Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Prior to the actual open at 9:30, the DJIA futures was trading in new all-time high, the 10 yr -6/32 at 1.90% and 30 yr MBSs -6 bp frm yesterday’s close. At 9:30 the DJIA opened +34 just a few points shy of the record then jumped over it a few minutes later; now it is all about the close; at 9:45 the DJIA index was the highest in the 200 yr history of the index. The NASDAQ opened +20, S&P +7; the 10 yr note yield at 9:30 -4/32 at 1.89% +1 bp, 30 yr MBS price -3 bp frm yesterday’s close. Four times in the past five sessions the 10 yr note yield fell to 1.84%, four times it has failed to break below and the yield increased. Yesterday the 10 declined to 1.84% failed and closed at 1.88%. 30 yr MBSs also failing at critical resistance levels; unable to move above its 40 day average and failing to break high prices going back to Jan 25th. Both markets are overbought based on momentum oscillators. This morning prior to the 9:30 open the S&P traded at a new high for the five year rally. US financial markets are at critical levels; technically and fundamentally. Interest rates stuck in a narrow range and not likely to decline much; the stock market about to make new highs today. Meantime the President is backing off from the doomsday forecasts of the sequester; no one believes the pronouncements of 170K jobs about to be lost, or that air planes won’t fly. Are there any bears still in the stock market?, any bulls in the bond market? When everyone gets on one side of the boat, the odds of tipping over become very high. China is moving toward slowing growth to 7.5%, concentrating on domestic spending at home and less on global exports. 7.5% growth is very strong but well off double digit growth over the past few years. Property values have exploded in China, the government is set now on new controls to control and tame the sector. The country facing an inflation bubble in property values that according to it’s leaders will lead to overall rampant inflation. Prior to the US service sector index this morning, in Europe the sector declined but not as much as expected. Retail sales in Germany were better than expected, up 3.1% and helped drive the EU sales up 1.2%. The jobless rate in the euro area rose to a record in January, climbing to 11.9%, data showed on March 1. Still, economic confidence in the euro area increased more than economists forecast in February. All European and Asian stock markets are better today. With global equity markets rallying today it is interesting that there is no major selling in the US treasury markets; prices are lower and rate higher this morning but only slightly. The Fed’s plan to continue its $85B of purchases of treasuries and mortgages is supporting any major increase in rates presently. Also, although this morning the stock market is pushing new highs, there is still a lot of conviction the US stock markets are due for a pullback. The only data today, the Feb ISM services sector index expected at 55.0 frm 55.2 in Jan. More fuel for the stock market; the index increased to 56.0, the highest since Feb 2012. The employment component however did slip a little, frm 57.5 to 57.2, still above 50 indicating expansion. The reaction sent the DJIA to new interday highs. The 10 yr and MBSs saw little reaction to the report.