Mortgage Rates



Treasuries and mortgage markets opened a little better this morning after three days of selling taking the 10 yr to 2.03% yesterday. Stock indexes opening a little weaker. There are no economic releases to deal with today, likely the markets will trade quietly into the weekend.

European leaders met in yet another summit in Brussels declaring a “turning point” after confirming the second bailout for Greece (the 17th summit meeting in the last two years). Leaders signed the deficit control treaty while Europe’s economy is still in recession mode; “We’re not out of the economic crisis yet but we are turning the page of the financial crisis,” French President Nicolas Sarkozy said. “It’s a reassuring picture which is still very fragile because we have a lot of uncertainty and the countries of Europe have to persevere,” ECB President Mario Draghi said at the summit. “It’s a much much better picture than we had until November.” German Chancellor Angela Merkel apparently changed her mind at the summit, agreeing to speed the payments into the planned 500 billion-euro permanent rescue fund barely a year after she won a deal to slow them down. “We are still in a fragile situation,” Merkel said. ‘This situation has calmed down a bit, but the crisis is hardly over and further steps will be required to get there.’’ And the beat goes on.

Crude oil markets were subject to another rumor yesterday, sending crude prices higher on reports apparently out of Iran’s media that a pipeline explosion occurred in Saudi Arabia. The rumor spiked prices but was totally denied by the Saudi officials. This morning crude oil is down about a dollar after the explosion was seen as a ruse by Iran; there was a fire at a refinery in the area but did didn’t cause any serious damage to the refinery or a pipeline. That crude hasn’t fallen much from the rumor reminds that the situation with Iran’s nuke program is escalating. The Obama administration is escalating warnings that the U.S. may join Israel in an attack on the nuclear facilities if Iran doesn’t dispel concern that its atomic-research program is aimed at producing weapons. Air Force Chief of Staff General Norton Schwartz told reporters this week that the Joint Chiefs of Staff have prepared military options.

At 9:30 the DJIA opened down 7 points, the 10 yr note +6/32 at 2.01% -2 bp and MBS prices +4/32 (.12 bp).

In the absence of any direct data today Tim Geithner’s op-ed piece in the WSJ is worth perusing. The point of the piece is that Wall Street continues to fight the number of new regulations forced on it after the financial disaster the Street and large banks foisted on America that set up the worst recession since the depression. ……” In the spring of 2008, more Americans were starting to face higher mortgage payments as teaser interest rates reset and they could no longer refinance out of them because the value of their homes stopped rising—the leading edge of a wave of foreclosures and a terrible fall in house prices. By the time Bear Stearns failed, the recession was then already several months old, but it would of course get much worse in coming months. These problems were partly the result of amnesia. There was no memory of extreme crisis, no memory of what can happen when a nation allows huge amounts of risk to build up outside of the safeguards all economies require.”…… To read the piece online, visit this link.

Yesterday the 10 yr note rose to 2.06% before closing the day at 2.03%; it hit its near term support and held, just as when it falls to its resistance at 1.90%. The 10 and mortgage rates are well contained in their respective ranges, it’s been that way for months and likely to continue. At 10:00 the 10 yr is back under 2.00% at 1.99% on weaker stock indexes. MBS prices already better than where prices traded when lenders priced this morning. The rest of the day should trade quietly with no driving news.