Mortgage Rates





Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com


Building Strong, Lasting Relationships; One Client at a Time.

Monday, February 14, 2011


Markets are starting quietly this morning; today has no economic data to work on but the Administration is releasing the 2012 budget. The annual ritual, the budget next year as presented this morning at 10:30 is another miss as far as the deficit is concerned. The President's own commission that was charged to come up with ways to cut the debt, the recommendation from the bi-partisan group called for cuts of $4.0T, as presented this morning it will cut just $1.4T over the next three years. Nothing in the budget on dealing with the elephants; social security and Medicare or an admission that taxes will have to increase.

The deficit for the current fiscal year is forecast to hit a record $1.6 trillion -- 10.9 percent of gross domestic product -- up from $1.4 trillion the administration estimated previously, according to documents released this morning by the administration. It would fall to $1.1 trillion in fiscal 2012, the fourth consecutive year of deficits exceeding $1 trillion. By 2015 it would decline to $607 billion, or 3.2 percent of GDP.
While some of the lowest borrowing costs on record have helped the economy recover from its worst financial crisis since the Great Depression, bond yields are now rising as growth resumes. Net interest expense will triple to an all-time high of $554 billion in 2015 from $185 billion in 2010, according to the Obama administration’s adjusted 2011 budget.
Last week the bond and mortgage markets were focused on Treasury auctions with very little on the economy; this week markets have a number of economic reports to work on beginning tomorrow through Thursday.
This Week's Economic Calendar:
Tuesday;
8:30 am Jan retail sales (+0.5%, ex autos +0.6%)
Feb NY Empire State manufacturing index (16.0 frm 11.92 in Jan)
Jan Import and Export prices (N/A)
10:00 am Dec business inventories (+0.7%)
NAHB Feb housing market index (16 unch frm Jan)
Wednesday:
7:00 am MBA mortgage applications
8:30 am Jan housing starts and permits (starts +2.4% to 540K; permits -8.7% to 580K)
Jan PPI (+0.7%; ex food and energy +0.2%)
9:15 am Jan industrial production (+0.6%)
Jan capacity utilization (76.4% frm 76.0 in Dec)
2:00 pm FOMC minutes from 1/26 meeting
Thursday;
8:30 am weekly jobless claims (+27K to 410K)
Jan CPI (+0.3%, ex food and energy +0.1%; con't claims to 3.90 mil frm 3.88 mil)
10:00 am Jan leading economic indicators (+0.2%)
Feb Philadelphia Fed business index (21.9 frm 19.3 in Jan)

The revolutions in Tunisia and Egypt have settled but we expect more to come from the mid-east. This morning there are rep[orts that people are getting roiled in Bahrain with security forces using tear gas and rubber bullets to quell the unrest. Expect more to come in the mid-east region; so far no serious violence, lets hope it stays that way. in the meantime the US must review and change man of its policies in the region.
Very quiet so far this morning; the DJIA opened -10 but is sliding lower. The rate markets generally unchanged so far but if equity indexes work lower it will support the bond market. We still do not want to float rates, best to lock as the bond and mortgage markets remain bearish fundamentally and technically.