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.
Thursday, July 07, 2011
Two early employment reports this morning; at 8:15 ADP non-farm private jobs were expected at +65K to +90K, as reported jobs increased by 157K. The reaction sent interest rates up and prices lower in treasuries and mortgages. At 8:30 weekly jobless claims were expected down 8K, as reported down 14K to 418K; last week's claims were revised slightly higher to 432K frm 428K. Continuing claims fell to 3.68 mil frm last week's revised 3.725 mil; the 4 wk average 424.75K. Weekly claims have held above the 400K level now for 13 consecutive weeks.
The ADP report, much higher than was expected, initially sent the 10 yr note rate up to 3.16% from 3.11% yesterday and mortgage prices dropped 11/32 (.34 bp). Cooler heads prevailed however, within 30 minutes while still weaker the 10 yr bounced back some and mortgage prices at 8:45 off 6/32 (.18 bp). The increase in ADP set up a stronger open in the stock market, at 9:00 the DJIA was trading +60 points.
As widely expected the ECB did increase its base rate by 0.25%, the increase didn't have much of an impact on Europe's markets however.
Nothing left on the schedule today, the rest of the day will be positioning moves for tomorrow's more important BLS June employment report. There is little reason to expect any improvement in the bond and mortgage markets through the rest of the day given the ADP jobs report this morning and tomorrow's "official" June employment data. The estimates prior to the ADP report were for non-farm private jobs to have increased 125K with unemployment at 9.1% unchanged from May. After ADP analysts and traders now looking for a stronger jobs increase. ADP estimates in the past have deviated substantially at times from the BLS data so markets are left as always, holding collective breaths and will resist any improvement in the rate markets today.
The DJIA opened +69 at 9:30, the 10 yr note -12/32 to 3.15% +4 bp and mortgage prices -7/32 (.22 bp).
The debt ceiling debates between the Democrats and the Administration and Republicans appears to be making progress. There will be no debt defaults or any government shutdown. In these times neither party can afford to fumble the ball now. Unlikely a complete agreement will be reached for another couple of weeks but in the end it will get done. Neither side will be pleased and the debate will continue on how to cut spending, increase taxes and restructure social security and Medicare. Unlikely there will anything definitive until after 2012 elections as our politicians are more about being re-elected than facing serious issues.
Technically the bond and mortgage markets are bearish now, the only hope for a significant rebound in the near term is a weaker than expected employment report tomorrow. While we are not constructive on the short term outlook for interest rates, we don't believe rates will explode much higher. The 10 yr note is likely to move to 3.25% up 10 more basis points in rate and mortgages up an additional amount.
Thursday, July 7, 2011
Wednesday, July 6, 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.
Wednesday, July 06, 2011
Treasuries and mortgages rallied yesterday after the panic moves last week that shot the 10 yr note up 37 basis points and mortgage rates up 26 basis points. The rally in stocks last week and the jump in interest rates came with both markets very over-extended and triggered by better economic reads on two manufacturing indexes (Chicago and ISM), the momentary debt crisis in Greece averted, the surprisingly weak demand for Treasury's $99B of auctions and the end of QE 2. Yesterday and so far this morning markets are better but the outlook remains questionable that interest rates will decline to the lows seen three weeks ago.
This morning the bond and mortgage markets continued to gain; at 9:00 the 10 yr note traded +9/32 at 3.09% and mortgage prices +5/32 (.15 bp). The US stock market following the declines in Europe in pre-market trading. Equity markets being hit some on China increasing rates again, the third tome this year to head off inflation that has increased; the rate up 25 basis points to 6.5%. Tomorrow the ECB will likely increase its base lending rate. Rates increasing globally except here in the US. In Europe Portugal, Ireland, Italy and Spain interest rates increasing after Moody's rated Portugal's debt to junk status. Europe's banks and those countries facing continued debt fears that won't likely be solved for a long time, possibly years. The ECB, IMF and the EU trying to hold it all together but fighting a huge headwind.
At 9:30 the DJIA opened slightly lower, down 10; the 10 yr note +5/32 3.10% -2 bp and mortgages at 9:30 +3/32 (.09 bp) frm yesterday's close.
Early this morning the weekly MBA mortgage applications report. Mortgage applications decreased 5.2% from one week earlier. The Refinance Index decreased 9.2% from the previous week. The Refinance Index has decreased for 3 consecutive weeks, reaching its lowest level since May 6, 2011. The seasonally adjusted Purchase Index increased 4.8% from one week earlier. The unadjusted Purchase Index was 11.7% higher than the same week one year ago. The four week moving average for the Market Index is down 0.5%. The four week moving average is up 0.8% for the seasonally adjusted Purchase Index, while this average is down 1.1% for the Refinance Index. The refinance share of mortgage activity decreased to 66.4% of total applications from 69.5% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.1% from 5.8%of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.69% from 4.46%, with points decreasing to 0.90 from 1.19 (including the origination fee) for 80% loans. This is the highest 30-year rate recorded in the survey since the middle of May 2011. The average contract interest rate for 15-year fixed-rate mortgages increased to 3.79% from 3.64%, with points decreasing to 0.88 from 1.11 (including the origination fee) for 80% loans. This is the highest 15-year rate recorded in the survey since the beginning of May 2011.
A few minutes ago at 10:00 the June ISM services sector index, expected at 54, was 53.3 frm 54.6; new orders component 53.6 frm 56.8, prices 60.9 frm 69.6 and employment 54.1 frm 54.0. A little weaker but not much, close to 50 level which is pivotal; under 50 is contraction, over is expansion. There was not much initial reaction to the report.
Markets still focused more on employment due out Friday and tomorrow the ADP non-farm private jobs estimate (+60K) and Friday's BLS estimate +80K on non-farm payrolls and +110K non-farm private jobs increase. The estimates are not strong, employment still soft, could get a bullish surprise when the BLS reports on Friday morning.
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.
Wednesday, July 06, 2011
Treasuries and mortgages rallied yesterday after the panic moves last week that shot the 10 yr note up 37 basis points and mortgage rates up 26 basis points. The rally in stocks last week and the jump in interest rates came with both markets very over-extended and triggered by better economic reads on two manufacturing indexes (Chicago and ISM), the momentary debt crisis in Greece averted, the surprisingly weak demand for Treasury's $99B of auctions and the end of QE 2. Yesterday and so far this morning markets are better but the outlook remains questionable that interest rates will decline to the lows seen three weeks ago.
This morning the bond and mortgage markets continued to gain; at 9:00 the 10 yr note traded +9/32 at 3.09% and mortgage prices +5/32 (.15 bp). The US stock market following the declines in Europe in pre-market trading. Equity markets being hit some on China increasing rates again, the third tome this year to head off inflation that has increased; the rate up 25 basis points to 6.5%. Tomorrow the ECB will likely increase its base lending rate. Rates increasing globally except here in the US. In Europe Portugal, Ireland, Italy and Spain interest rates increasing after Moody's rated Portugal's debt to junk status. Europe's banks and those countries facing continued debt fears that won't likely be solved for a long time, possibly years. The ECB, IMF and the EU trying to hold it all together but fighting a huge headwind.
At 9:30 the DJIA opened slightly lower, down 10; the 10 yr note +5/32 3.10% -2 bp and mortgages at 9:30 +3/32 (.09 bp) frm yesterday's close.
Early this morning the weekly MBA mortgage applications report. Mortgage applications decreased 5.2% from one week earlier. The Refinance Index decreased 9.2% from the previous week. The Refinance Index has decreased for 3 consecutive weeks, reaching its lowest level since May 6, 2011. The seasonally adjusted Purchase Index increased 4.8% from one week earlier. The unadjusted Purchase Index was 11.7% higher than the same week one year ago. The four week moving average for the Market Index is down 0.5%. The four week moving average is up 0.8% for the seasonally adjusted Purchase Index, while this average is down 1.1% for the Refinance Index. The refinance share of mortgage activity decreased to 66.4% of total applications from 69.5% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.1% from 5.8%of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.69% from 4.46%, with points decreasing to 0.90 from 1.19 (including the origination fee) for 80% loans. This is the highest 30-year rate recorded in the survey since the middle of May 2011. The average contract interest rate for 15-year fixed-rate mortgages increased to 3.79% from 3.64%, with points decreasing to 0.88 from 1.11 (including the origination fee) for 80% loans. This is the highest 15-year rate recorded in the survey since the beginning of May 2011.
A few minutes ago at 10:00 the June ISM services sector index, expected at 54, was 53.3 frm 54.6; new orders component 53.6 frm 56.8, prices 60.9 frm 69.6 and employment 54.1 frm 54.0. A little weaker but not much, close to 50 level which is pivotal; under 50 is contraction, over is expansion. There was not much initial reaction to the report.
Markets still focused more on employment due out Friday and tomorrow the ADP non-farm private jobs estimate (+60K) and Friday's BLS estimate +80K on non-farm payrolls and +110K non-farm private jobs increase. The estimates are not strong, employment still soft, could get a bullish surprise when the BLS reports on Friday morning.
Tuesday, July 5, 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.
Tuesday, July 05, 2011
A nice start today with treasuries and mortgages doing much better after the huge increase in interest rates last week. The 10 yr note rate jumped 37 basis points and mortgage rates up 25 percent last week. Looking for some retracement after the beatdown last week, and volatility this week will be very high. This is employment week and the expectations are not that great so if we were to see any less than thought reads on jobs some rte improvement is likely. Last week it was the stock market making big moves higher in the indexes, the best week for stocks in 2 yrs; the DJIA up 648, NASDAQ +208 and S&P +71. Like the bond market it too was likely a little ahead of itself.
This morning in early activity (9:00 am) the 10 yr note +10/32 at 3.15% -5 bp and mortgage prices +11/32 (.34 bp); the DJIA +7 but the S&P -2.
Although the potential for a bounce in the bond and mortgage markets is likely, the trend and technicals have changed to bearish or at best sitting here for awhile. That said, as noted its employment week. The early forecasts for Thursday's ADP non-farm private job growth an anemic +60K, the forecast for the BLS non-farm private job growth on Friday, also a weak +110K. These are not numbers that show much improvement. Expect estimates to change a little as the week progresses.
In Europe Thursday it is expected the ECB will increase its base rate once again. European services and manufacturing growth were revised lower, with a composite index falling to 53.3, from an earlier reading of 53.6, London-based Markit Economics said today. Spanish and Italian bonds fell, increasing the additional yield investors demand to hold the securities instead of German bunds, on concern Greece’s debt crisis may continue to harm its euro-area peers. Portuguese 10-year bonds also sank as the Financial Times reported commitments from banks to reinvest funds from maturing securities into new Greek debt may fall short of policy makers’ target. Europe's debt problems are not over, even Greece is still subject to defaulting eventually as some continue to expect it will.
Crude oil higher this morning after two days of declines; crude is well trapped between $97.00 and $92.00 a barrel.
At 9:30 the DJIA opened -14, S&P -2; 10 yr note +11/32 at 3.14% -6 bp and mortgage prices +12/32 (.37 bp).
The only data today; at 10:00 May factory orders were up 0.8% against estimates of +1.0%; April orders were revised to -0.9% frm -1.2%. May durable goods orders revised to +2.1% frm +1.9%-----no initial reaction to the data.
This Week's Economic Calendar:
Today;
10:00 am May Factory Orders as reported +0.8%
Wednesday;
7:00 am Weekly MBA mortgage apps (N/A)
10:00 am June ISM services sector index (54.0 frm 54.6)
Thursday;
8:15 am ADP non-farm private jobs (+60K)
8:30 am weekly jobless claims (-3K to 425K; con't claims 3,70 mil frm 3.702 mil)
Friday;
8:30 am BLS employment report (NFP jobs +80K, non-farm private jobs +110K; unemployment rate 9.1% unch)
10:00 am May wholesale inventories (+1.0%)
3:00 pm May consumer credit (+$3.5B, Apr +$6.5B)
Last week's strong stock market rally, the momentary deal worked out to keep Greece afloat, the end of QE 2 and the previous week's very poor demand for $99B of Treasury offerings combined to break the bond and mortgage markets. This week's employment data that will set the next move for the bond market. The US economy is feeble giving many the idea that US interest rates will move back below 3.00% after the spike last week; we do not subscribe to that view however. Although the economy isn't likely to grow quickly and inflation is not a problem, the recent auctions suggest risk levels for US debt will increase a little, keeping interest rates a little higher than 3.00% for the benchmark 10 yr note---driver for 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, July 05, 2011
A nice start today with treasuries and mortgages doing much better after the huge increase in interest rates last week. The 10 yr note rate jumped 37 basis points and mortgage rates up 25 percent last week. Looking for some retracement after the beatdown last week, and volatility this week will be very high. This is employment week and the expectations are not that great so if we were to see any less than thought reads on jobs some rte improvement is likely. Last week it was the stock market making big moves higher in the indexes, the best week for stocks in 2 yrs; the DJIA up 648, NASDAQ +208 and S&P +71. Like the bond market it too was likely a little ahead of itself.
This morning in early activity (9:00 am) the 10 yr note +10/32 at 3.15% -5 bp and mortgage prices +11/32 (.34 bp); the DJIA +7 but the S&P -2.
Although the potential for a bounce in the bond and mortgage markets is likely, the trend and technicals have changed to bearish or at best sitting here for awhile. That said, as noted its employment week. The early forecasts for Thursday's ADP non-farm private job growth an anemic +60K, the forecast for the BLS non-farm private job growth on Friday, also a weak +110K. These are not numbers that show much improvement. Expect estimates to change a little as the week progresses.
In Europe Thursday it is expected the ECB will increase its base rate once again. European services and manufacturing growth were revised lower, with a composite index falling to 53.3, from an earlier reading of 53.6, London-based Markit Economics said today. Spanish and Italian bonds fell, increasing the additional yield investors demand to hold the securities instead of German bunds, on concern Greece’s debt crisis may continue to harm its euro-area peers. Portuguese 10-year bonds also sank as the Financial Times reported commitments from banks to reinvest funds from maturing securities into new Greek debt may fall short of policy makers’ target. Europe's debt problems are not over, even Greece is still subject to defaulting eventually as some continue to expect it will.
Crude oil higher this morning after two days of declines; crude is well trapped between $97.00 and $92.00 a barrel.
At 9:30 the DJIA opened -14, S&P -2; 10 yr note +11/32 at 3.14% -6 bp and mortgage prices +12/32 (.37 bp).
The only data today; at 10:00 May factory orders were up 0.8% against estimates of +1.0%; April orders were revised to -0.9% frm -1.2%. May durable goods orders revised to +2.1% frm +1.9%-----no initial reaction to the data.
This Week's Economic Calendar:
Today;
10:00 am May Factory Orders as reported +0.8%
Wednesday;
7:00 am Weekly MBA mortgage apps (N/A)
10:00 am June ISM services sector index (54.0 frm 54.6)
Thursday;
8:15 am ADP non-farm private jobs (+60K)
8:30 am weekly jobless claims (-3K to 425K; con't claims 3,70 mil frm 3.702 mil)
Friday;
8:30 am BLS employment report (NFP jobs +80K, non-farm private jobs +110K; unemployment rate 9.1% unch)
10:00 am May wholesale inventories (+1.0%)
3:00 pm May consumer credit (+$3.5B, Apr +$6.5B)
Last week's strong stock market rally, the momentary deal worked out to keep Greece afloat, the end of QE 2 and the previous week's very poor demand for $99B of Treasury offerings combined to break the bond and mortgage markets. This week's employment data that will set the next move for the bond market. The US economy is feeble giving many the idea that US interest rates will move back below 3.00% after the spike last week; we do not subscribe to that view however. Although the economy isn't likely to grow quickly and inflation is not a problem, the recent auctions suggest risk levels for US debt will increase a little, keeping interest rates a little higher than 3.00% for the benchmark 10 yr note---driver for mortgage rates.
Friday, July 1, 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.
Friday, July 01, 2011
The bond and mortgage markets opened a little better this morning ahead of key data points at 10:00 when the June ISM manufacturing report is released and the U. of Michigan consumer sentiment index is revealed. Stock indexes in early trading about unchanged. Manufacturing growth is slowing from China to Europe; China’s factory index fell to the lowest level since February 2009, while in the 17-nation euro area, a gauge slipped to an 18-month low. German manufacturing expanded at the weakest pace in 17 months, while Italy, Ireland, Spain and Greece contracted. In the U.K. and India, output growth also slowed.
ECB President Jean-Claude Trichet reiterated yesterday that policy makers are ready to raise the benchmark interest rate further from 1.25 percent to fight inflation threats even as governments struggle to contain Greece’s debt crisis. They will hold their next monetary policy meeting on July 7 in Frankfurt.
Crude oil and gold trading lower this morning; crude early was down $1.20, gold at 9:30 off $15.00.
At 9:30 the DJIA opened flat, the 10 yr note +3/32 and mortgage prices +3/32 (.09 bp) frm yesterday's close.
At 9:55 the U. of Michigan consumer sentiment index expected unchanged at 71.8 frm two weeks ago; hit at 71.5, down from 79.6 at the end of May. Current conditions 82.0 frm 79.6, expectations 64.8 frm 66.8 two weeks ago and the 12 month outlook 74.0 frm 78.0. No reaction to the data with the ISM hitting 5 minutes later at 10:00.
At 10:00 the June ISM manufacturing index, expected at 52.0 frm 53.5 in May, increased to 55.3. New orders increased to 51.6 frm 51.0, employment at 59.9 frm 58.2 and prices pd at 68.0 frm 76.5. Like yesterday's Chicago regional report, better than expected and sent stock indexes higher and the bond and mortgage markets lower in prices, higher in yields prior to the release.
May construction spending expected unchanged was down 0.6%.
As noted in the past two days, expect increased market volatility in equities, bonds, energy and precious metals in the next week or two. The rapid increase in interest rates since Tuesday appears to have caught investors off guard, markets will take some time to assess the potential impact on economies, inflation and the potential implications of an interest rate increase in Europe next week. The data this morning is adding to the swift turn in outlooks for the economy; after a series of very weak data points on May data now the data suggests the economy is showing slight signs of improvement. The stock market jumped higher on the 10:00 data, the 10 yr note yield hit 3.20% +4 bp on the initial reaction to the ISM report.
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.
Friday, July 01, 2011
The bond and mortgage markets opened a little better this morning ahead of key data points at 10:00 when the June ISM manufacturing report is released and the U. of Michigan consumer sentiment index is revealed. Stock indexes in early trading about unchanged. Manufacturing growth is slowing from China to Europe; China’s factory index fell to the lowest level since February 2009, while in the 17-nation euro area, a gauge slipped to an 18-month low. German manufacturing expanded at the weakest pace in 17 months, while Italy, Ireland, Spain and Greece contracted. In the U.K. and India, output growth also slowed.
ECB President Jean-Claude Trichet reiterated yesterday that policy makers are ready to raise the benchmark interest rate further from 1.25 percent to fight inflation threats even as governments struggle to contain Greece’s debt crisis. They will hold their next monetary policy meeting on July 7 in Frankfurt.
Crude oil and gold trading lower this morning; crude early was down $1.20, gold at 9:30 off $15.00.
At 9:30 the DJIA opened flat, the 10 yr note +3/32 and mortgage prices +3/32 (.09 bp) frm yesterday's close.
At 9:55 the U. of Michigan consumer sentiment index expected unchanged at 71.8 frm two weeks ago; hit at 71.5, down from 79.6 at the end of May. Current conditions 82.0 frm 79.6, expectations 64.8 frm 66.8 two weeks ago and the 12 month outlook 74.0 frm 78.0. No reaction to the data with the ISM hitting 5 minutes later at 10:00.
At 10:00 the June ISM manufacturing index, expected at 52.0 frm 53.5 in May, increased to 55.3. New orders increased to 51.6 frm 51.0, employment at 59.9 frm 58.2 and prices pd at 68.0 frm 76.5. Like yesterday's Chicago regional report, better than expected and sent stock indexes higher and the bond and mortgage markets lower in prices, higher in yields prior to the release.
May construction spending expected unchanged was down 0.6%.
As noted in the past two days, expect increased market volatility in equities, bonds, energy and precious metals in the next week or two. The rapid increase in interest rates since Tuesday appears to have caught investors off guard, markets will take some time to assess the potential impact on economies, inflation and the potential implications of an interest rate increase in Europe next week. The data this morning is adding to the swift turn in outlooks for the economy; after a series of very weak data points on May data now the data suggests the economy is showing slight signs of improvement. The stock market jumped higher on the 10:00 data, the 10 yr note yield hit 3.20% +4 bp on the initial reaction to the ISM report.
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