Mortgage Rate Update
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Tuesday, May 31, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Tuesday, May 31, 2011
Not a good start this morning in the bond and mortgage markets. This is employment week when most attention is directed to working the estimates all week; current thoughts are for jobs to increase 185K with non-farm private jobs +220K and unemployment unchanged at 9.0%. The forecasts likely to be moving all week; on tomorrow we get a look at what ADP estimates, presently it is expected to show an increase of 170K private jobs.
The 10 yr note yield is finding momentary resistance at its 200 day moving average. Over the weekend news from Europe that a deal may be in the offing to help Greece avoid defaults has also pressured the bond and mortgage markets as the dollar is declining against the euro, that in turn is putting a bid in US equities. Some of the safety buying from potential debt problems in Europe are being lifted adding additional pressure in the US rate markets. At 9:30 the DJIA opened +106, the 10- yr -6/32 at 3.10% and mortgage prices -7/32 (.22 bp).
German retail sales rose in April as unemployment fell below 3 million for the first time in almost 19 years, fueling bets that the European Central Bank will signal next week that it may raise interest rates for a second time this year. A separate European Union report showed euro-region inflation slowed in May to 2.7% from April’s 2.8%, the fastest pace since October 2008. Better economic reads from Germany and lower inflation added to what is expected on the US jobs report on Friday are a drag on US rate markets.
The Case/Shiller home prices fell 4.2% yr/yr; in April prices fell 0.6% in the 10 city and -0.8% in the 20 city data. Prices continue to fall and the outlook doesn't look any better; housing according to Shiller are now in a confirmed double dip with prices expected to continue to fall particularly in the areas hardest hit; Phoenix, Florida, Nevada and California. Until the inventory is stabilized (banks continuing to unload foreclosures into markets) the deli one in prices is expected to continue.
At 9:45 the May Chicago purchasing mgrs data was weaker than expected and follows the various Fed regional reports over the past couple of weeks. The overall index was expected at 62.5 frm 67.6, as reported it fell to 56.6; new orders index 53.5 frm 66.3, prices pd at 78.6 frm 81.8 and employment fell to 60.8 frm 63.7. Any index over 50 is considered expansion, under 50 contraction. Only a slight reaction to the data improving rate prices by 3/32 frm their low.
At 10:00 My consumer confidence from the Conference Board was expected at 66.3 frm 66.0 in April; as reported it fell to 60.8 the lowest level since last November. Present conditions 39.3 frm 40.2, expectations at 75.2 frm 83.2 and inflation expectations at 6.6 frm 6.3. Another weak report.
This Week's Economic Calendar:
Wednesday;
7:00 am MBA mortgage apps
8:15 am ADP jobs estimate for May (+170K non-farm private jobs)
10:00 am ISM May manufacturing index (57.6 frm 60.4)
Apr construction spending (-0.5%)
3:00 pm May auto and truck sales (N/A)
Thursday;
8:30 am weekly jobless claims (-11K to 413K; con't claims 3.688 mil frm 3.690 mil)
Q1 productivity revision (+1.6% unch frm previous release)
Q1 unit labor costs (+0.9%)
10:00 am Apr factory orders (-1.0%)
Friday;
8:30 am May employment data (non-farm jobs +185K, non-farm private jobs +220K, unemployment +9.0%)
10:00 am May ISM services sector index (53.3 frm 52.8)
The data this morning was all weaker than expected; the rate markets have improved by 10:10 from levels where prices were set this morning.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Tuesday, May 31, 2011
Not a good start this morning in the bond and mortgage markets. This is employment week when most attention is directed to working the estimates all week; current thoughts are for jobs to increase 185K with non-farm private jobs +220K and unemployment unchanged at 9.0%. The forecasts likely to be moving all week; on tomorrow we get a look at what ADP estimates, presently it is expected to show an increase of 170K private jobs.
The 10 yr note yield is finding momentary resistance at its 200 day moving average. Over the weekend news from Europe that a deal may be in the offing to help Greece avoid defaults has also pressured the bond and mortgage markets as the dollar is declining against the euro, that in turn is putting a bid in US equities. Some of the safety buying from potential debt problems in Europe are being lifted adding additional pressure in the US rate markets. At 9:30 the DJIA opened +106, the 10- yr -6/32 at 3.10% and mortgage prices -7/32 (.22 bp).
German retail sales rose in April as unemployment fell below 3 million for the first time in almost 19 years, fueling bets that the European Central Bank will signal next week that it may raise interest rates for a second time this year. A separate European Union report showed euro-region inflation slowed in May to 2.7% from April’s 2.8%, the fastest pace since October 2008. Better economic reads from Germany and lower inflation added to what is expected on the US jobs report on Friday are a drag on US rate markets.
The Case/Shiller home prices fell 4.2% yr/yr; in April prices fell 0.6% in the 10 city and -0.8% in the 20 city data. Prices continue to fall and the outlook doesn't look any better; housing according to Shiller are now in a confirmed double dip with prices expected to continue to fall particularly in the areas hardest hit; Phoenix, Florida, Nevada and California. Until the inventory is stabilized (banks continuing to unload foreclosures into markets) the deli one in prices is expected to continue.
At 9:45 the May Chicago purchasing mgrs data was weaker than expected and follows the various Fed regional reports over the past couple of weeks. The overall index was expected at 62.5 frm 67.6, as reported it fell to 56.6; new orders index 53.5 frm 66.3, prices pd at 78.6 frm 81.8 and employment fell to 60.8 frm 63.7. Any index over 50 is considered expansion, under 50 contraction. Only a slight reaction to the data improving rate prices by 3/32 frm their low.
At 10:00 My consumer confidence from the Conference Board was expected at 66.3 frm 66.0 in April; as reported it fell to 60.8 the lowest level since last November. Present conditions 39.3 frm 40.2, expectations at 75.2 frm 83.2 and inflation expectations at 6.6 frm 6.3. Another weak report.
This Week's Economic Calendar:
Wednesday;
7:00 am MBA mortgage apps
8:15 am ADP jobs estimate for May (+170K non-farm private jobs)
10:00 am ISM May manufacturing index (57.6 frm 60.4)
Apr construction spending (-0.5%)
3:00 pm May auto and truck sales (N/A)
Thursday;
8:30 am weekly jobless claims (-11K to 413K; con't claims 3.688 mil frm 3.690 mil)
Q1 productivity revision (+1.6% unch frm previous release)
Q1 unit labor costs (+0.9%)
10:00 am Apr factory orders (-1.0%)
Friday;
8:30 am May employment data (non-farm jobs +185K, non-farm private jobs +220K, unemployment +9.0%)
10:00 am May ISM services sector index (53.3 frm 52.8)
The data this morning was all weaker than expected; the rate markets have improved by 10:10 from levels where prices were set this morning.
Monday, May 30, 2011
Friday, May 27, 2011
Thursday, May 26, 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.
Thursday, May 26, 2011
Prior to 8:30 this morning the bond and mortgage markets were slightly weaker; at 8:30 the bond market found some support when weekly jobless claims and Q1 GDP revision were released. Weekly jobless claims were expected to have declined 5K to 9K to 400K, claims increased 10K to 424K and last week's claims were revised slightly higher from 409K to 414K. Continuing claims however continued to decline, 3.69 mil frm 3.736 mil last week as more are losing their unemployment. Q1 GDP on the advance report last month was +1.8%, the preliminary report this morning was widely expected to be revised to +2.0% to +2.2%; as released GDP was unchanged at 1.8%. Consumer spending in Q1 was revised from +2.7% to +2.2%; we have repeatedly warned that consumers will not increase discretionary spending with home prices falling and unemployment high. The market reactions to the two data points turned treasury prices and mortgage prices higher. At 9:00 the 10 yr +5/32 at its critical 3.11% and mortgage prices +4/32 (.12 bp).
The two data points at 8:30 took a lot of steam out of trading in the stock index futures, although all key indexes remain better going into the 9:30 open. At 9:30 the DJIA opened -30, the 10 yr 3.11% +6/32, mortgage prices +3/32 (.09 bp).
At 1:00 this afternoon Treasury will complete this week's $99B borrowing with $29B of 7 yr notes, so far the 2 and the 5 went well, most expect the 7 yr auction will also see good bidding.
Europe's debt problems do not get any better, only worsening. This morning a former European Central Bank Chief Economist Omar Issing commented that Greece will probably not be able to meet its obligations. “I’m skeptical about Greece,” said Issing, who joined the ECB a year before the euro’s inception in 1999 and stayed there until 2006. “Greece is not just illiquid, it’s insolvent.” The region’s debt crisis, which has also forced Ireland and Portugal to seek bailouts, has left the euro in a “critical” condition. Europe's debt problems and the economic outlook in the US are key factors why US interest rates are this low. Safety moves away from equities at the moment and what is likely a default by Greece and possibly other EU countries is keeping investors in safe mode.
Here we are again; the 10 yr note at 3.11%, the 4.0 30 yr FNMA coupon not able to break above its 200 day average. Although this is only Thursday there is a long week-end ahead with US markets closed Monday and an early close in the bond market tomorrow, the bond market should hold well today and tomorrow. Traders won't have any motivation to be heavy sellers in the bond market as Europe continues to provide support with all its critical debt problems.
Crude oil and gold lower to start this morning; crude down $0.23 at 9:30, gold -$2.90 (see below for 10:00 prices).
The Q1 GDP report this morning confirms that the US economy is still struggling; most every economist had forecast GDP would come at 2.0% or higher on the revision this morning. GDP growth in Q1 at 1.8% is down from 3.1% growth in Q4 2010; Q2 is likely to be even weaker than Q1. The weakening economy will keep the Fed from any plans to increase the FF rate this year and increase the conversation of another easing after QE 2 ends at the end of June. Our economic outlook is a little more bearish than the so called consensus but we don't believe the Fed will embark on another massive easing move. The Fed's QE 2 did nothing to slow unemployment, did nothing to improve the economy and did nothing to help the housing sector----the main drag on the economy. What it did do was push investors into the equity markets, large investors that are now exiting and moving to safe havens. Historic low interest rates have had only a very minor benefit to housing, there is little reason to expect another easing move will change anything.
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, May 26, 2011
Prior to 8:30 this morning the bond and mortgage markets were slightly weaker; at 8:30 the bond market found some support when weekly jobless claims and Q1 GDP revision were released. Weekly jobless claims were expected to have declined 5K to 9K to 400K, claims increased 10K to 424K and last week's claims were revised slightly higher from 409K to 414K. Continuing claims however continued to decline, 3.69 mil frm 3.736 mil last week as more are losing their unemployment. Q1 GDP on the advance report last month was +1.8%, the preliminary report this morning was widely expected to be revised to +2.0% to +2.2%; as released GDP was unchanged at 1.8%. Consumer spending in Q1 was revised from +2.7% to +2.2%; we have repeatedly warned that consumers will not increase discretionary spending with home prices falling and unemployment high. The market reactions to the two data points turned treasury prices and mortgage prices higher. At 9:00 the 10 yr +5/32 at its critical 3.11% and mortgage prices +4/32 (.12 bp).
The two data points at 8:30 took a lot of steam out of trading in the stock index futures, although all key indexes remain better going into the 9:30 open. At 9:30 the DJIA opened -30, the 10 yr 3.11% +6/32, mortgage prices +3/32 (.09 bp).
At 1:00 this afternoon Treasury will complete this week's $99B borrowing with $29B of 7 yr notes, so far the 2 and the 5 went well, most expect the 7 yr auction will also see good bidding.
Europe's debt problems do not get any better, only worsening. This morning a former European Central Bank Chief Economist Omar Issing commented that Greece will probably not be able to meet its obligations. “I’m skeptical about Greece,” said Issing, who joined the ECB a year before the euro’s inception in 1999 and stayed there until 2006. “Greece is not just illiquid, it’s insolvent.” The region’s debt crisis, which has also forced Ireland and Portugal to seek bailouts, has left the euro in a “critical” condition. Europe's debt problems and the economic outlook in the US are key factors why US interest rates are this low. Safety moves away from equities at the moment and what is likely a default by Greece and possibly other EU countries is keeping investors in safe mode.
Here we are again; the 10 yr note at 3.11%, the 4.0 30 yr FNMA coupon not able to break above its 200 day average. Although this is only Thursday there is a long week-end ahead with US markets closed Monday and an early close in the bond market tomorrow, the bond market should hold well today and tomorrow. Traders won't have any motivation to be heavy sellers in the bond market as Europe continues to provide support with all its critical debt problems.
Crude oil and gold lower to start this morning; crude down $0.23 at 9:30, gold -$2.90 (see below for 10:00 prices).
The Q1 GDP report this morning confirms that the US economy is still struggling; most every economist had forecast GDP would come at 2.0% or higher on the revision this morning. GDP growth in Q1 at 1.8% is down from 3.1% growth in Q4 2010; Q2 is likely to be even weaker than Q1. The weakening economy will keep the Fed from any plans to increase the FF rate this year and increase the conversation of another easing after QE 2 ends at the end of June. Our economic outlook is a little more bearish than the so called consensus but we don't believe the Fed will embark on another massive easing move. The Fed's QE 2 did nothing to slow unemployment, did nothing to improve the economy and did nothing to help the housing sector----the main drag on the economy. What it did do was push investors into the equity markets, large investors that are now exiting and moving to safe havens. Historic low interest rates have had only a very minor benefit to housing, there is little reason to expect another easing move will change anything.
Wednesday, May 25, 2011
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