Mortgage Rates


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


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Friday, February 25, 2011


Already this morning volatility in oil and stock indexes moving markets. Crude oil at 8:00 was lower by $0.50, the DJIA futures up 75 points and the 10 yr note down 6/32 in price. By 9:00 oil was up $0.30, the DJIA +63 and the 10 yr note +2/32 with mortgage prices up 3/32 (.09 bp) frm yesterday's closes.

At 8:30 Q4 GDP revision was expected to have increased from +3.2% to +3.3% on the advance report last month; as reported GDP declined from 3.2% to +2.8%. While still an improvement it was obviously less than expected. The reaction flipped the 10 yr from -6/32 to +2/32; mortgage prices at 9:00 +3/32 (.09 bp). State and local government expenditures fell at a 2.4% annual rate in the fourth quarter, compared with a previous estimate of a 0.9% drop. In the third quarter, state and local government spending rose 0.7%. Household purchases, about 70% of the economy, rose 4.1%, the most since the same three months in 2006, compared with 4.4% originally estimated and a 2.4% rate in the third quarter. The Federal Reserve’s preferred price gauge, which is tied to consumer spending and strips out food and energy costs, climbed at a 0.5% annual pace; still no inflation even though the Fed wants it higher.

Qaddafi still in control of Tripoli but has lost all of the eastern areas where the oil is; forces loyal to Qaddafi moved against cities near Tripoli and more than 100 people were killed in Az-Zawiyah, a town west of the capital, Al Jazeera reported. Evidence he was losing allies included the defection to Egypt of a confidante, his cousin Ahmed Qaddaf al-Dam, following resignations by government ministers and diplomats. Army units, particularly in the eastern part of the country, have defected to the opposition. U.S. Senators John McCain and Joseph Lieberman, speaking at a press conference in Jerusalem today, urged NATO countries to impose a no-fly zone on Libyan airbases to prevent air attacks on the anti-Qaddafi forces, and called on the U.S. to back the rebels with weapons. Lieberman said they should get “military support to complete the change of leadership.” Security forces surrounded mosques in Tripoli today after opposition leaders called for mass demonstrations against Qaddafi after Friday prayers, Al Jazeera reported.

At 9:30 the stock market did open better, the DJIA +35; the 10 yr note unchanged and mortgage prices also generally unchanged, crude at 9:30 unchanged (see below for 10:00 levels) volatility has already been high.

At 9:55 the final Feb U. of Michigan consumer sentiment index was expected unchanged at 75.1; it increased to 77.5. The current conditions index increased to 86.9 frm 86.8, expectation index at 71.6 frm 67.8 and the 12 month outlook index jumped to 85 from 78. It was a much better report than expected but caused no movements in the rate markets however did boost the stock indexes a little.

Although the Mideast and particularly N. Africa continue to drive all US markets, the recent increase in oil prices and the selling in US stock markets may be momentarily overdone. If there is nothing new in those regions expect the bond and mortgage markets to be quiet today with not much movement. If it weren't Friday the bond and mortgage markets would likely be weaker; with the weekend ahead traders won't want to lift positions based primarily on the civil unrest in Libya and possibly Algeria. That said, the present situations In the oil world will not go away soon and will lead markets on movements in energy prices and in turn continue to support US interest rate markets.