Mortgage Rate Update
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Saturday, December 31, 2011
Friday, December 30, 2011
Mortgage Rates
The final day of the year; nothing of substance to think about. No news of consequence out of Europe, the various markets in Europe are slightly better today. At 9:00 this morning the US stock indexes traded fractionally lower, the 10 yr note +3/32 and mortgages at 9:00 +5/32 (.15 bp).
No economic data today; trading will be thin, by 1:00 most will have left the area. Markets open all day.
Europe remains the key for US interest rates, not news that safety trades have pushed US yields to all-time lows. In Jan, after a few weeks of quiet from the EU, ECB, and the IMF, expect renewed comments and "plans" on how to deal with the increasing debt mess and banking concerns in Europe's banks. At the end of the year the dangling question that has hung over global markets for two years hasn't changed. Can officials of various bodies actually solve the debt crisis in a manner that doesn't lead to default? And where is the money going to come from to relieve the region's banks? At the end of day so far, there isn't enough money or near term solution to the developing crisis. Will Europe drag global economies down as it re-enters recession?
At 9:30 the DJIA opened -14, 10 yr +3/32 at 1.89% -1 bp and mortgage prices after being +.15 bp at 9:00 fell back to +.09 bp on 30 yr MBSs.
The rest of the day should be quiet with little changes in stock indexes and interest rates. The outlook for interest rates remains positive but uneasy at these low levels. We are still concerned that the lows may have already been achieved when the 10 yr hit 1.70% last Sept. Lower rates from these levels depend on the moves made in Europe to corral what appears to be coming defaults; bailouts from the ECB, IMF and EU along with Germany and France are needed, so far that hasn't happened----only talk.
The final day of the year; nothing of substance to think about. No news of consequence out of Europe, the various markets in Europe are slightly better today. At 9:00 this morning the US stock indexes traded fractionally lower, the 10 yr note +3/32 and mortgages at 9:00 +5/32 (.15 bp).
No economic data today; trading will be thin, by 1:00 most will have left the area. Markets open all day.
Europe remains the key for US interest rates, not news that safety trades have pushed US yields to all-time lows. In Jan, after a few weeks of quiet from the EU, ECB, and the IMF, expect renewed comments and "plans" on how to deal with the increasing debt mess and banking concerns in Europe's banks. At the end of the year the dangling question that has hung over global markets for two years hasn't changed. Can officials of various bodies actually solve the debt crisis in a manner that doesn't lead to default? And where is the money going to come from to relieve the region's banks? At the end of day so far, there isn't enough money or near term solution to the developing crisis. Will Europe drag global economies down as it re-enters recession?
At 9:30 the DJIA opened -14, 10 yr +3/32 at 1.89% -1 bp and mortgage prices after being +.15 bp at 9:00 fell back to +.09 bp on 30 yr MBSs.
The rest of the day should be quiet with little changes in stock indexes and interest rates. The outlook for interest rates remains positive but uneasy at these low levels. We are still concerned that the lows may have already been achieved when the 10 yr hit 1.70% last Sept. Lower rates from these levels depend on the moves made in Europe to corral what appears to be coming defaults; bailouts from the ECB, IMF and EU along with Germany and France are needed, so far that hasn't happened----only talk.
Thursday, December 29, 2011
Mortgage Rate Update
Early this morning the 10 yr and mortgages opened a little weaker; Italy's auctions didn't do as well today as the shorter term auctions did yesterday. Italian 10-year bonds fell, pushing yields toward the highest this month, after the nation raised less than its maximum target at an auction of debt due between 2014 and 2022. Portuguese and Spanish securities also declined and the euro weakened to a 15-month low against the dollar after Italy agreed to pay a yield of 6.98% on securities maturing in 2022, close to the 7% level that prompted euro-area peers to seek bailouts. The Italian 10 after the auction is trading over 7.00% at 7.07%.
Italy did sell its debt offerings, a good thing, but the rate was higher than thought and in after market trade the rate is now above 7.00% that markets have set as a benchmark for its 10 yr debt offerings. The reaction has been muted so far this morning, except in the currency market where the euro currency continued to decline to the weakest level since Sept. 2010 against the dollar, and the weakest against the yen in 10 yrs.
At 8:30 weekly jobless claims were expected to be up 4K, as reported claims increased 15K to 381K. Continuing claims also increased, to 3.601 mil frm 3.567 mil the week before. The 4 wk average, a smoother look at claims, at 375K down from 380,750. Claims still declining even with the increase; there was no noticeable reaction to the report in either stocks or interest rates.
At 9:30 the DJIA opened +30, the 10 yr note unchanged and mortgage prices -2/32 (.06 bp).
The last key economic report of this year at 9:45; the Dec Chicago purchasing managers index. In Nov the index hit a recent high at 62.6, the index was expected to have declined in Dec to 60.1. As reported the index hit at 62.5 frm a revised 62.6 in Nov; new orders index at 68 frm 702, prices pd at 65.7 frm 60.2 and employment at 58.6 frm 56.9 (any index over 50 is considered expansion). There was little to no reaction to the data.
At 10:00 the NAR reported Nov pending home sales (contracts signed but no yet closed), expected up 0.6%,
The rest of the day bonds and mortgages will track equities; the stock market is holding a gain of about 65 points at 10:00. Trade should be contained through the rest of the session. Technically, the US 10 yr escaped from breaking down yesterday with the rally that returned the 10 below 2.00%. If equity markets were to fall the 10 and mortgages will improve, but not much.
Early this morning the 10 yr and mortgages opened a little weaker; Italy's auctions didn't do as well today as the shorter term auctions did yesterday. Italian 10-year bonds fell, pushing yields toward the highest this month, after the nation raised less than its maximum target at an auction of debt due between 2014 and 2022. Portuguese and Spanish securities also declined and the euro weakened to a 15-month low against the dollar after Italy agreed to pay a yield of 6.98% on securities maturing in 2022, close to the 7% level that prompted euro-area peers to seek bailouts. The Italian 10 after the auction is trading over 7.00% at 7.07%.
Italy did sell its debt offerings, a good thing, but the rate was higher than thought and in after market trade the rate is now above 7.00% that markets have set as a benchmark for its 10 yr debt offerings. The reaction has been muted so far this morning, except in the currency market where the euro currency continued to decline to the weakest level since Sept. 2010 against the dollar, and the weakest against the yen in 10 yrs.
At 8:30 weekly jobless claims were expected to be up 4K, as reported claims increased 15K to 381K. Continuing claims also increased, to 3.601 mil frm 3.567 mil the week before. The 4 wk average, a smoother look at claims, at 375K down from 380,750. Claims still declining even with the increase; there was no noticeable reaction to the report in either stocks or interest rates.
At 9:30 the DJIA opened +30, the 10 yr note unchanged and mortgage prices -2/32 (.06 bp).
The last key economic report of this year at 9:45; the Dec Chicago purchasing managers index. In Nov the index hit a recent high at 62.6, the index was expected to have declined in Dec to 60.1. As reported the index hit at 62.5 frm a revised 62.6 in Nov; new orders index at 68 frm 702, prices pd at 65.7 frm 60.2 and employment at 58.6 frm 56.9 (any index over 50 is considered expansion). There was little to no reaction to the data.
At 10:00 the NAR reported Nov pending home sales (contracts signed but no yet closed), expected up 0.6%,
The rest of the day bonds and mortgages will track equities; the stock market is holding a gain of about 65 points at 10:00. Trade should be contained through the rest of the session. Technically, the US 10 yr escaped from breaking down yesterday with the rally that returned the 10 below 2.00%. If equity markets were to fall the 10 and mortgages will improve, but not much.
Wednesday, December 28, 2011
Mortgage Rates
Started a little better this morning in the bond and mortgage markets, still with very thin volume. The 10 yr note and MBSs are toying with key technical levels now, if the rally is to continue the 10 must get back below 2.00% and hold there---something that it hasn't been able to achieve for any length of time. Italy sold more debt in a successful auction today increasing European stocks and supporting the US equity markets in pre-opening trade.
Italy's borrowing costs are declining, lessening concerns of default. The country sold 9 billion euros ($11.8B) of six- month Treasury bills at half the yield it agreed to pay at an auction of the securities last month. The Rome-based Treasury sold the 179-day bills at a rate of 3.251%, down from 6.504% on Nov. 25. Demand was 1.7 times the amount on offer, compared with 1.47 times last month. It also sold 1.733 billion euros of 2013 notes today to yield 4.853%, compared with a yield of 7.814% at the last auction on Nov. 25. The bid-to-cover ratio was 2.24, compared with 1.59 last month. Tomorrow Italy will auction four different securities, including a 10-year bond; if the 10 yr rate is under 7.00% it will be considered a good auction.
The reaction to the strong Italian auctions lessens the demand for US treasuries, at least at the moment; however by 9:00 this morning after some minor selling in treasuries on the auction news, the 10 yr is back to its best levels prior to the auction results. At 9:30 the DJIA opened +7, 10 yr +5/32 at 1.98% -2 bp and mortgage prices +5/32 (.15 bp).
Retail sales in the week prior to Christmas were up 4.5% last week from a year earlier, according to data reported this morning. Sales for the week ending Dec. 24 increased 0.9% from the previous week, according to a chain-store sales index released today by New York-based International Council of Shopping Centers. Yesterday Dec consumer confidence index jumped much more than thought, expectations were at 58 frm 55.2 in Nov, as released the index was 64.5 the highest since last April. Weekly jobless claims have been declining for the last month; the Nov unemployment rate fell to 8.6% frm 9.0% expected. Nov housing starts, permits, sales of existing and new home sales were better than forecast. The Dec Philly Fed index as well as the Empire State manufacturing indexes were also better than estimates. Forecasts for growth in 2012 are at +2.4% GDP, 2011 at 2.00%.
Treasuries and mortgages are increasingly facing stronger headwinds; with the recent data and at least for the moment some relaxation of Europe fears it is looking more likely that the decline in US rates may be ending. Technicals are being tested although still holding, the likelihood of further declines in rates is becoming questionable. Likely US rates would be under some pressure this morning if it were not for the long weekend ahead.
The good news so far today; the bond and mortgage markets are trading better, ignoring the Italian auctions and the recent better economic data. There isn't any data today and volume will continue to be light. Although rate markets are doing OK so far; there isn't anything out there that is adding support this morning except what so appears to be a soft equity market. The 10 yr is testing its key averages recently, but each time so far the note manages to hold its positive bias; we don't fight the tape even though interest rates are likely to increase in the next month or two.
Started a little better this morning in the bond and mortgage markets, still with very thin volume. The 10 yr note and MBSs are toying with key technical levels now, if the rally is to continue the 10 must get back below 2.00% and hold there---something that it hasn't been able to achieve for any length of time. Italy sold more debt in a successful auction today increasing European stocks and supporting the US equity markets in pre-opening trade.
Italy's borrowing costs are declining, lessening concerns of default. The country sold 9 billion euros ($11.8B) of six- month Treasury bills at half the yield it agreed to pay at an auction of the securities last month. The Rome-based Treasury sold the 179-day bills at a rate of 3.251%, down from 6.504% on Nov. 25. Demand was 1.7 times the amount on offer, compared with 1.47 times last month. It also sold 1.733 billion euros of 2013 notes today to yield 4.853%, compared with a yield of 7.814% at the last auction on Nov. 25. The bid-to-cover ratio was 2.24, compared with 1.59 last month. Tomorrow Italy will auction four different securities, including a 10-year bond; if the 10 yr rate is under 7.00% it will be considered a good auction.
The reaction to the strong Italian auctions lessens the demand for US treasuries, at least at the moment; however by 9:00 this morning after some minor selling in treasuries on the auction news, the 10 yr is back to its best levels prior to the auction results. At 9:30 the DJIA opened +7, 10 yr +5/32 at 1.98% -2 bp and mortgage prices +5/32 (.15 bp).
Retail sales in the week prior to Christmas were up 4.5% last week from a year earlier, according to data reported this morning. Sales for the week ending Dec. 24 increased 0.9% from the previous week, according to a chain-store sales index released today by New York-based International Council of Shopping Centers. Yesterday Dec consumer confidence index jumped much more than thought, expectations were at 58 frm 55.2 in Nov, as released the index was 64.5 the highest since last April. Weekly jobless claims have been declining for the last month; the Nov unemployment rate fell to 8.6% frm 9.0% expected. Nov housing starts, permits, sales of existing and new home sales were better than forecast. The Dec Philly Fed index as well as the Empire State manufacturing indexes were also better than estimates. Forecasts for growth in 2012 are at +2.4% GDP, 2011 at 2.00%.
Treasuries and mortgages are increasingly facing stronger headwinds; with the recent data and at least for the moment some relaxation of Europe fears it is looking more likely that the decline in US rates may be ending. Technicals are being tested although still holding, the likelihood of further declines in rates is becoming questionable. Likely US rates would be under some pressure this morning if it were not for the long weekend ahead.
The good news so far today; the bond and mortgage markets are trading better, ignoring the Italian auctions and the recent better economic data. There isn't any data today and volume will continue to be light. Although rate markets are doing OK so far; there isn't anything out there that is adding support this morning except what so appears to be a soft equity market. The 10 yr is testing its key averages recently, but each time so far the note manages to hold its positive bias; we don't fight the tape even though interest rates are likely to increase in the next month or two.
Tuesday, December 27, 2011
Mortgage Rates
Last Friday treasuries took a fairly large hit as traders backed away from heavy long positions into the long weekend; mortgage prices were soft all day but also on thin trading and following the bond market. This morning treasuries opened a little better with mortgage prices generally unchanged from Friday's close. This week is still on holiday with many not working. The week doesn't have much data and it is unlikely there will be much out of Europe to jostle markets until after the first of the year.
The bellwether 10 yr note continues to resist trading much under 2.00%, the averages are moving lower daily frm the 20 day to the 100 day; unless the bond market continues to improve quickly the technical picture will change to one of a more bearish outlook. In our opinion unless there is an actual default in Europe the US rate markets are going to turn slightly bearish with yields increasing somewhat. Not looking for a big increase in rates but the prolonged rally looks as if it has stalled. The U.S. government received record demand for its bonds in 2011, pushing longer-maturity Treasuries to their best performance since 1995; a very weak economy, no inflation and a huge fear factor contributed to the decline in rates.
This is the time of year when we hear a multitude of economic forecasts from economists. From what we have read over the last few days, the consensus for 2012 is better based on various surveys. Economists surveyed by Bloomberg and Reuters are expecting GDP growth in 2012 at +2.4% frm 2011 that is under 2.00%. Of course most forecasts have the caveat that Europe could drag the world back into recession and a global credit crisis if banks in the region fail or sovereign debt defaults occur. 2012 like 2011 will be held captive by Europe's continuing inability to accomplish much so far.
The S&P/Case-Shiller index of property values in 20 cities dropped 3.4% from October 2010 after decreasing 3.5% in the year ended September, the New York-based group said today. The median forecast of 27 economists in a Bloomberg News survey projected a 3.2% decrease. This report gets little if any attention from bond traders; no real news in it.
At 10:00 Dec consumer confidence index expected at 58 frm 56 in Nov. As reported the confidence index jumped to its highest level since last April to 64.5 frm a revised Nov at 55.2; the present situation index increased to 46.7 frm 38.3 and the expectations index up to 76.4 frm 66.4. A much better outlook from last month and better than what was expected; there was however no reaction to the data in either the stock or bond market----so far.
This Week's Economic Calendar:
Tuesday;
9:00 am Oct Case/Shiller housing index (as reported -3.4%)
10:00 am Dec consumer confidence index (as reported 64.5 frm 55.2)
Thursday;
8:30 weekly jobless claims (+4K to 368K)
9:45 am Chicago purchasing mgrs index (60.1 frm 62.6(
10:00 am Nov pending home sales (+0.6%)
At 9:30 the DJIA opened -20; 10 yr note +2/32 at 2.01% and mortgage prices at 9:30 generally unchanged.
Not looking for much this week; another short week and year end doldrums should keep things relatively quiet until next week. The technical picture is weakening in the bond market, unless the 10 yr improves and holds under 2.00% (which up until now has not occurred) rates from a technical outlook will likely begin to increase next week.
Last Friday treasuries took a fairly large hit as traders backed away from heavy long positions into the long weekend; mortgage prices were soft all day but also on thin trading and following the bond market. This morning treasuries opened a little better with mortgage prices generally unchanged from Friday's close. This week is still on holiday with many not working. The week doesn't have much data and it is unlikely there will be much out of Europe to jostle markets until after the first of the year.
The bellwether 10 yr note continues to resist trading much under 2.00%, the averages are moving lower daily frm the 20 day to the 100 day; unless the bond market continues to improve quickly the technical picture will change to one of a more bearish outlook. In our opinion unless there is an actual default in Europe the US rate markets are going to turn slightly bearish with yields increasing somewhat. Not looking for a big increase in rates but the prolonged rally looks as if it has stalled. The U.S. government received record demand for its bonds in 2011, pushing longer-maturity Treasuries to their best performance since 1995; a very weak economy, no inflation and a huge fear factor contributed to the decline in rates.
This is the time of year when we hear a multitude of economic forecasts from economists. From what we have read over the last few days, the consensus for 2012 is better based on various surveys. Economists surveyed by Bloomberg and Reuters are expecting GDP growth in 2012 at +2.4% frm 2011 that is under 2.00%. Of course most forecasts have the caveat that Europe could drag the world back into recession and a global credit crisis if banks in the region fail or sovereign debt defaults occur. 2012 like 2011 will be held captive by Europe's continuing inability to accomplish much so far.
The S&P/Case-Shiller index of property values in 20 cities dropped 3.4% from October 2010 after decreasing 3.5% in the year ended September, the New York-based group said today. The median forecast of 27 economists in a Bloomberg News survey projected a 3.2% decrease. This report gets little if any attention from bond traders; no real news in it.
At 10:00 Dec consumer confidence index expected at 58 frm 56 in Nov. As reported the confidence index jumped to its highest level since last April to 64.5 frm a revised Nov at 55.2; the present situation index increased to 46.7 frm 38.3 and the expectations index up to 76.4 frm 66.4. A much better outlook from last month and better than what was expected; there was however no reaction to the data in either the stock or bond market----so far.
This Week's Economic Calendar:
Tuesday;
9:00 am Oct Case/Shiller housing index (as reported -3.4%)
10:00 am Dec consumer confidence index (as reported 64.5 frm 55.2)
Thursday;
8:30 weekly jobless claims (+4K to 368K)
9:45 am Chicago purchasing mgrs index (60.1 frm 62.6(
10:00 am Nov pending home sales (+0.6%)
At 9:30 the DJIA opened -20; 10 yr note +2/32 at 2.01% and mortgage prices at 9:30 generally unchanged.
Not looking for much this week; another short week and year end doldrums should keep things relatively quiet until next week. The technical picture is weakening in the bond market, unless the 10 yr improves and holds under 2.00% (which up until now has not occurred) rates from a technical outlook will likely begin to increase next week.
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