Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Friday the 10 yr note managed to move below its strong resistance at 1.58% but this morning the note is under pressure with stronger stock indexes, and is back to 1.61% at 9:00. MBS prices were up 23 bp, at 9:00 prices are down 21 bp. Over the past two weeks the bond and mortgage markets have stayed in very narrow ranges and will likely continue through this week also. This week is a shortened one with markets closed Thursday and will close early Friday, many will; be taking Wednesday afternoon off and all of Friday even though markets will be working. The data this week focuses mostly on housing data. At 9:30 the DJIA opened +97, NASDAQ +32, S&P +12. 10 yr note at 9:30 1.62% +3 bp; 30 yr MBS prices -28 bp. At 10:00 Oct existing home sales, expected down 1.0%, were up 2.1% to 4.79 mil units (annualized), Sept sales were revised slightly lower, from 4.75 mil to 4.69 mil. The average sales price $178,600.00; sales up 11.1% yr/yr. Also at 10:00 the NAHB hosing index was expected at 42 from 41 in Oct, the index jumped to 46, the highest index reading since May 2006. The data gave the stock indexes an additional boost. Tomorrow the EU nations will meet to consider Greece’s debt crisis. Today ahead of the official meeting tomorrow France, Germany, Italy and Spain met to lay out some kind of agreed upon consensus among the four countries. Europe remains the main drag on global growth as it is now officially back in recession. It has been over three years since the debt crisis began, in that time there has never been any plan that has stuck more than a couple of months. The Brussels meeting tomorrow, the second in a week after finance chiefs agreed seven days ago to keep Greece’s bailout aid flowing, underscores skirmishing among EU officials confronting rising unemployment and a slowing economy. Tomorrow at 12:15 Ben Bernanke will speak to the NY Economics Club. There is some thought he may lay the ground work for QE4. Last Friday the key stock indexes closed better, this morning the indexes are starting better on optimism that there will be a deal that avoids the fiscal cliff when the Bush tax cuts expire at the end of the year. Whatever agreement comes from the negotiators will not satisfy anyone, but the consequences going over the cliff are so severe even our politicians will have to agree on something. Obama met with political leaders last Friday, markets are taking it as positive with comments from the participants sounding optimistic. Both sides appear to be softening their long-standing hard core positions. Although treasury and mortgage prices are lower today, the bond and mortgage markets remain slightly bullish from a technical perspective, however there is still no demand for treasuries. The most recent data on Sept international cash flows showed foreign investors have reduced their holdings of US treasuries by about $85B.