Mortgage Rates



Treasuries and mortgages opened unchanged this morning with no news. Greece still can’t finalize anything on their debt workout; three weeks and counting since Greek officials said they were close to an agreement with creditors. Last week’s Jan employment report was much better than even the most optimistic forecasts and counter to the pessimistic outlook delivered from the Fed at the conclusion of the Jan 25th FOMC meeting. Not only the employment data stronger but the two ISM reports for Jan (manufacturing and service sector) were better than what had been expected.

European bank supervisors may discuss easing requirements for lenders to hold capital against sovereign debt this week as part of more than 30 meetings this month to track banks’ progress in complying with updated requirements, two people with knowledge of the discussions said. After three weeks of discussions and nothing coming from it Fitch said a Greek disorderly default “cannot be wholly discounted.” “Fitch expects Greece to undertake an orderly debt restructuring, which would ensure that a payment system is in place,” the ratings company said in a statement today. “However, a disorderly default, which may include an exit from the euro zone, cannot be wholly discounted.” European leaders stepped up pressure on Greek politicians to accept the conditions for a 130 billion-euro ($171 billion) bailout, saying time was running out.

Today we have no scheduled reports; this week the economic calendar doesn’t offer much. Treasury will auction $72B of notes and bonds this week beginning tomorrow through Thursday.

At 9:30 the DJIA opened -60, the 10 yr note -3/32 to 1.94% +1.5% and mortgage prices +1/32 (.03 bp). Treasuries facing auctions this week are hanging back with yields unchanged after Friday’s drumming over the Jan employment report.

This Week’s Economic Calendar:
Tuesday;
1:00 pm $32B 3 yr note auction
3:00 pm Dec consumer credit (+$8.5B, +$20.4B in Nov)
Wednesday;
7:00 am MBA mortgage applications
1:00 pm $24B 10 yr note auction
Thursday;
8:30 am weekly jobless claims (+3K to 370K; continuing claims 3.475 mil frm 3.437 mil)
10:00 am Dec wholesale inventories (+0.4%)
1:00 pm $16B 30 yr bond auction
Friday;
8:30 am Dec trade balance (-$48.2B)
9:55 am U. of Michigan sentiment index (74.0 frm 75.0)
2:00 pm Jan Treasury budget (-$40.0B)

Treasuries continue to weaken this morning, after opening slightly better the 10 yr note at 10:00 -4/32 at 1.94% +1.5% with MBS trade -1/32 (.03 bp) at 10:00. Technically still positive but softening now. As we have noted countless times, the 10 yr note struggles when it falls below 2.00%, mortgage rates remain subject to treasuries and also have demonstrated an inability to fall when at the present levels. Safe haven to treasuries has waned even with the potential of Greece deflating. Traders don’t believe Greece will default even with nothing being finalized for weeks and the clock ticking for Greece to make its next payment next month.