Mortgage Rates



Early this morning the bond market and mortgages started a little better, US stock indexes also slightly better prior to the open at 9:30. Crude oil continues its increase, at 9:00 over $108.00/barrel. Traders pushing stock indexes higher on belief that Jan new home sales would be up 2.5%, see below for the 10:00 release.

In Europe the UK reported Q4 growth slowed as companies scaled back investment, underscoring the risks to a recovery. Gross domestic product dropped 0.2% from the third quarter, no change from the previous report as had been expected. German gross domestic product fell 0.2% in the fourth quarter as the sovereign debt crisis damped demand across the euro region and curtailed exports. Greece’s debt issues appear to be resolved for the moment, it will get the necessary bailout funds to avoid default next month, the over-riding longer outlook is focused on whether Greece can actually live up to its austerity pledges. Europeans are scared, which makes them willing to do things they would not normally do -- such as implementing austerity and ratifying treaties they dislike. Agreeing to sacrifice sovereignty in principle to maintain the European economic system is about all the weakest EU countries (large debts) can do at this time. This year won’t bring any of it to a head, but next year there will be a huge debate in political circles about whether giving up sovereign identity to a wider control by the overlaying EU and ECB. The next two years for the survival of the EU will be contentious to say the least. Right this minute though, those issues are being ignored while focus is on putting out fires that will continue to erupt.

At 9:30, and head of two key data points at 10:00, the DJIA opened +16, the 10 yr +4/32 at 1.98% -1 bp; MBS prices on 30s +3/32 (.09 bp) frm yesterday’s closes.

The recent increase in oil prices and the rise in gasoline prices are not impacting markets as in the past----at least so far. Crude today up over $10.00/barrel over the last three weeks will have an impact on consumer spending and the GD{P growth in Q1 unless oil reverses quickly and gas prices fall back. Most of the increase due to Iran saber rattling and cutting sales of its oil to Europe. A temporary event appears to the take markets have adopted. Tim Geithner this morning agreed that Iran is causing oil to increase, but he also pointed to global economic improvement that is increasing demand. Geithner also saying the economic problems in Europe is not likely to “de-rail” the US economy.

At 9:55 the U. of Michigan final Feb consumer sentiment index was expected at 73.5, as reported it jumped to 75.3 the highest sentiment reading since Fed 2011. The 12 month sentiment at 82 was unchanged; the current conditions index at 83.0 frm 79.6 on the preliminary at mid-month. No reaction to it with Jan new home sales at 10:00.

At 10:00 Jan new home sales were expected +2.4% were down 0.9%, however Dec new home sales saw a big upward revision to +1.9% frm -2.2% previously reported. Taken together sales totals were a little better, expected at 315K annualized, sales were at 321K. Once again after the two reports in five minutes there has been little reaction to the data kin either stocks or rate markets.