Mortgage Rates
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Sunday, July 31, 2011
Friday, July 29, 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 29, 2011
Treasuries and mortgages were better early this morning on the failure of the House to pass its "plan" yesterday as was expected based on comments frm Speaker Boehner through the day. Safety moves into treasuries as Congress and the Administration move closer to a possible default is driving longer dated treasuries lower and with them mortgage rates. There is a lot of talk as you know, that the US will suffer a decline in its credit rating by the rating agencies. Based on reports this morning 75% of investors in treasuries said they would not change their investments or jettison treasuries if in fact the downgrade actually happens.
At 8:30 more improvement in treasuries and mortgages with the advance GDP report for Q2 showing the economy grew just 1.3% against general estimates of +1.9%. Q1 GDP was revised lower, from +1.9% on the final read last month to +0.4%, a huge revision lower. Forecasts of 85 economists in the survey ranged from 0.9% to 2.9%. At $13.27 trillion in the second quarter, GDP has yet to surpass the pre-recession peak. The GDP estimate is the first of three for the quarter, with the other releases scheduled for August and September when more information becomes available. Consumer spending from April through June showed the smallest gain since the second quarter of 2009, when the economy was in recession. The slump reflected a 4.4% decline in purchases of durable goods like automobiles. Q2 employment cost index increased 0.7%; yr/yr up 2.2%.
Markets spent a lot of gray matter yesterday on the idea the Boehner plan would pass the House late yesterday; it didn't happen as conservative Tea Party members refused to go along even with Boehner flexing his leadership muscle. Even if the House would have passed its plan the Senate had made it clear it would be dead on arrival if it had reached the chamber. The next step isn't' clear; that said there are countless opinions about what will happen and what the impact will be under various scenarios.
President Obama is scheduled to talk about the impasse on the debt ceiling at 10:20 this morning.
More data at 9:45 when the July Chicago purchasing mgrs index hit; forecasts were for an unchanged index at 61.1, as reported 58.8; employment at 51.5 frm 58.7, new orders at 59.4 frm 61.2 and prices pd at 71.7 frm 70.5. Another weak report however the stock market didn't seem to react much to it, as the key indexes were already down hard from yesterday's closes. Treasuries and mortgage markets did add to their gains on the release, the 10 yr note yield dipped to 2.86% down 2 bp below its level prior to the report; mtgs jumped 4/32 (.12 bp in price)
At 9:55 the U. of Michigan consumer sentiment index, expected at 64.0 frm 63.8; was 63.7. The 12 month out expectations index at 55 frm 52. No reaction to it.
The bellwether 10 yr note this morning fell to 2.87% close to the 2.85% seen a month ago. With Washington in current gridlock on the debt ceiling investors are piling into safety positions, in US treasuries. That Congress and this Administration are at an impasse at the moment is surprising to me; I really believed they would act responsibly, always overestimate the will of politicians even though I set the bar exceptionally low.
At 9:30 the DJIA opened -130, the 10 yr note +20/32 at 2.88% -8 bp and mortgage prices +10/32 (.31 bp).
The bond and mortgage markets are testing last month's low yields this morning. Given the mess in Washington the potential for even lower rates has increased; however, we have to respect the technicals and the momentary double bottom in yields if rates don't push lower. The next few days are critical.
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 29, 2011
Treasuries and mortgages were better early this morning on the failure of the House to pass its "plan" yesterday as was expected based on comments frm Speaker Boehner through the day. Safety moves into treasuries as Congress and the Administration move closer to a possible default is driving longer dated treasuries lower and with them mortgage rates. There is a lot of talk as you know, that the US will suffer a decline in its credit rating by the rating agencies. Based on reports this morning 75% of investors in treasuries said they would not change their investments or jettison treasuries if in fact the downgrade actually happens.
At 8:30 more improvement in treasuries and mortgages with the advance GDP report for Q2 showing the economy grew just 1.3% against general estimates of +1.9%. Q1 GDP was revised lower, from +1.9% on the final read last month to +0.4%, a huge revision lower. Forecasts of 85 economists in the survey ranged from 0.9% to 2.9%. At $13.27 trillion in the second quarter, GDP has yet to surpass the pre-recession peak. The GDP estimate is the first of three for the quarter, with the other releases scheduled for August and September when more information becomes available. Consumer spending from April through June showed the smallest gain since the second quarter of 2009, when the economy was in recession. The slump reflected a 4.4% decline in purchases of durable goods like automobiles. Q2 employment cost index increased 0.7%; yr/yr up 2.2%.
Markets spent a lot of gray matter yesterday on the idea the Boehner plan would pass the House late yesterday; it didn't happen as conservative Tea Party members refused to go along even with Boehner flexing his leadership muscle. Even if the House would have passed its plan the Senate had made it clear it would be dead on arrival if it had reached the chamber. The next step isn't' clear; that said there are countless opinions about what will happen and what the impact will be under various scenarios.
President Obama is scheduled to talk about the impasse on the debt ceiling at 10:20 this morning.
More data at 9:45 when the July Chicago purchasing mgrs index hit; forecasts were for an unchanged index at 61.1, as reported 58.8; employment at 51.5 frm 58.7, new orders at 59.4 frm 61.2 and prices pd at 71.7 frm 70.5. Another weak report however the stock market didn't seem to react much to it, as the key indexes were already down hard from yesterday's closes. Treasuries and mortgage markets did add to their gains on the release, the 10 yr note yield dipped to 2.86% down 2 bp below its level prior to the report; mtgs jumped 4/32 (.12 bp in price)
At 9:55 the U. of Michigan consumer sentiment index, expected at 64.0 frm 63.8; was 63.7. The 12 month out expectations index at 55 frm 52. No reaction to it.
The bellwether 10 yr note this morning fell to 2.87% close to the 2.85% seen a month ago. With Washington in current gridlock on the debt ceiling investors are piling into safety positions, in US treasuries. That Congress and this Administration are at an impasse at the moment is surprising to me; I really believed they would act responsibly, always overestimate the will of politicians even though I set the bar exceptionally low.
At 9:30 the DJIA opened -130, the 10 yr note +20/32 at 2.88% -8 bp and mortgage prices +10/32 (.31 bp).
The bond and mortgage markets are testing last month's low yields this morning. Given the mess in Washington the potential for even lower rates has increased; however, we have to respect the technicals and the momentary double bottom in yields if rates don't push lower. The next few days are critical.
Thursday, July 28, 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, July 28, 2011
Treasuries and mortgages prior to 8:30 were up nicely, not unusual as in the last seven days every other day the bond and mortgage markets have some gains, and every other day prices fall with no real change in the level of rates. At 8:30 weekly jobless claims took some wind out of the rate markets; after 16 weeks of claims above 400K, claims this morning declined 24K to 398K. The stock indexes reversed from lower levels to up a little. Continuing claims fell 17K to 3.703 mil; last week's claims were revised up 4K to 422K from 418K. The lower claims didn't turn rate markets completely, just a slight move lower but still held better levels than yesterday's closes; within 30 minutes the bond and mortgage markets recovered all of the minor price declines.
CEOs of all major banks sent a letter to Obama, Republicans and Democrats urging they get their act together and deal with the debt problems. One more huge voice but likely won't budge anyone. According to news reports Republicans in the House will vote today on the Boehner plan to increase the debt limit; a two step plan that calls for a temporary increase then another round in early 2012. Many of the Tea Party freshmen members of the House have been resisting accepting Boehner's plan; yesterday he told them to "get their ass in line", tough talk. If the House actually passes the Boehner plan it will go to the senate where Sen.. Reid will make amendments to it, likely removing the temporary increase to increasing the ceiling through all of 2012. Then the bill will go back to the House. If Senate Republicans balk over changes to the Boehner plan it will leave Democrats and the President with the choice of accepting the plan or let the US default. All that said, it is still a fast moving target and likely will have more moves before there is a deal avoiding default.
The bond market continues to believe there will be no default, interest rate markets are holding generally unchanged for the last two weeks with yields swinging up and down every other day with no actual significant changes. One view traders hold is that even if the rating agencies were to lower US credit ratings as they have warned if the Boehner plan is passed, it won't have any impact on US interest rates. A lower credit rating will not take away the fact that the US is still the strongest and safest place in the world. That view is key to why the bond and mortgage markets are not seeing any increase in interest rates. Banks searching for hints of credit-market distress ahead of next week’s deadline to raise the debt ceiling are finding few signs of panic so far.
At 9:30 the DJIA opened +6, the S&P +1, and NASDAQ +2; the 10 yr note +9/32 at 2.95% -3 bp and mortgage prices up 10/32 (.31 bp).
At 10:00 NAR June pending home sales, expected down 2.0%, were up 2.4% after increasing 8.4% in May. Yr/yr pending sales up 19.8%. No reaction to the data, sales still very volatile but showing some small signs of improvement.
At 1:00 Treasury will auction $29B of 7 yr notes to complete this week's borrowing. Yesterday's 5 yr wasn't met with strong demand, not a bad auction just not as solid as recent 5 yr debt issues.
Treasuries still holding most of their bullish technical readings; the 10 yr trading under its key 20 and 40 day averages on the yield charts. The RSI is hovering at 50, a neutral reading. The MBS markets are a little more volatile than treasuries but will follow the 10 yr; note the MBS chart, prices are slightly declining; unable to its 20 day average. Got to go with the technicals but still wonder whether interest rates can decline much from the present levels. These are unusual times with Europe still teetering on defaults in a number of countries; we haven't heard much recently as all attention is aimed at the US debt ceiling issue; difficult to handicap what will happen next once the debt ceiling is increased.
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 28, 2011
Treasuries and mortgages prior to 8:30 were up nicely, not unusual as in the last seven days every other day the bond and mortgage markets have some gains, and every other day prices fall with no real change in the level of rates. At 8:30 weekly jobless claims took some wind out of the rate markets; after 16 weeks of claims above 400K, claims this morning declined 24K to 398K. The stock indexes reversed from lower levels to up a little. Continuing claims fell 17K to 3.703 mil; last week's claims were revised up 4K to 422K from 418K. The lower claims didn't turn rate markets completely, just a slight move lower but still held better levels than yesterday's closes; within 30 minutes the bond and mortgage markets recovered all of the minor price declines.
CEOs of all major banks sent a letter to Obama, Republicans and Democrats urging they get their act together and deal with the debt problems. One more huge voice but likely won't budge anyone. According to news reports Republicans in the House will vote today on the Boehner plan to increase the debt limit; a two step plan that calls for a temporary increase then another round in early 2012. Many of the Tea Party freshmen members of the House have been resisting accepting Boehner's plan; yesterday he told them to "get their ass in line", tough talk. If the House actually passes the Boehner plan it will go to the senate where Sen.. Reid will make amendments to it, likely removing the temporary increase to increasing the ceiling through all of 2012. Then the bill will go back to the House. If Senate Republicans balk over changes to the Boehner plan it will leave Democrats and the President with the choice of accepting the plan or let the US default. All that said, it is still a fast moving target and likely will have more moves before there is a deal avoiding default.
The bond market continues to believe there will be no default, interest rate markets are holding generally unchanged for the last two weeks with yields swinging up and down every other day with no actual significant changes. One view traders hold is that even if the rating agencies were to lower US credit ratings as they have warned if the Boehner plan is passed, it won't have any impact on US interest rates. A lower credit rating will not take away the fact that the US is still the strongest and safest place in the world. That view is key to why the bond and mortgage markets are not seeing any increase in interest rates. Banks searching for hints of credit-market distress ahead of next week’s deadline to raise the debt ceiling are finding few signs of panic so far.
At 9:30 the DJIA opened +6, the S&P +1, and NASDAQ +2; the 10 yr note +9/32 at 2.95% -3 bp and mortgage prices up 10/32 (.31 bp).
At 10:00 NAR June pending home sales, expected down 2.0%, were up 2.4% after increasing 8.4% in May. Yr/yr pending sales up 19.8%. No reaction to the data, sales still very volatile but showing some small signs of improvement.
At 1:00 Treasury will auction $29B of 7 yr notes to complete this week's borrowing. Yesterday's 5 yr wasn't met with strong demand, not a bad auction just not as solid as recent 5 yr debt issues.
Treasuries still holding most of their bullish technical readings; the 10 yr trading under its key 20 and 40 day averages on the yield charts. The RSI is hovering at 50, a neutral reading. The MBS markets are a little more volatile than treasuries but will follow the 10 yr; note the MBS chart, prices are slightly declining; unable to its 20 day average. Got to go with the technicals but still wonder whether interest rates can decline much from the present levels. These are unusual times with Europe still teetering on defaults in a number of countries; we haven't heard much recently as all attention is aimed at the US debt ceiling issue; difficult to handicap what will happen next once the debt ceiling is increased.
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