Mortgage Rate Update
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Tuesday, October 4, 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, October 04, 2011
Treasuries rallied big yesterday on news out of Europe that Greece failed the austerity tests that the EU and IMF had set out in order to get another dose of financial support to avoid default. European finance chiefs meeting yesterday considered “technical revisions” for a second Greek bailout. Europe’s financial leaders are fighting on multiple fronts, trying to extinguish the Greek crisis while insulating Italy and Spain and coming up with a formula for banks that the International Monetary Fund says face as much as 300 billion euros in credit risk.
The rally yesterday was huge and the mortgage markets went along but not nearly as strong as treasuries; the 10 yr yield dropped 14 basis points, its price up 49/32 while mortgage prices increased 11/32 (.34 bp). The stock market fell 258 on the DJIA.
This morning in early trading in stock indexes had the DJIA, NASDAQ and S&P all lower at 8:30 implying a weak opening at 9:30. Treasuries essentially unchanged from yesterday with mortgage prices down .06 bp at 8:30. At 9:30 the DJIA opened -100, the 10 yr note unchanged and mortgage prices -4/32 (.12 bp) frm yesterday's close.
At 10:00 Bernanke will begin testimony to the Joint Economic Committee on the US economy. Likely he will be questioned about Operation Twist and its impact on the economy and what the Fed has described as a significant risk of further decline. As is always the case when the head of the Fed testifies markets will listen closely. We would like the committee to ask Bernanke detailed questions about the European debt crisis and the impact it has had, and will have on the US economy and US banks. US bank stocks are being hammered recently, partly over Europe's banks fall even though there is no evidence US banks are involved directly. The fear is that if big banks in Europe and US banks have inter-related swaps and other relationships our banks will suffer if Europe doesn't fix the mess quickly. At times it appears Europe's leaders don't realize the negative global impact it is causing by its inability to solve the mess; 17 counties tied together by a common currency sounded great in 1999, now maybe not so good.
Goldman-Sachs out predicting Germany and France will fall back into recession.
At 10:00 August factory orders, the only data today, expected -0.2% was -0.2%, July revised to +2.1% frm +2.4% originally reported. No reaction.
Crude for November delivery declined as much as $2.16 to $75.45 a barrel in early electronic trading this morning, the lowest since Sept. 24, 2010. Supplies of crude are increasing with Libya back on line with more output than what had been expected, and weakening demand as the economic outlook is worsening.
The stock market in early activity is being hit hard so this morning, however there is not much improvement in the bond and mortgage markets after yesterday's huge rally. MBSs are lagging treasuries as the move to lower rates is safety buys as Greece teeters on default while European officials and the IMF cannot work out a deal acceptable to banks or the 17 countries. Traders waiting to hear from Bernanke as he begins testimony now (10:00 am). We have noted many times that when the 10 yr is trading below 2.00% as it is now, volatility will remain high; at 1.72% to move lower equities have to fall and Europe has to falter in efforts to avoid Greek default. The MBS market will follow treasuries but at this moment in time its all about safety, leaving the MBS markets behind somewhat.
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, October 04, 2011
Treasuries rallied big yesterday on news out of Europe that Greece failed the austerity tests that the EU and IMF had set out in order to get another dose of financial support to avoid default. European finance chiefs meeting yesterday considered “technical revisions” for a second Greek bailout. Europe’s financial leaders are fighting on multiple fronts, trying to extinguish the Greek crisis while insulating Italy and Spain and coming up with a formula for banks that the International Monetary Fund says face as much as 300 billion euros in credit risk.
The rally yesterday was huge and the mortgage markets went along but not nearly as strong as treasuries; the 10 yr yield dropped 14 basis points, its price up 49/32 while mortgage prices increased 11/32 (.34 bp). The stock market fell 258 on the DJIA.
This morning in early trading in stock indexes had the DJIA, NASDAQ and S&P all lower at 8:30 implying a weak opening at 9:30. Treasuries essentially unchanged from yesterday with mortgage prices down .06 bp at 8:30. At 9:30 the DJIA opened -100, the 10 yr note unchanged and mortgage prices -4/32 (.12 bp) frm yesterday's close.
At 10:00 Bernanke will begin testimony to the Joint Economic Committee on the US economy. Likely he will be questioned about Operation Twist and its impact on the economy and what the Fed has described as a significant risk of further decline. As is always the case when the head of the Fed testifies markets will listen closely. We would like the committee to ask Bernanke detailed questions about the European debt crisis and the impact it has had, and will have on the US economy and US banks. US bank stocks are being hammered recently, partly over Europe's banks fall even though there is no evidence US banks are involved directly. The fear is that if big banks in Europe and US banks have inter-related swaps and other relationships our banks will suffer if Europe doesn't fix the mess quickly. At times it appears Europe's leaders don't realize the negative global impact it is causing by its inability to solve the mess; 17 counties tied together by a common currency sounded great in 1999, now maybe not so good.
Goldman-Sachs out predicting Germany and France will fall back into recession.
At 10:00 August factory orders, the only data today, expected -0.2% was -0.2%, July revised to +2.1% frm +2.4% originally reported. No reaction.
Crude for November delivery declined as much as $2.16 to $75.45 a barrel in early electronic trading this morning, the lowest since Sept. 24, 2010. Supplies of crude are increasing with Libya back on line with more output than what had been expected, and weakening demand as the economic outlook is worsening.
The stock market in early activity is being hit hard so this morning, however there is not much improvement in the bond and mortgage markets after yesterday's huge rally. MBSs are lagging treasuries as the move to lower rates is safety buys as Greece teeters on default while European officials and the IMF cannot work out a deal acceptable to banks or the 17 countries. Traders waiting to hear from Bernanke as he begins testimony now (10:00 am). We have noted many times that when the 10 yr is trading below 2.00% as it is now, volatility will remain high; at 1.72% to move lower equities have to fall and Europe has to falter in efforts to avoid Greek default. The MBS market will follow treasuries but at this moment in time its all about safety, leaving the MBS markets behind somewhat.
Monday, October 3, 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, October 03, 2011
The bond and mortgage markets started nicely this morning with early trading in stock index futures were pointing to a weaker open at 9:30. Friday the bond market held its key supports then rallied as the stock market basis the DJIA dropped 240 points. Stock indexes still quite volatile and likely will remain that way for a long time as investors and traders try to make a buck with high frequency trading.
The economy is declining yet there are those that believe these are buying opportunities for that "in the long run" investments----most that espouse that view are Wall Street firms that make money on investor buying. Greece failed its austerity tests the the EU, IMF and the ECB demanded but the EU isn't ready to let Greece fail yet, only a matter of time though it will. Its time to cut the country loose and let it fail. For months global markets and economies have been focusing on Greece and what European leaders will do. Europe's banks don't want to take loses, unfortunately for them there isn't any choice in the end.
This week has a lot of economic releases but the key is Friday's employment report. Euro-area finance chiefs will meet today in Luxembourg to weigh the threat of a Greek default, grapple with how to shield banks from the fallout and consider a further boost to the rescue fund. A much-needed “liquidity backstop” for the region must come from governments because the European Central Bank’s mandate requires it to keep purchases of sovereign debt extremely limited.
At 9:30 the DJIA opened -30, NASDAQ -12, S&P -4; the 10 yr note +15/32 to 1.87% -5 bp, mortgage prices on 30s +13/32 (.41 bp).
At 10:00 this morning Sept ISM manufacturing index expected at 50.5 frm 50.6, increased to 51.6; new orders component unchanged at 49.6, prices pd at 56.0 frm 55.5 and employment at 53.8 frm 51.8. The initial reaction to the better data turned stock indexes from -89 on the DJIA to -25, the 10 yr note traded +198/32 prior to 10:00 but generally held as safety trades being put back on with Greece unable to meet the goals for more funds.
Also at 10:00 August construction spending expected own -0.5%, as reported spending increased 1.4%.
This Week's Economic Calendar:
Monday;
10:00 am Sept ISM manufacturing index (as reported 51.6)
August construction spending (as reported +1.4%)
3:00 pm Sept auto and truck sales (autos 4.1 mil, trucks +5.5 mil)
Tuesday;
10:00 am August factory orders (-0.1%)
Wednesday;
7:00 am MBA weekly mortgage applications
8:15 am ADP private jobs for Sept (+45K)
10:00 am ISM Sept services sector index (52.8 frm 53.3)
Thursday;
8:30 weekly jobless claims (+11K to 402K)
Friday;
8:30 Sept employment data (non-farm jobs +60K, non-farm private jobs +83K, unemployment rate unch at 9.1%)
10:00 am August wholesale inventories +0.5%)
3:00 pm August consumer credit (+$7.0B)
10:00 ISM took some of the bullishness away from early activity in the bond market and stopped selling in equity markets. Still not much investing in equities, just traders moving the indexes in huge wide ranges. Technically the 10 yr and mortgages held key technical bullish levels last week. The rest of the day will be, as usual these days, will be watching stock indexes and any news out of Europe.
At 10:15 the bond and mortgage markets were -6/32 (.18 bp) frm 9:30.
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, October 03, 2011
The bond and mortgage markets started nicely this morning with early trading in stock index futures were pointing to a weaker open at 9:30. Friday the bond market held its key supports then rallied as the stock market basis the DJIA dropped 240 points. Stock indexes still quite volatile and likely will remain that way for a long time as investors and traders try to make a buck with high frequency trading.
The economy is declining yet there are those that believe these are buying opportunities for that "in the long run" investments----most that espouse that view are Wall Street firms that make money on investor buying. Greece failed its austerity tests the the EU, IMF and the ECB demanded but the EU isn't ready to let Greece fail yet, only a matter of time though it will. Its time to cut the country loose and let it fail. For months global markets and economies have been focusing on Greece and what European leaders will do. Europe's banks don't want to take loses, unfortunately for them there isn't any choice in the end.
This week has a lot of economic releases but the key is Friday's employment report. Euro-area finance chiefs will meet today in Luxembourg to weigh the threat of a Greek default, grapple with how to shield banks from the fallout and consider a further boost to the rescue fund. A much-needed “liquidity backstop” for the region must come from governments because the European Central Bank’s mandate requires it to keep purchases of sovereign debt extremely limited.
At 9:30 the DJIA opened -30, NASDAQ -12, S&P -4; the 10 yr note +15/32 to 1.87% -5 bp, mortgage prices on 30s +13/32 (.41 bp).
At 10:00 this morning Sept ISM manufacturing index expected at 50.5 frm 50.6, increased to 51.6; new orders component unchanged at 49.6, prices pd at 56.0 frm 55.5 and employment at 53.8 frm 51.8. The initial reaction to the better data turned stock indexes from -89 on the DJIA to -25, the 10 yr note traded +198/32 prior to 10:00 but generally held as safety trades being put back on with Greece unable to meet the goals for more funds.
Also at 10:00 August construction spending expected own -0.5%, as reported spending increased 1.4%.
This Week's Economic Calendar:
Monday;
10:00 am Sept ISM manufacturing index (as reported 51.6)
August construction spending (as reported +1.4%)
3:00 pm Sept auto and truck sales (autos 4.1 mil, trucks +5.5 mil)
Tuesday;
10:00 am August factory orders (-0.1%)
Wednesday;
7:00 am MBA weekly mortgage applications
8:15 am ADP private jobs for Sept (+45K)
10:00 am ISM Sept services sector index (52.8 frm 53.3)
Thursday;
8:30 weekly jobless claims (+11K to 402K)
Friday;
8:30 Sept employment data (non-farm jobs +60K, non-farm private jobs +83K, unemployment rate unch at 9.1%)
10:00 am August wholesale inventories +0.5%)
3:00 pm August consumer credit (+$7.0B)
10:00 ISM took some of the bullishness away from early activity in the bond market and stopped selling in equity markets. Still not much investing in equities, just traders moving the indexes in huge wide ranges. Technically the 10 yr and mortgages held key technical bullish levels last week. The rest of the day will be, as usual these days, will be watching stock indexes and any news out of Europe.
At 10:15 the bond and mortgage markets were -6/32 (.18 bp) frm 9:30.
Sunday, October 2, 2011
Saturday, October 1, 2011
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