Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Treasuries and mortgages were essentially unchanged on Monday. This morning about the same, at 9:00 the 10 yr note unchanged and 30 yr MBSs +3 bp. Stock indexes a little better early and prior to the 9:30 open. The lights in Washington still off after failure to come to any agreement on the Cliff. President Obama will return to Washington tomorrow and Congress will be back There is still some optimism that the two warring parties will get something done; if so it will be a deal that fails to address spending cuts or deficit reduction. About the best that can be expected now is a plan to avoid tax increases for most citizens. The most recent data on holiday shopping isn’t good. Sales were expected to increase 3.0% frm last year, according to Master Card sales increased just 0.7%. It was the slowest growth in sales since 2008 when sales fell 5.5%; since then holiday sales have increased each year. Mostly it was the fiscal mess and Washington’s ineptness in coming to grips with it. The tropical storm Sandy gets some blame but consumers’ fears of higher taxes in January is the prime reason for the slowdown. The S&P/Case-Shiller index of property values in 20 cities increased 4.3% from October 2011, the biggest 12-month advance since May 2010. Estimates were for an increase of 4.0%. Home prices adjusted for seasonal variations rose 0.7% in October from the prior month, with 17 of 20 cities showing gains. Las Vegas showed the biggest gain with a 2.4% advance, followed by San Diego with a 1.7% increase. Property values dropped the most in Chicago, which fell 0.7% over the month. At 9:30 the DJIA opened +20, MASDAQ unchanged, S&P +2. The 10 yr at 9:30, after starting a little weak, up 3 bp to 1.77% -1 bp; 30 yr MBSs +6 bp. With nothing but the fiscal Cliff on minds, the markets should be relatively quiet through the day. Washington won’t get make to “business” until tomorrow and with the bad weather hitting most of the mid-section of the country some of the legislators may not make it on time. The best outcome now is for an agreement to keep tax increases from increasing on middle America. Nothing will be done on spending cuts or deficit reduction, not to mention reforms of entitlement programs. Kick the can down the road is what we can expect from Washington. A blizzard warning stretches from northeastern Arkansas to Cleveland, Ohio, where almost 14 inches of snow is expected to fall by tomorrow, according to the National Weather Service. Winter storm warnings are in effect from Illinois into Maine. Here in Indy we are going to get 12” by late this evening. Over the last six trading sessions the 10 yr has stayed in a 8 bp range. 30 yr MBSs about unchanged. Technically still slightly bearish but with the Fed supporting rate markets we don’t expect rates will increase much from present levels. IF the economy were to go over the Cliff next week the bond and mortgage markets should improve with the stock market falling on disappointment. Until there is something concrete from Washington traders will continue to keep a minor bid in the bond and mortgage markets. In the equity markets, based on how the indexes have been trading, there is still optimism that the Cliff will be avoided.