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.
Tuesday, April 12, 2011
Treasuries rallying this morning on lower equity market trade and another slight run to safety on news that Japan has elevated the condition level on its nuke sites from a 5 to a 7, the same level as Chernobyl in 1986. Officials however are saying the level of radiation leaks is much lower than Chernobyl, still an increase to the highest level for nuke accidents. Also supporting rate markets; in the UK inflation levels slipped a little as is also the case on recent data from Mexico. In Germany investor confidence slid on ECB rate increase last week; German inflation unexpectedly accelerated to 2.3% last month after oil prices surged to more than $110 a barrel. (crude has declined $7.00 in the last 24 hours)
More not so good news for the economic outlook this morning. The National Federation of Independent Business index fell. "It looks like everyone became more pessimistic in March, consumers (The university of Michigan Confidence Index took a dive, tenth largest monthly decline in survey history) and business owners. The Index of Small Business Optimism gave up 2.6 points in March, falling to 91.9, definitely a recession-level reading if history is any guide.".... "The bad news for the Fed (although not for the business owners who need to improve their bottom lines after the recession laid waste to their profits) is that price pressures continue to mount. The decline in the Index was driven by weaker expectations for real sales gains and business conditions and a marked deterioration in profit trends. Job creation plans weakened but remained in positive territory and plans to make capital outlays posted another gain (although reports of actual outlays over the past 6 months were unchanged). Basically, the Index and its components are at recession levels from an historical perspective."
The Feb international trade deficit was about in line; -$45.76B. March import prices increased 2.7%, higher than 2.2% expected; export prices +1.5% higher than +0.8% expected. Food prices up 4.2% the largest increase since July 1994; yr/yr import prices up 9.7%. Yr/yr on export price +9.7%.
The DJIA opened -88, at 9:30 the 10 yr +19/32 at 3.52% -6 bp and mortgages +12/32 (.27 bp). Equity markets were not happy over the Alcoa earnings reported at 4:00 yesterday, the beginning of earnings season. Cisco also not helping equities with news of the company about to cut jobs.
The reactions to weaker earnings, a decline in small business confidence, Japan increasing the nuke emergency level from 5 to the highest 7 level, a sizeable decline in oil prices in the last 24 hours (about $7.00), and lower inflation stats from the UK have momentarily shaken markets. Not a big deal in the larger perspective but enough to pressure stocks for the moment and push interest rates slightly lower this morning.
At 1:00 Treasury will auction $32B of 3 yr notes. At 2:00 this afternoon Treasury will report the March balance, expected a deficit of $189B.
A nice start to the day but we are not swayed, the bond and mortgage markets if we look at it from the technicals are both near term oversold as we noted yesterday; the equity markets equally overbought. Both markets overdue for consolidation. The larger picture remains optimistic fore economic recovery, inflation concerns haven't evaporated as most countries are on a path of rate hikes. Then the much wider perspective; the US budget deficit that will play a huge role in the markets starting again tomorrow after Obama's speech. None of the driving issues justify optimism in the bond markets.
Tuesday, April 12, 2011
Monday, April 11, 2011
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, April 11, 2011
Last week there wasn't much direct news for the bond and mortgage markets. Interest rates increasing around the globe, no economic reports of consequence and politicians working on a budget to fund deficits through the end of 2011 fiscal year (Sept). The rate markets last week saw the 10 yr yield increase 12 bp, mortgages up 6 bp.
At the 11th hour (literally) the Congress and the Administration agreed on a budget, avoiding a government shutdown. The media made a huge deal out of the inability of Republicans and Democrats to agree, markets however were generally convinced the shut-down would be avoided.
Treasuries and mortgages started the day about unchanged from Friday, a couple of ticks weaker; in pre-market trading the stock indexes were higher and at 9:30 the DJIA opened better (+20) Mortgage prices were down 2/32 (.06 bp) prior to 9:30 but improved a little to +2/32 (.06 bp) . Last week the DJIA up 3 pts, NASDAQ -9, and the S&P -4. Today there are no economic releases for markets; through the week however we will get more data than last week.
Starting tomorrow afternoon Treasury will auction $66B of notes and bonds, recent borrowing demand from investors has been a little soft so demand will be closely watched. Wednesday Pres Obama will speak and release the administrations 2012 budget; politicians had a difficult time over the past few weeks agreeing on a budget for the rest of this year. The 2012 budget battle will make the recent budget battle look like children's play. Cuts in entitlements will be difficult to get agreement but it is necessary to cut them; Medicare and Medicaid and likely talks of revenue increases. Recall Obama extended the Bush tax cuts this year, that isn't likely to happen next year so taxes for many will increase just on that alone.
This Week's Economic Calendar:
Tuesday;
8:30 am Feb trade balance (-$45.7B)
Mar import and export price (N/A)
1:00 pm $32B 3 yr note auction
2:00 Mar treasury budget balance (-$189.0B)
Wednesday;
7:00 am Weekly mortgage applications
8:30 am Mar retail sales (+0.5%; ex auto sales +0.8%)
10:00 am Feb business inventories (+0.8%)
1:00 pm $21B 10 yr note auction
2:00 pm Fed's Beige Book (report on the economy)
Thursday;
8:30 am weekly jobless claims (+3K to 385K; con't claims 3.70 mil frm 3.723 mil)
Mar producer price index (+1.0%, ex food and energy +0.2%)
1:00 pm $13B 30 yr bond auction
Friday;
8:30 am Mar consumer price index (+0.5%; ex food and energy +0.2%)
Apr NY Empire State manufacturing index (15.0 frm 17.5 in Mar)
9:15 am Mar industrial production (+0.6% frm unch in Feb)
Mar capacity utilization (77.4% frm 77.0% in Feb)
9:55 am U. of Michigan mid-month consumer sentiment index (66.0 frm 67.5)
Technically the bond and mortgage markets are a little oversold on a near term measurement, a little improvement is likely but the trend won't change---its negative. The 10 yr managed a successful test of longer term support at 3.60% on Friday and fell back to close at 3.58%. We suggest using any improvements to lock loans about to close. The best we can forecast is the 10 may fall back to 3.50% at best. Treasury auctions should keep rates from declining much in the early part of the week.
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, April 11, 2011
Last week there wasn't much direct news for the bond and mortgage markets. Interest rates increasing around the globe, no economic reports of consequence and politicians working on a budget to fund deficits through the end of 2011 fiscal year (Sept). The rate markets last week saw the 10 yr yield increase 12 bp, mortgages up 6 bp.
At the 11th hour (literally) the Congress and the Administration agreed on a budget, avoiding a government shutdown. The media made a huge deal out of the inability of Republicans and Democrats to agree, markets however were generally convinced the shut-down would be avoided.
Treasuries and mortgages started the day about unchanged from Friday, a couple of ticks weaker; in pre-market trading the stock indexes were higher and at 9:30 the DJIA opened better (+20) Mortgage prices were down 2/32 (.06 bp) prior to 9:30 but improved a little to +2/32 (.06 bp) . Last week the DJIA up 3 pts, NASDAQ -9, and the S&P -4. Today there are no economic releases for markets; through the week however we will get more data than last week.
Starting tomorrow afternoon Treasury will auction $66B of notes and bonds, recent borrowing demand from investors has been a little soft so demand will be closely watched. Wednesday Pres Obama will speak and release the administrations 2012 budget; politicians had a difficult time over the past few weeks agreeing on a budget for the rest of this year. The 2012 budget battle will make the recent budget battle look like children's play. Cuts in entitlements will be difficult to get agreement but it is necessary to cut them; Medicare and Medicaid and likely talks of revenue increases. Recall Obama extended the Bush tax cuts this year, that isn't likely to happen next year so taxes for many will increase just on that alone.
This Week's Economic Calendar:
Tuesday;
8:30 am Feb trade balance (-$45.7B)
Mar import and export price (N/A)
1:00 pm $32B 3 yr note auction
2:00 Mar treasury budget balance (-$189.0B)
Wednesday;
7:00 am Weekly mortgage applications
8:30 am Mar retail sales (+0.5%; ex auto sales +0.8%)
10:00 am Feb business inventories (+0.8%)
1:00 pm $21B 10 yr note auction
2:00 pm Fed's Beige Book (report on the economy)
Thursday;
8:30 am weekly jobless claims (+3K to 385K; con't claims 3.70 mil frm 3.723 mil)
Mar producer price index (+1.0%, ex food and energy +0.2%)
1:00 pm $13B 30 yr bond auction
Friday;
8:30 am Mar consumer price index (+0.5%; ex food and energy +0.2%)
Apr NY Empire State manufacturing index (15.0 frm 17.5 in Mar)
9:15 am Mar industrial production (+0.6% frm unch in Feb)
Mar capacity utilization (77.4% frm 77.0% in Feb)
9:55 am U. of Michigan mid-month consumer sentiment index (66.0 frm 67.5)
Technically the bond and mortgage markets are a little oversold on a near term measurement, a little improvement is likely but the trend won't change---its negative. The 10 yr managed a successful test of longer term support at 3.60% on Friday and fell back to close at 3.58%. We suggest using any improvements to lock loans about to close. The best we can forecast is the 10 may fall back to 3.50% at best. Treasury auctions should keep rates from declining much in the early part of the week.
Saturday, April 9, 2011
Friday, April 8, 2011
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