Mortgage Rate Update
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Thursday, March 31, 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, March 31, 2011
Treasuries and mortgages doing better early this morning. At 8:30 weekly jobless claims saw a decline of 6K filings from last week, however last week's claims were revised from 282K to 394K. Continuing claims were down 51K to 3.714 mil but as with the claims continuing claims were revised from 3.721 mil last week to 4.22 mil in the revision. The 4 wk average also increased to 394,250 frm 391.000 based on the revisions. The claims report today is data collected after the BLS gathered the data for tomorrow's monthly employment report.
Next up this morning, the March Chicago purchasing managers index, expected at 70.0 frm 71.2 in Feb, was 70.6. The new orders component at 74.5 frm 75.9, the employment index at 65.6 frm 59.8 the highest read since Dec 1983 and the prices pd for materials at 83.4 frm 81.2, the highest since July 2008. Employment and prices are more evidence that the economy is improving along with inflation concerns. However, there was little reaction to the report, treasuries and mortgages held steady with small price gains and the stock market unchanged.
Finally today, Feb factory orders were expected to be up 0.4%, were down 0.1% and Jan revised to +3.3% frm 3.1%.
In Europe inflation data was stronger than expected; in the 17-nation euro region inflation increased to 2.6% in March from 2.4% in February, European Union estimates showed today. That’s the fastest pace since October 2008, and exceeds the ECB’s 2.0% limit for a fourth month. Economists had forecast inflation to hold steady. Next week the ECB will meet to discuss increasing its base lending rate, the inflation data today further increases the chance ECB will increase rates. Following moves in China, Brazil, Russia and India base lending rates are moving higher. In the US so far, the Fed still holds that inflation is not an immediate problem and plans to continue the easing move of buying $600B of treasuries. Whether or not inflation is about to click in, the bond market will face a huge hill to climb keeping long term rates including mortgages at or below the present levels. Fed officials are increasingly more divided on ending QE 2 sooner and less buying than originally intended; Bernanke however appears to be holding with completing the entire $600B buying that will conclude at the end of June.
After all the data this morning the rate markets holding better than we would have thought given the strong Chicago PM index and inflation increase out of Europe. The stock market holding unchanged. Technically the 10 yr held 3.50% on Tuesday giving traders a little opportunity but overall the bond market still holds a bearish outlook for rates. The rest of the session will be setting up for tomorrow's employment report with estimates still for an increase of 200K jobs and the unemployment rate unchanged at 8.9%. If floating stay close today; normally we do not like having a market position into employment as it is too volatile.
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, March 31, 2011
Treasuries and mortgages doing better early this morning. At 8:30 weekly jobless claims saw a decline of 6K filings from last week, however last week's claims were revised from 282K to 394K. Continuing claims were down 51K to 3.714 mil but as with the claims continuing claims were revised from 3.721 mil last week to 4.22 mil in the revision. The 4 wk average also increased to 394,250 frm 391.000 based on the revisions. The claims report today is data collected after the BLS gathered the data for tomorrow's monthly employment report.
Next up this morning, the March Chicago purchasing managers index, expected at 70.0 frm 71.2 in Feb, was 70.6. The new orders component at 74.5 frm 75.9, the employment index at 65.6 frm 59.8 the highest read since Dec 1983 and the prices pd for materials at 83.4 frm 81.2, the highest since July 2008. Employment and prices are more evidence that the economy is improving along with inflation concerns. However, there was little reaction to the report, treasuries and mortgages held steady with small price gains and the stock market unchanged.
Finally today, Feb factory orders were expected to be up 0.4%, were down 0.1% and Jan revised to +3.3% frm 3.1%.
In Europe inflation data was stronger than expected; in the 17-nation euro region inflation increased to 2.6% in March from 2.4% in February, European Union estimates showed today. That’s the fastest pace since October 2008, and exceeds the ECB’s 2.0% limit for a fourth month. Economists had forecast inflation to hold steady. Next week the ECB will meet to discuss increasing its base lending rate, the inflation data today further increases the chance ECB will increase rates. Following moves in China, Brazil, Russia and India base lending rates are moving higher. In the US so far, the Fed still holds that inflation is not an immediate problem and plans to continue the easing move of buying $600B of treasuries. Whether or not inflation is about to click in, the bond market will face a huge hill to climb keeping long term rates including mortgages at or below the present levels. Fed officials are increasingly more divided on ending QE 2 sooner and less buying than originally intended; Bernanke however appears to be holding with completing the entire $600B buying that will conclude at the end of June.
After all the data this morning the rate markets holding better than we would have thought given the strong Chicago PM index and inflation increase out of Europe. The stock market holding unchanged. Technically the 10 yr held 3.50% on Tuesday giving traders a little opportunity but overall the bond market still holds a bearish outlook for rates. The rest of the session will be setting up for tomorrow's employment report with estimates still for an increase of 200K jobs and the unemployment rate unchanged at 8.9%. If floating stay close today; normally we do not like having a market position into employment as it is too volatile.
Wednesday, March 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, March 30, 2011
Mortgage markets starting better this morning after price declines again yesterday; the 10 yr note at 9:00 was up slightly (2/32) while mtg prices were +4/32 (.12 bp). At 8:15 the March ADP non-farm private jobs report came in at +201K; small businesses +102K, medium businesses +82K and large businesses +17K. ADP reported the service sector jobs increased 164K the 15th consecutive increase in service producing sector; goods producing up 37K the 5th consecutive increase and manufacturing increased 37K the 6th consecutive increase. According to ADP the US private sector has averaged 175K jobs a month for the past six months. Projections of the 34 economists polled by Bloomberg ranged from gains of 171,000 to 295,000.
According to Chicago-based Challenger, Gray & Christmas Inc., another employment data point this morning, employers announced fewer job cuts in March than the same month last year, even as government payroll cutbacks climbed to the highest level in a year. Public employees accounted for almost half of all job cuts as states continue to cut fat with most state budgets in some kind of deficit.
Earlier this morning at 7:00 am the MBA released its weekly mortgage applications; they decreased 7.5% from one week earlier. The Refinance Index decreased 10.1% from the previous week. The seasonally adjusted Purchase Index decreased 1.7% from one week earlier. The unadjusted Purchase Index was 21.9% lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is up 2.0%. The four week moving average is up 2.1% for the seasonally adjusted Purchase Index, while this average is up 2.0% for the Refinance Index. The refinance share of mortgage activity decreased to 64.3% of total applications from 66.4% the previous week. This is the second lowest refinance share reported since May 2010. The adjustable-rate mortgage (ARM) share of activity decreased to 5.7% from 5.9% of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.92% from 4.80%, with points decreasing to 0.83 from 0.96 (including the origination fee) for 80% loans. The average contract interest rate for 15-year fixed-rate mortgages increased to 4.16% from 4.02%, with points increasing to 0.99 from 0.90 (including the origination fee) for 80% loans.
Later today, at 1:00 pm Treasury will auction $29B of 7 yr notes. So far the 2 yr and 5 yr auctions were marginal at best. Today's auction closer to the long end of the curve will be closely watched by traders, another soft auction will likely add conviction that interest rates are on the way higher.
At 9:30 the DJIA opened +46, the 10 yr note traded +1/32, mortgage prices +4/32 (.12 bp) frm yesterday's close. Although the ADP report and the open in the equity markets would pressure to rate markets, interest rate markets have been in a slow free-fall for the past eight sessions and are now momentarily technically oversold. The potential for some improvement is high but in the wider perspective any rebound in rates will be seen as a selling opportunity by traders. The ECB about to increase rates along with many of the economies of the world, inflation concerns increasing albeit slowly, and as the calendar ticks off we get closer to the end of all of the Fed's easing moves with QE 2 ending in June. Markets will not wait to the end and will have to consider how markets will absorb the shortfall when the Fed stops buying treasuries.
Should be quiet the rest of the morning until the 7 yr note auction is completed at 1:00. Oversold momentum oscillators likely to keep traders still until another shoe drops (i.e., a poor 7 yr auction or stronger economic data when the official employment report for March hits Friday morning). Although some rebound can't be ignored, the rate markets will not likely loose their bearish outlook.
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, March 30, 2011
Mortgage markets starting better this morning after price declines again yesterday; the 10 yr note at 9:00 was up slightly (2/32) while mtg prices were +4/32 (.12 bp). At 8:15 the March ADP non-farm private jobs report came in at +201K; small businesses +102K, medium businesses +82K and large businesses +17K. ADP reported the service sector jobs increased 164K the 15th consecutive increase in service producing sector; goods producing up 37K the 5th consecutive increase and manufacturing increased 37K the 6th consecutive increase. According to ADP the US private sector has averaged 175K jobs a month for the past six months. Projections of the 34 economists polled by Bloomberg ranged from gains of 171,000 to 295,000.
According to Chicago-based Challenger, Gray & Christmas Inc., another employment data point this morning, employers announced fewer job cuts in March than the same month last year, even as government payroll cutbacks climbed to the highest level in a year. Public employees accounted for almost half of all job cuts as states continue to cut fat with most state budgets in some kind of deficit.
Earlier this morning at 7:00 am the MBA released its weekly mortgage applications; they decreased 7.5% from one week earlier. The Refinance Index decreased 10.1% from the previous week. The seasonally adjusted Purchase Index decreased 1.7% from one week earlier. The unadjusted Purchase Index was 21.9% lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is up 2.0%. The four week moving average is up 2.1% for the seasonally adjusted Purchase Index, while this average is up 2.0% for the Refinance Index. The refinance share of mortgage activity decreased to 64.3% of total applications from 66.4% the previous week. This is the second lowest refinance share reported since May 2010. The adjustable-rate mortgage (ARM) share of activity decreased to 5.7% from 5.9% of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.92% from 4.80%, with points decreasing to 0.83 from 0.96 (including the origination fee) for 80% loans. The average contract interest rate for 15-year fixed-rate mortgages increased to 4.16% from 4.02%, with points increasing to 0.99 from 0.90 (including the origination fee) for 80% loans.
Later today, at 1:00 pm Treasury will auction $29B of 7 yr notes. So far the 2 yr and 5 yr auctions were marginal at best. Today's auction closer to the long end of the curve will be closely watched by traders, another soft auction will likely add conviction that interest rates are on the way higher.
At 9:30 the DJIA opened +46, the 10 yr note traded +1/32, mortgage prices +4/32 (.12 bp) frm yesterday's close. Although the ADP report and the open in the equity markets would pressure to rate markets, interest rate markets have been in a slow free-fall for the past eight sessions and are now momentarily technically oversold. The potential for some improvement is high but in the wider perspective any rebound in rates will be seen as a selling opportunity by traders. The ECB about to increase rates along with many of the economies of the world, inflation concerns increasing albeit slowly, and as the calendar ticks off we get closer to the end of all of the Fed's easing moves with QE 2 ending in June. Markets will not wait to the end and will have to consider how markets will absorb the shortfall when the Fed stops buying treasuries.
Should be quiet the rest of the morning until the 7 yr note auction is completed at 1:00. Oversold momentum oscillators likely to keep traders still until another shoe drops (i.e., a poor 7 yr auction or stronger economic data when the official employment report for March hits Friday morning). Although some rebound can't be ignored, the rate markets will not likely loose their bearish outlook.
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