Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com January unemployment rate was higher than expected at 7.9%, but job growth was better than expected with sizeable revisions to Nov and Dec data. Jan non-farm job growth +157K, private job growth 166K; Nov non-farm jobs were revised from +161K to +247K and Dec jobs were revised from +155K to +196K, a combined total of 127K more jobs than what had been previously reported. The unemployment rate was expected to have increased to 7.8% frm 7.7% in Dec. The median forecast of 90 economists surveyed by Bloomberg called for an advance of 165,000 in January payrolls. Projections ranged from gains of 115,000 to 230,000 following an initially reported 155,000 increase in December. The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- stayed at 14.4%. For all of 2012 non-farm jobs increased by 2.2 million jobs. Prior to the 8:30 employment report the 10 yr yield had increased to 2.03%, by 9:00 the rate stood at 1.95%; 30 yr MBSs at 9:00 were up 21 bp after trading weaker on the release of the employment data, at 8:20 -18 bp. The stock indexes at 9:00 were on fire with the DJIA +109. Treasuries holding well on the higher unemployment rates while stocks are improving on upward revisions in job increases. Kind of peculiar, interest rates holding well in the face of a strong opening in the equity market at 9:30. At 9:30 the DJIA opened +65, NASDAQ +20, S&P +7. The 10 yr note 1.93% -5 bp; 30 yr MBS prices +40 bp. More data this morning; at 9:55 the U. of Michigan consumer sentiment index was expected at 71.5 frm 71.3; the index came at 73.8, the best since last fall when the index was in the 80s. At 10:00 Jan ISM manufacturing index expected at 55.5 frm 54.0, as reported the index hit at 53.1, the employment component at 54.0 frm 51.9. Dec construction spending was expected up 0.8%, as released spending increased 0.9% and Nov spending originally reported at -0.3% was revised to _0.1% US interest rates are better this morning on the Jan payrolls being less than estimates at 157K against forecasts of about 185K and the increases in the unemployment rate to 7.9% against estimates of 7.8%. Prior to 8:30 the 10 yr note yield was at 2.04%. Stocks are rallying because there were upward revisions to Nov and Dec job gains. The bond market has found good support at the 2.00% level; although the level has been breached a couple of times, 2.00% is holding well and supporting better mortgage prices so far. As we have noted, the bond and mortgage markets have been very oversold from a technical perspective, looks like 2.00% will hold and the retracement we have been looking for may be at hand. That said, we don’t expect there will be a huge decline in interest rates, the longer bearish outlook should continue.