Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Very early this morning (7:00 am) the 10 yr note was unchanged, but as the sun rose the 10 managed to improve. At 9:00 the 10 yr +5/32 at 1.71% -2 bp and 30 yr MBSs +6 bp. At 8:30 Nov CPI declined 0.3%, a little weaker than -0.2% expected; the core (ex food and energy) +0.1%, also weaker than +0.2% markets were expecting. The last of this week’s data at 9:15; Nov. industrial production was thought to be up 0.3%, as reported it increased 1.1%, Oct was revised frm -0.4% to -0.7%. Nov factory usages was forecast to have increased to 78.0%, it jumped to 78.4%. There was no immediate reaction to the better manufacturing data in the stock indexes that were about unchanged prior to data this morning. The increase in production increased the most in two years as manufacturers rebounded from Sandy. In China, the December preliminary reading was 50.9 for a purchasing managers’ index released by HSBC Holdings Plc and Markit Economics, beating estimates. Late yesterday afternoon Pres. Obama and House speaker Boehner met at the White House for the third time. After the meeting which lasted about an hour, both of their spokespeople said the same thing; it was a “frank” meeting. Pundits saying it indicates that nothing was moved forward. It continues to be a game of chicken, positioning for the best possible face. Although the ink isn’t dry on the election results last month; both parties are already posturing for the 2014 elections. If there is a deal before the country plunges off the Cliff, it won’t satisfy anyone. If there is a deal it won’t happen before Christmas given the intransigence frm both sides. A slightly better start this morning for treasuries and MBS markets; after increasing yields over the last four days the 10 yr is doing better so far. The softer inflation reading on Nov CPI supporting treasuries but mostly just traders squaring positions after the swift decline in prices. The FOMC policy statement and the change in how long the Fed will keep rates low (until unemployment falls to 6.5%) and the Fed’s increase in its inflation threshold frm 2.0% to 2.5% rocked fixed income markets. The Fed’s changes will put a higher floor for rallies; adding additional belief that interest rates will struggle to decline to levels seen last summer as some are touting.