Mortgage Rates


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




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Friday, March 25, 2011


Treasuries and mortgages opened flat this morning while the stock index futures were aiming at a better open at 9:30. At 8:30 the final Q4 GDP was better than expected, from +2.8% to up 3.1% with expectations of an increase to 2.9%. Consumer spending, about 70% of the economy, rose 4.0% last quarter, the most since the same three months in 2006, compared with 4.1% previously estimated and a 2.4% rate in the third quarter. It is old news however, Q1 has about ended; nevertheless equity markets were boosted a little that the economy was actually stronger than what the market had traded. Q1 is likely to drag some with oil prices increasing and supplies of components that are made in Japan have slowed.

At 9:30 the stock market opened +22 on the DJIA, the 10 yr note up 4/32 at 3.40% and mortgage prices at 9:30 +4/32 (.12 bp).

Japan suffered another 6.2 after shock overnight. The Prime Minister said the problems at the nuclear power plants is serious and grave and not yet near under control. It has been two weeks since the initial quake and tsunami, the stock market took a huge hit on the reaction but the key stock indexes are now trading at or above where they were prior to disaster. Our markets also appear to be ignoring turmoil in the Mideast and Libya as the equity markets keep improving and the bond market that got a safe haven boost is now back to yields prior to the earthquake. Today in Germany business confidence didn't fall as much as analysts were expecting, more evidence that Japan's tragedy hasn't hurt the economic outlook in Europe either.

At 9:55 the Reuters/U.of Michigan consumer sentiment index expected at 68.0 frm 68.2 two weeks ago fell to 67.7, the lowest level since Nov 2009. The index at the end of Feb was 77.5 so a big drop in this very volatile series. The expectations index fell to 57.9 frm 58.3 the lowest since March 2009; the current conditions component at 82.5 frm 83.6 and the 12 month out index to 60.0 frm 64.0. Even though weaker the initial reaction didn't hamper stocks or improve the bond and mortgage markets.

Technically, the 10 yr note has minor support at 3.40% where its 20 day MA is and on the chart support. The rate markets have seen prices decline for seven days now as markets shrug off the implications of Japan's disaster and the unsettled Mideast situation and Libya's civil war.