; the 10 yr note -1/32 2.04% unch and mortgages a little weaker -5/32 (.15 bp).
The bellwether 10 yr note still is finding technical resistance whenever it approaches 2.00%; safety moves to US from Europe on fears of banks in Europe increasing. MBSs follow the 10 they too are working around technical levels, last week both markets rallied on Greece, this morning holding as the stock market is improving from the 9:30 open. Equity markets continue to set the direction for rate markets, last week the DJIA fell 248 points leading to the improvement in rate markets.
Saturday, November 5, 2011
Friday, November 4, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Friday, November 04, 2011
October employment report at 8:30. The overall unemployment rate declined to 9.0% frm 9.1%----somewhat a surprise. Oct non-farm jobs up 80K against estimates at 100K, non-farm private jobs +104K against +120K expected. Average hourly earnings on target at +0.2%. The U-6 unemployment rate at 16.2% (those underemployed and those that have stopped looking). Sept NFP revised from +103K to +158K, August NFP frm 57K to +104K a total of 102K additional jobs. Manufacturing jobs +5K, service producing +90K, government jobs -24K. The 80K headline still holds most of the interest and didn't meet forecasts, nevertheless the data is better overall than expectations.
The initial reaction to the employment report was rather mute in the rate sector, the 10 yr prior to 8:30 sat unchanged, 15 minutes after the release (8:45) the 10 traded down just 8?32 to 2.10% +3 bp; mortgage prices at 8:45 off just 3/32 (.09 bp). Stock indexes at 8:45 weaker, DJIA down 31 points. Curious that equities were not reacting better to the report and the higher revisions in Aug and Sept. Overall the reaction to the report has been tame, not much reaction initially and trading thin.
The G-20 meeting in France where leaders met seems like a waste of time and expense. Two things agreed upon; that Italy agreed to IMF and EU monitoring its progress on reforms; secondly the IMF said it will increase from $300B to $350B in special drawing rights. It took a lot of twisting to get the IMF to increase drawings rights by a measly $50B. Leaders of the 20 countries are refusing to put any money in the pot; reflecting frustration with Europe’s failure to end a crisis with Greece’s government edging towards collapse and Italy facing intensifying pressure to restore fiscal order.
Greece abandoned a referendum on the euro area’s latest bailout plan, reducing the risk of a disorderly default. Greek Prime Minister Papandreou faces a confidence vote in parliament today that will determine whether he stays on or calls an election. Papandreou yesterday abandoned his planned referendum on the country’s bailout after a warning from German Chancellor Angela Merkel that a no vote would cost Greece its membership of the 17-nation currency.
At 9:30 the stock market opened weaker, not taking the employment report as a positive, or after 386 points in the DJIA in the last two days investors are not willing to add to the gains. The headline that non-farm jobs were 20K lower than forecasts is being held at a higher level than the 102K increases in revisions to Aug and Sept. The decline in the unemployment rates to 9.0% appears to be ignored as a positive. Focus this morning appears to be on Europe and comments from the region's leaders that the region may fall back into recession. The DJIA opened -88 at 9:30, mortgage prices up 2/32 (.06 bp) and the 10 yr note unchanged at 2.07%.
While the day has a long way to go, so far the financial markets are very quiet. The 10 yr and mortgages are generally unchanged from yesterday; the stock indexes are lower but so far have not moved much in either direction from opening levels. There isn't anymore scheduled news today; Europe of course is still open and there is always the chance some news will appear. In the absence of anything out of the region US markets may be in for one of the few quiet sessions we have had for awhile. That said, as this is being sent MBS prices have improved to +6/32 (.18 bp) and up 4/32 (.12 bp) frm 9:30.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Friday, November 04, 2011
October employment report at 8:30. The overall unemployment rate declined to 9.0% frm 9.1%----somewhat a surprise. Oct non-farm jobs up 80K against estimates at 100K, non-farm private jobs +104K against +120K expected. Average hourly earnings on target at +0.2%. The U-6 unemployment rate at 16.2% (those underemployed and those that have stopped looking). Sept NFP revised from +103K to +158K, August NFP frm 57K to +104K a total of 102K additional jobs. Manufacturing jobs +5K, service producing +90K, government jobs -24K. The 80K headline still holds most of the interest and didn't meet forecasts, nevertheless the data is better overall than expectations.
The initial reaction to the employment report was rather mute in the rate sector, the 10 yr prior to 8:30 sat unchanged, 15 minutes after the release (8:45) the 10 traded down just 8?32 to 2.10% +3 bp; mortgage prices at 8:45 off just 3/32 (.09 bp). Stock indexes at 8:45 weaker, DJIA down 31 points. Curious that equities were not reacting better to the report and the higher revisions in Aug and Sept. Overall the reaction to the report has been tame, not much reaction initially and trading thin.
The G-20 meeting in France where leaders met seems like a waste of time and expense. Two things agreed upon; that Italy agreed to IMF and EU monitoring its progress on reforms; secondly the IMF said it will increase from $300B to $350B in special drawing rights. It took a lot of twisting to get the IMF to increase drawings rights by a measly $50B. Leaders of the 20 countries are refusing to put any money in the pot; reflecting frustration with Europe’s failure to end a crisis with Greece’s government edging towards collapse and Italy facing intensifying pressure to restore fiscal order.
Greece abandoned a referendum on the euro area’s latest bailout plan, reducing the risk of a disorderly default. Greek Prime Minister Papandreou faces a confidence vote in parliament today that will determine whether he stays on or calls an election. Papandreou yesterday abandoned his planned referendum on the country’s bailout after a warning from German Chancellor Angela Merkel that a no vote would cost Greece its membership of the 17-nation currency.
At 9:30 the stock market opened weaker, not taking the employment report as a positive, or after 386 points in the DJIA in the last two days investors are not willing to add to the gains. The headline that non-farm jobs were 20K lower than forecasts is being held at a higher level than the 102K increases in revisions to Aug and Sept. The decline in the unemployment rates to 9.0% appears to be ignored as a positive. Focus this morning appears to be on Europe and comments from the region's leaders that the region may fall back into recession. The DJIA opened -88 at 9:30, mortgage prices up 2/32 (.06 bp) and the 10 yr note unchanged at 2.07%.
While the day has a long way to go, so far the financial markets are very quiet. The 10 yr and mortgages are generally unchanged from yesterday; the stock indexes are lower but so far have not moved much in either direction from opening levels. There isn't anymore scheduled news today; Europe of course is still open and there is always the chance some news will appear. In the absence of anything out of the region US markets may be in for one of the few quiet sessions we have had for awhile. That said, as this is being sent MBS prices have improved to +6/32 (.18 bp) and up 4/32 (.12 bp) frm 9:30.
Thursday, November 3, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, November 03, 2011
Early trade this morning, treasuries and mortgages weaker; at 9:00 the 10 yr -20/32 to 2.06% +6 bp and mortgage prices down 11/32 (.34 bp), the DJIA futures traded +153.
News out of Europe; rumors that Greece Prime Minister Papandreou is about to resign but no one is taking it seriously as most of the rumors are coming from "anonymous sources". Greece has about as many cabinet members as we have senators (70), everyone there has an agenda; markets are becoming de-sensitized over rumors after two years of no progress in the debt issues dragging Europe down. Papandreou shocked officials yesterday when he called for a referendum vote from Greeks on whether or not to accept the austerity provisions demanded from the ECB, EU, and IMF in order to get the funds to avoid defaulting on their debt.
More news from Europe; the ECB cut its base lending rate by 25 bp to 1.25% after increasing rates 50 basis points earlier this year. The unexpected cut added to the increase in stock index futures and in turn pushed the 10 yr higher in rate. The move was unexpected but Spain and Italy saw their interest rates rise yesterday as some Euro officials are now speculating that Greece will default and leave the EU. France and Germany saying they would treat Greece’s surprise referendum on a second bailout as a vote on its euro membership. Greece's potential defaults and exit from the EU shouldn't be a complete surprise; it is a huge hill to climb for Europe to avoid more turmoil, next up will be Spain and Italy whose sovereign debts make Greece look like small potatoes.
Economic data at 8:30 this morning; weekly jobless claims were down 9K to 397K, last week's claims revised from 402K to 406K; it has been since 9/21 that claims are below the 400K level that economists see as pivotal. The estimate was for claims to be at 402K so not much of a differential. Q3 worker productivity, expected +2.5%, came at +3.1%; Q3 unit labor costs were expected -0.7% but fell 2.4%.
At 9:30 the DJIA opened +126, the 10 yr note -24/32 to 2.07% +7 bp and mortgage prices at 9:30 -13/32 (.41 bp).
Next up in this morning's time line; at 10:00 Oct ISM services sector index expected at 53.5 frm 53.0; it declined to 52.9. The components; new orders index 52.4 frm 56.5, employment at 53.3 frm 48.7 and prices at 57.1 frm 62.9. The report put pressure on stock indexes, after opening up 126 and increasing to +160 the DJIA dropped back to unchanged (see below).
Also at 10:00, Sept factory orders were thought to be -0.2%; as reported orders increased 0/1%.
Tomorrow morning its the ever volatile employment report from the BLS, the present estimate is for non-farm jobs to have increased 90K and non-farm private jobs +120K, the unemployment rate unchanged at 9.1%. The increases in non-farm jobs and private jobs is lower than in Sept (103K and 137K respectively). The norm for the employment data each month is that the data usually comes in well off the estimates sending markets into wild volatility.
The bellwether 10 yr note continues to find resistance when it falls to 2.00%, as we have noted numerous times, under 2.00% is difficult to maintain. The 10 has been as low as 1.70% twice, each time it didn't hold long. Mortgage interest rates also facing resistance at present levels. That said, these are very unusual times and anything is possible. Europe is going to lower its economic forecasts as the debt issues continue unresolved; so far the US equity markets are not reacting to the weaker euro outlook. The US rate markets continue to be driven by equity markets; stocks rally and it outs pressure on the bond and mortgage markets; equities decline and the bond and mortgage markets find support.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, November 03, 2011
Early trade this morning, treasuries and mortgages weaker; at 9:00 the 10 yr -20/32 to 2.06% +6 bp and mortgage prices down 11/32 (.34 bp), the DJIA futures traded +153.
News out of Europe; rumors that Greece Prime Minister Papandreou is about to resign but no one is taking it seriously as most of the rumors are coming from "anonymous sources". Greece has about as many cabinet members as we have senators (70), everyone there has an agenda; markets are becoming de-sensitized over rumors after two years of no progress in the debt issues dragging Europe down. Papandreou shocked officials yesterday when he called for a referendum vote from Greeks on whether or not to accept the austerity provisions demanded from the ECB, EU, and IMF in order to get the funds to avoid defaulting on their debt.
More news from Europe; the ECB cut its base lending rate by 25 bp to 1.25% after increasing rates 50 basis points earlier this year. The unexpected cut added to the increase in stock index futures and in turn pushed the 10 yr higher in rate. The move was unexpected but Spain and Italy saw their interest rates rise yesterday as some Euro officials are now speculating that Greece will default and leave the EU. France and Germany saying they would treat Greece’s surprise referendum on a second bailout as a vote on its euro membership. Greece's potential defaults and exit from the EU shouldn't be a complete surprise; it is a huge hill to climb for Europe to avoid more turmoil, next up will be Spain and Italy whose sovereign debts make Greece look like small potatoes.
Economic data at 8:30 this morning; weekly jobless claims were down 9K to 397K, last week's claims revised from 402K to 406K; it has been since 9/21 that claims are below the 400K level that economists see as pivotal. The estimate was for claims to be at 402K so not much of a differential. Q3 worker productivity, expected +2.5%, came at +3.1%; Q3 unit labor costs were expected -0.7% but fell 2.4%.
At 9:30 the DJIA opened +126, the 10 yr note -24/32 to 2.07% +7 bp and mortgage prices at 9:30 -13/32 (.41 bp).
Next up in this morning's time line; at 10:00 Oct ISM services sector index expected at 53.5 frm 53.0; it declined to 52.9. The components; new orders index 52.4 frm 56.5, employment at 53.3 frm 48.7 and prices at 57.1 frm 62.9. The report put pressure on stock indexes, after opening up 126 and increasing to +160 the DJIA dropped back to unchanged (see below).
Also at 10:00, Sept factory orders were thought to be -0.2%; as reported orders increased 0/1%.
Tomorrow morning its the ever volatile employment report from the BLS, the present estimate is for non-farm jobs to have increased 90K and non-farm private jobs +120K, the unemployment rate unchanged at 9.1%. The increases in non-farm jobs and private jobs is lower than in Sept (103K and 137K respectively). The norm for the employment data each month is that the data usually comes in well off the estimates sending markets into wild volatility.
The bellwether 10 yr note continues to find resistance when it falls to 2.00%, as we have noted numerous times, under 2.00% is difficult to maintain. The 10 has been as low as 1.70% twice, each time it didn't hold long. Mortgage interest rates also facing resistance at present levels. That said, these are very unusual times and anything is possible. Europe is going to lower its economic forecasts as the debt issues continue unresolved; so far the US equity markets are not reacting to the weaker euro outlook. The US rate markets continue to be driven by equity markets; stocks rally and it outs pressure on the bond and mortgage markets; equities decline and the bond and mortgage markets find support.
Wednesday, November 2, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, November 02, 2011
Treasuries and mortgages after three days of improvement are weaker this morning, volatility in US markets continues to be excessive; most of it is what isn't happening in Europe. Europe pushing on a string, there isn't enough capital in the region to come close to keeping the sovereign debt under control, there is going to be failures beginning with Greece. Greece in the EU is on borrowed time, in the end Greece will likely default and exit the EU. Next up n the line of problems, Italy and Spain. For all the summit meetings and all the press conferences there has been no real effective solution. Europe's banks can't take 50% haircuts on the bonds they hold from a number of EU countries, the IMF isn't likely to get too deep into the problem without bringing massive criticism from G-20 countries. China last week indicated it may be interested in EU debt but only if the bonds its purchases have a valid Guarantee from the EFSF and that hasn't happen. In the meantime what happens in Europe is unsettling all of the industrial world, sending mixed messages daily that produces wild and unexpected moves as was clearly evident yesterday and Monday.
Europe’s bailout fund is delaying a 3 billion-euro ($4.1 billion) bond sale after Greek Prime Minister George Papandreou’s request for a referendum on the rescue pact for his country roiled markets. An EFSF official said in a conference call with investors today that it may wait for the outcome of the Nov. 3-4 Group of 20 summit in Cannes, France before selling the bonds, according to a person with knowledge of the matter. On Friday there will be a confidence vote in the Greece Parliament, if he doesn't retain his majority he may be out of office by Saturday morning.
This morning at 8:15 the ADP October non-farm payrolls increased 110K a little better than estimates, Sept jobs were revised higher 25K more than reported last month to +116K. Treasuries and mortgages, already weaker didn't show any reaction to the better jobs. The stock indexes after falling 576 points yesterday and Monday on the DJIA are better this morning but not much.
At 12:30 this afternoon the FOMC policy statement will be released, likely markets will be relatively quiet until then. At 2:15 even more important than the policy statement, Bernanke will hold a press conference. What is Bernanke thinking about what isn't happening in Europe? Will he signal the possibility of more easing with a QE 3? Operation Twist didn't work, why? A lot of questions.
The driver for mortgage interest rates, the 10 yr treasury note, even after the strong improvement in the past couple of days, is still unable to hold under 2.00%. Every time the 10 falls below 2.00% it hasn't lasted more than a few days.
At 9:30 the DJIA opened +90, the 10 yr note -19/32 2.06% +6 bp and mortgage prices -8/32 (.25 bp).
Purchase applications for home mortgages rose for a second week, up 1.8% in the October 28 week on top of the 6.4% gain in the October 21 week to nearly reverse the prior week's 8.8% drop. The refinance index is down 0.2% in the latest week. Rates in the week were little changed with 30-year conforming loans ($417,500 or less) down two basis points to 4.31% and 30-year jumbo loans (greater than $417,500) up one basis point to 4.69%.
At 10:00 the bond and mortgage markets have come off their lows; mtgs -3/32 (.09 bp).
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, November 02, 2011
Treasuries and mortgages after three days of improvement are weaker this morning, volatility in US markets continues to be excessive; most of it is what isn't happening in Europe. Europe pushing on a string, there isn't enough capital in the region to come close to keeping the sovereign debt under control, there is going to be failures beginning with Greece. Greece in the EU is on borrowed time, in the end Greece will likely default and exit the EU. Next up n the line of problems, Italy and Spain. For all the summit meetings and all the press conferences there has been no real effective solution. Europe's banks can't take 50% haircuts on the bonds they hold from a number of EU countries, the IMF isn't likely to get too deep into the problem without bringing massive criticism from G-20 countries. China last week indicated it may be interested in EU debt but only if the bonds its purchases have a valid Guarantee from the EFSF and that hasn't happen. In the meantime what happens in Europe is unsettling all of the industrial world, sending mixed messages daily that produces wild and unexpected moves as was clearly evident yesterday and Monday.
Europe’s bailout fund is delaying a 3 billion-euro ($4.1 billion) bond sale after Greek Prime Minister George Papandreou’s request for a referendum on the rescue pact for his country roiled markets. An EFSF official said in a conference call with investors today that it may wait for the outcome of the Nov. 3-4 Group of 20 summit in Cannes, France before selling the bonds, according to a person with knowledge of the matter. On Friday there will be a confidence vote in the Greece Parliament, if he doesn't retain his majority he may be out of office by Saturday morning.
This morning at 8:15 the ADP October non-farm payrolls increased 110K a little better than estimates, Sept jobs were revised higher 25K more than reported last month to +116K. Treasuries and mortgages, already weaker didn't show any reaction to the better jobs. The stock indexes after falling 576 points yesterday and Monday on the DJIA are better this morning but not much.
At 12:30 this afternoon the FOMC policy statement will be released, likely markets will be relatively quiet until then. At 2:15 even more important than the policy statement, Bernanke will hold a press conference. What is Bernanke thinking about what isn't happening in Europe? Will he signal the possibility of more easing with a QE 3? Operation Twist didn't work, why? A lot of questions.
The driver for mortgage interest rates, the 10 yr treasury note, even after the strong improvement in the past couple of days, is still unable to hold under 2.00%. Every time the 10 falls below 2.00% it hasn't lasted more than a few days.
At 9:30 the DJIA opened +90, the 10 yr note -19/32 2.06% +6 bp and mortgage prices -8/32 (.25 bp).
Purchase applications for home mortgages rose for a second week, up 1.8% in the October 28 week on top of the 6.4% gain in the October 21 week to nearly reverse the prior week's 8.8% drop. The refinance index is down 0.2% in the latest week. Rates in the week were little changed with 30-year conforming loans ($417,500 or less) down two basis points to 4.31% and 30-year jumbo loans (greater than $417,500) up one basis point to 4.69%.
At 10:00 the bond and mortgage markets have come off their lows; mtgs -3/32 (.09 bp).
Tuesday, November 1, 2011
Mortgage Rates Today
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, November 01, 2011
The wheels started coming off yesterday on what was lauded as a big step forward in Europe to get a grip on Greece and other EU countries that are similarly facing potential defaults on their sovereign debt; this morning the wheels have fallen off completely-----at least at the moment. What is happening today is no assurance the same will be the case tomorrow based on the last two years out of the region. A huge shocker to financial markets in Europe and here in the US; in a surprising move no one saw coming, Greek Prime Minister announced he would not continue to fight the issues in the country and let citizens decide whether or not to go along with the austerity programs set out by EU officials. He is calling for a voter referendum and let citizens decide whether they want austerity or default that will eventually end Greece's membership in the EU. Greece’s proposed referendum poses a threat to the region’s financial stability, Fitch Ratings said. Group of 20 leaders gather Nov. 3-4 for a summit in Cannes, France, to discuss the debt crisis. No one saw this coming; letting voters decide, but the voting isn't likely until early next year.
Yesterday there were signs that the "plan" worked out last week was not as solid as what had been the wide belief last week. Yesterday re-started a run into safety in US treasuries, this morning its a stampede after the Greek news. At 9:00 the 10 yr note was at 1.97% down another 15 basis points from yesterday and down 44 basis points from last Thursday's high that sent rates up on the optimism of a Europe plan that was seen as a huge step forward. Mortgage rates tumbling with the 10 and the rest of the yield curve. Technically, last week the treasury and mortgage markets were breaking supports, most all of our models had become bearish. Not the case now, the 10 yield is well below its key 20 and 40 day averages, the RSI is now in bullish territory.
MF Global filed for bankruptcy yesterday, the NY Fed revoked its primary dealer status, overnight there has been talk that custodial funds (money in accounts of customers) possibly $100 mil that is not accounted for. Another minor motivation for money to migrate to treasuries.
The DJIA opened -250, NASDAQ -68, S&P -32; at 9:30 the 10 yr note at 2.00% and mortgage prices +15/32 (.47 bp). Most all Euro equity markets trading down 5% to 6% on the Greek referendum decision.
At 10:00 Oct ISM manufacturing index, expected at 52.1 frm 51.6 in Sept, fell to 50.8. The headline not do good, but components held up; new orders at 52.4 frm 49.6, prices pd at 41.0 from 56.0 and employment at 53.5 frm 53.8. No reaction to the report.
Also at 10:00 Sept construction spending was thought to be up 0.3%, as reported up 0.2%, in Aug construction spending revised from _1.4% to +1.6%.
Today the FOMC meeting gets underway; we won't have anything to look to until tomorrow at its end, at 12:30 tomorrow the policy statement will be released then at 2:15 Bernanke will hold his press conference. The economic outlook, what the Fed may be thinking and the Euro issues will dominate.
Mortgage rates now back to some of the best levels, volatility is back with a vengeance and will continue to be the case with markets swinging in big moves. The Fed is in play on what it may do, if anything, to keep rates from increasing, the stock market is going to track how Europe's markets perform, and the US economic outlook remains cloudy. Expect markets to swing in wide ranges. Suggest taking advantage of the current decline in mortgage rates.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, November 01, 2011
The wheels started coming off yesterday on what was lauded as a big step forward in Europe to get a grip on Greece and other EU countries that are similarly facing potential defaults on their sovereign debt; this morning the wheels have fallen off completely-----at least at the moment. What is happening today is no assurance the same will be the case tomorrow based on the last two years out of the region. A huge shocker to financial markets in Europe and here in the US; in a surprising move no one saw coming, Greek Prime Minister announced he would not continue to fight the issues in the country and let citizens decide whether or not to go along with the austerity programs set out by EU officials. He is calling for a voter referendum and let citizens decide whether they want austerity or default that will eventually end Greece's membership in the EU. Greece’s proposed referendum poses a threat to the region’s financial stability, Fitch Ratings said. Group of 20 leaders gather Nov. 3-4 for a summit in Cannes, France, to discuss the debt crisis. No one saw this coming; letting voters decide, but the voting isn't likely until early next year.
Yesterday there were signs that the "plan" worked out last week was not as solid as what had been the wide belief last week. Yesterday re-started a run into safety in US treasuries, this morning its a stampede after the Greek news. At 9:00 the 10 yr note was at 1.97% down another 15 basis points from yesterday and down 44 basis points from last Thursday's high that sent rates up on the optimism of a Europe plan that was seen as a huge step forward. Mortgage rates tumbling with the 10 and the rest of the yield curve. Technically, last week the treasury and mortgage markets were breaking supports, most all of our models had become bearish. Not the case now, the 10 yield is well below its key 20 and 40 day averages, the RSI is now in bullish territory.
MF Global filed for bankruptcy yesterday, the NY Fed revoked its primary dealer status, overnight there has been talk that custodial funds (money in accounts of customers) possibly $100 mil that is not accounted for. Another minor motivation for money to migrate to treasuries.
The DJIA opened -250, NASDAQ -68, S&P -32; at 9:30 the 10 yr note at 2.00% and mortgage prices +15/32 (.47 bp). Most all Euro equity markets trading down 5% to 6% on the Greek referendum decision.
At 10:00 Oct ISM manufacturing index, expected at 52.1 frm 51.6 in Sept, fell to 50.8. The headline not do good, but components held up; new orders at 52.4 frm 49.6, prices pd at 41.0 from 56.0 and employment at 53.5 frm 53.8. No reaction to the report.
Also at 10:00 Sept construction spending was thought to be up 0.3%, as reported up 0.2%, in Aug construction spending revised from _1.4% to +1.6%.
Today the FOMC meeting gets underway; we won't have anything to look to until tomorrow at its end, at 12:30 tomorrow the policy statement will be released then at 2:15 Bernanke will hold his press conference. The economic outlook, what the Fed may be thinking and the Euro issues will dominate.
Mortgage rates now back to some of the best levels, volatility is back with a vengeance and will continue to be the case with markets swinging in big moves. The Fed is in play on what it may do, if anything, to keep rates from increasing, the stock market is going to track how Europe's markets perform, and the US economic outlook remains cloudy. Expect markets to swing in wide ranges. Suggest taking advantage of the current decline in mortgage rates.
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