Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Building Strong, Lasting Relationships; One Client at a Time. At 8:30 the NY Fed Empire State general economic index dropped to minus 10.41, the lowest since April 2009, from minus 5.85 in August. The median forecast called for minus 2. New orders decreased to minus 14 this month, the lowest since November 2010, from minus 5.5 the prior month. A measure of shipments dropped to 2.8 from 4.1. The employment measure fell to 4.3 this month, the weakest this year, from 16.5 in August. The index of prices paid rose to 19.2 from 16.5 while prices received increased to 5.3 from 2.4. The weak report didn’t do too much damage to the stock market in pre-market trading; the key indexes were a little lower but didn’t slip on the report. Treasuries, after heavy selling last week are slightly better early today; MBS prices at 9:00 up about 15 bp frm Friday’s close. Markets should calm a little after last week’s FOMC statement that sent MBS markets screaming higher in price and mortgage rates lower. The Fed’s open-ended commitment to buy $40B a month of mortgage backed securities lit a fire under investors to continue selling treasuries and launch heavy buying of MBSs. The 10 yr note yield felt the pain, the yield on the 10 yr increased 20 basis points last week. 30 yr FNMA 3.0 coupon increased 73 basis points frm the close on Wednesday, the day before the FOMC statement. Last week’s decision from the FOMC to buy MBSs to keep interest rates low and help the housing industry, which Bernanke said was the weakest link in the economic recovery, wasn’t itself a surprise to markets as many analysts and traders were expecting the Fed would buy MBSs. What was somewhat shocking was the FOMC statement that said the Fed would buy $40B now and will continue to do it with no announced limit to the amount. Bernanke followed in the footsteps of ECB Pres. Mario Draghi; on July 26th Draghi threw down the gauntlet with his statement that the ECB would do “whatever it takes” to save the EU. At 9:30 the DJIA opened -23, NASDAQ -6, S&P -3; the 10 yr treasury note at 1.86% -1 bp. MBS prices +12 bp on 30s and -5 bp on 15s. EU finance ministers failed to agree on a timetable for a more unified banking system; sending Spain’s interest rates higher today while German 10 yr bunds saw some buying as any news that questions the EU efforts to support debt countries that isn’t positive puts investors back to safety; leaving the yield four basis points lower at 1.67%. The US 10 yr note at 1.86% Nothing left on the schedule today; the rest of the watch stock indexes; weaker will add some support to the bond and mortgage markets. After last Thursday and Friday some normalcy is welcome. The Treasury market is technically bearish; although last week the mortgage market lead treasuries after the FOMC statement, treasuries still direct interest rates.