Mortgage Rate


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



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Tuesday, March 29, 2011


Treasuries and mortgages were mostly flat yesterday with mortgage prices about .09 bp better. This morning the 10 yr note off a little at 9:00 with mortgage prices down .09 bp. Stock indexes yesterday were slightly lower, this morning opening a little better. Overall since Friday's closes markets are relatively unchanged. At 9:00 the Case/Shiller home prices were weaker as expected; the 20 city home prices fell 0.2%, yr/yr -3.1%, the biggest year-over-year decrease since December 2009; the 10 city prices yr/yr down 2.0%. Estimates for the price change for the 20 cities ranged from declines of 3.7% to 2.4%, according to the forecasts of 29 economists Media makes some noise over the monthly report; it is two months old and unless you live in the 20 cities it is meaningless, real estate is a local issue.

At 10:00 a more important data point; the Mar consumer confidence index from the Conference Board. Forecasts were for confidence to have slipped from 70.4 in Feb to 65 in March, as reported at 63.4 frm 72.0 revised from 70.4. The present situation index better at 36.9 frm 33.8 in Feb, expectations index at 81.1 frm 97.5 and the inflation index at 6.7 frm 5.6 in Feb, the highest reading since Oct 2008 but still anemic.

This afternoon at 1:00 Treasury will sell $35B of 5 yr notes, yesterday's $35B of 2 yr notes was so-so, not bad but not strongly bid either. Today's 5 yr may be another one that is not as strong as we would like to see, the 5 yr sector of the yield curve has been the weakest for the last couple of weeks. The 5 yr is at its highest yield in the past three weeks so that may entice investors some.

St Louis Fed Pres Bullard out again with comments that the Fed may be able to cut $100B from the QE 2 $600B treasury buying that is scheduled to be completed at the end of June. Bullard has been generally opposed to the QE by the Fed. Fed officials have purchased $1.7 trillion of mortgage debt and Treasuries through March 2010 to pull the U.S. out of the recession. The Fed’s second round of purchases has come under fire from Republican leaders in Congress who say it risks inflating asset-price bubbles and stoking inflation. “One of the things that I am concerned about is that the policy is so easy right now, that we have to get started on the process of going back to normal because it will take a long time to do that,” he said.

Debate is increasing within the Fed about when to end its support through quantative easing. Various Fed officials are saying the easing must continue as the economic recovery is still fragile while others want it ended soon and that the Fed should begin tightening to fend off inflation which so far isn't being seen. In Europe however the ECB is about to start tightening and increasing rates following China, Brazil, India and Russia. Hard to handicap at the moment but it is increasingly unlikely interest rates in the US will decline and more likely begin to creep higher.

After trading weaker this morning, by 9:45 the 10 yr note moved back to unchanged and mortgages off .12 bp at 9:00 were unchanged. The stock market opened a little better but backed off and went negative at 9:45 supporting the move up in interest rate prices. Likely to be quiet this morning until we get the results of how the 5 yr auction went. The MBS prices below are at 9:30, since then prices improved from -3/32 to +3/32 at 9:45 a gain of .18 bp frm initial pricing by lenders.