Archive for July, 2010

Market Commentary for July 29th 2010

Posted: July 29, 2010 in Uncategorized

Thursday’s bond market has opened in negative territory with no important economic being released this morning. The stock markets are showing gains with the Dow up 40 points and the Nasdaq up 2 points. The bond market is currently down 5/32, but we will likely see little change in this morning’s mortgage rates due to strength in bonds late yesterday.

Today’s only relevant data came from the Labor Department, who announced that 457,000 new claims for unemployment benefits were filed last week. This was below forecasts of 464,000, meaning this can be considered negative for bonds. However, this data is not considered to be important to mortgage rates and has had little influence on this morning’s trading.

Both of yesterday’s afternoon events were favorable for bonds and mortgage pricing. The 5-year Treasury Note auction went very well, indicating that investor demand for U.S. securities remains strong. That is good news for mortgage rates because that interest should carryover to mortgage-related securities also. The second of the two relevant sales is taking place today with 7-year Notes being sold. These are a little longer term than yesterday’s securities, which is closer to mortgage bond terms, so another strong sale should lead to improved mortgage rates this afternoon.

The Federal Reserve’s Beige Book report was released yesterday afternoon. It did not give us any negative surprises about economic growth. Most regions had reported modest growth with a couple showing negative activity. The concerns about the economy, such as unemployment and housing, remained considerable in many of the regions. This was all good news for bonds because this information will be relied on heavily when the Fed meets August 10th for their next FOMC meeting.

There are three releases scheduled for release tomorrow morning, including one of the most important reports we regularly see. That one is the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP), which is considered to be the best indicator of economic activity. It is the sum of all goods and services produced in the U.S. and usually has a great deal of influence on the financial markets. There are two revisions approximately one month apart, but the preliminary posting carries the most importance. Current forecasts are estimating that the economy grew at a 2.5% annual rate during the second quarter. A faster pace will probably hurt bond prices, leading to higher mortgage rates tomorrow. But a smaller than expected reading would likely fuel a bond market rally and lead to lower mortgage pricing.

The second report of the day is the 2nd Quarter Employment Cost Index (ECI) that measures employers’ costs for wages and benefits. It is considered to be an important measurement of wage inflation and can impact the bond market and mortgage rates if it varies much from forecasts. If it shows a rapid increase, raising inflation concerns, the bond market may drop and mortgage rates rise. It is expected to reveal an increase of 0.5%, but the GDP reading likely will have more of an influence on the markets and mortgage rates.

Tomorrow’s third piece of data is the revision to July’s University of Michigan Index of Consumer Sentiment that will help us measure consumer optimism about their own financial situations. As with Tuesday’s CCI release, this data is considered important because rising consumer confidence usually translates into higher levels of spending. This adds fuel to the economic recovery and is looked at as bad news for bonds. Tomorrow’s release is an update to the preliminary reading we saw two weeks ago, so unless we see a drastic revision to the preliminary estimate, I think the markets will probably shrug this news off. It is expected to be revised to 67.5.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Float if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now…

Advertisements

Mortgage Commentary for 07/28/2010

Posted: July 28, 2010 in Uncategorized

Wednesday’s bond market has opened relatively flat even though we saw weaker than expected results in this morning’s economic news and a negative open in stocks. The stock markets are posting minor losses with the Dow down 20 points and the Nasdaq down 8 points. The bond market is currently up 2/32, which will likely improve this morning’s mortgage rates by approximately .125 of a discount point.

The Commerce Department gave us this morning’s important economic news with the release of June’s Durable Goods Orders. They announced a decline of 1.0% in new orders for big-ticket items when analysts were expecting to see a 0.7% increase. This data is known to be volatile from month to month, but this is still a sizable difference. Even if larger, more volatile transportation-related orders were excluded, we would have seen a drop of 0.6%. That was also well short of forecasts, indicating that the manufacturing sector may have been weaker than expected last month. Therefore, this data can be considered favorable for the bond market.

The Federal Reserve will release its Beige Book report at 2:00 PM ET this afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke’s testimony to Congress last week gave us a recent update, I don’t think we will see any significant surprises in this report. Therefore, we will likely see little movement in mortgage rates as a result of this report.

Also today is the first of this week’s two Treasury auctions that may influence mortgage rates. Today’s sale is the 5-year Note auction while tomorrow brings us the 7-year Note sale. Their results will be posted at 1:00 PM ET both days, so any reaction will come during afternoon hours. If investor interest was strong, the bond market may rally and mortgage rates could move lower later today. However, lackluster demand could lead to bond selling and higher mortgage rates.

There is no relevant monthly or quarterly economic data being posted tomorrow. The Labor Department will post weekly unemployment figures early tomorrow morning, but this data usually has a minimal impact on mortgage rates. Since it tracks only a week’s worth of new claims for unemployment benefits, it takes a large variance from forecasts for the bond market to react enough to influence mortgage pricing. Analysts are expecting to see little change from the previous week’s 464,000 new claims.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now…

Market Commentary

Posted: July 21, 2010 in Uncategorized

Wednesday’s bond market has opened in positive territory with the stock markets showing early losses. The Dow is currently down 23 points while the Nasdaq has lost 16 points. The bond market is currently up 6/32, which should keep this morning’s mortgage rates at yesterday’s morning levels.

There is no relevant economic data to be posted today, so this morning’s trading is being driven by stock movement and speculation about today’s semi-annual congressional testimony of Fed Chairman Bernanke. He was originally scheduled to speak at 10:00 AM ET, but that has been pushed back to 2:00 PM ET. His testimony will be to Senate Banking Committee today and the House Financial Services Committee Thursday morning.

This event will be televised and watched very closely by market participants and analysts. We usually see the most movement in rates during the first day of this semi-annual testimony since his prepared words for both appearances are usually quite similar to each other, meaning that the second day of testimony rarely gives us anything we did not hear during the first day.

The National Association of Realtors will post June’s Existing Home Sales figures late tomorrow morning. This report gives us a measurement of housing sector strength and mortgage credit demand, but as with all of this week’s data it is not considered highly important. Current forecasts are calling for a decline in sales from May’s totals. A larger than expected drop in sales would be considered good news for bonds and mortgage rates because a weak housing sector will make it difficult for the economy to recover anytime soon. However, unless this data varies greatly from forecasts it probably will not cause much of a change in mortgage rates.

June’s Leading Economic Indicators (LEI) at 10:00 AM will also be posted late tomorrow. This Conference Board index attempts to measure economic activity over the next three to six months. While it is not a factual report, it still is considered to be of moderate importance to the bond market. It is expected to show a 0.4% decrease, meaning that we may see noticeable pullback in economic activity over the next few months. A larger decline in the index would be good news for the bond and mortgage markets.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Float if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now…

Updated Referral Directory: Contact me to be added!

Posted: July 19, 2010 in Uncategorized

 
 

Screen clipping taken: 7/19/2010 12:30 PM

 
 

Market Commentary for July 19, 2010

Posted: July 19, 2010 in Uncategorized

Monday’s bond market has opened down slightly following a positive open in stocks. The stock markets are showing minor gains with the Dow up 23 points and the Nasdaq up 7 points. The bond market is currently down 3/32, which should keep this morning’s mortgage rates at Friday’s morning levels.

There is no relevant economic data scheduled for release today, so look for the stock markets to be the biggest influence on the bond market and any potential changes to mortgage rates this afternoon. If the major stock indexes remain near current levels, mortgage rates should follow suit.

Tomorrow morning brings us the release of June’s Housing Starts. This data gives us an indication of housing sector strength, but is not considered to be of high importance. Analysts are currently expecting to see a decline in new home construction starts. However, I don’t see this data having much of an impact on mortgage rates unless it varies greatly from forecasts.

The rest of the week has only a couple of relevant economic reports scheduled in addition to Fed Chairman’s Bernanke’s semi-annual congressional update on the status of the economy and monetary policy. He will speak before the Senate Banking Committee Wednesday and the House Financial Services Committee Thursday mornings at 10:00am ET. His testimony will be broadcast and watched very closely. We usually see the most movement in rates during the first day of this testimony as the Chairman’s prepared words for both appearances are quite similar to each other, meaning that the second day of testimony rarely gives us anything we did not hear during the first day.

Overall, this is a moderately significant week for the bond market and mortgage rates. If we get weaker than expected economic results and Fed Chairman Bernanke’s words do not negatively surprise the markets, we may see mortgage rates move lower for the week. However, if Mr. Bernanke’s testimony raises concerns about rapid economic growth or inflation, rates may move higher on the week. I suspect we will see them move noticeably from current levels, which could be the base for more movement in the same direction over the next couple of weeks. Therefore, even though there is not a large number of relevant reports scheduled for release, don’t underestimate the importance of this particularly week. This is especially true if still floating an interest rate.

If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… Float if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now…

Market Commentary for July 16th, 2010

Posted: July 16, 2010 in Uncategorized

Friday’s bond market has opened in positive territory again following another round of early stock losses. The stock markets are posting sizable losses after a couple of earning releases disappointed investors. This has the Dow down 168 points while the Nasdaq has lost 41 points. The bond market is currently up 13/32, which should improve this morning’s mortgage rates by approximately .125 – .250 of a discount point.

The Labor Department announced early this morning that June’s Consumer Price Index (CPI) fell 0.1%, falling slightly short of forecasts. However, the core data reading that excludes more volatile food and energy prices at the consumer level of the economy rose 0.2%. This was higher than the 0.1% increase that was expected. The overall reading can be considered favorable for bonds, but the more important core reading is negative news. Fortunately, the bond market has shrugged off the news and is taking its lead from the stock markets.

The second report of the day was certainly favorable for bonds and mortgage pricing. The University of Michigan’s Index of Consumer Sentiment came in at 66.5, falling well short of the expected 74.5 reading. This means that surveyed consumers were much less optimistic about their own financial situations than they were last month. Since declining consumer confidence usually translates into weaker levels of spending, this is definitely good news for the bond market and mortgage rates.

If the major stock indexes move lower and remain there during afternoon trading, there is a decent possibility of seeing another improvement to mortgage pricing later today. Stocks opened with sizable losses yesterday, but managed to regain most of those losses before closing. I don’t believe we will see the same pattern today, but it is a possibility that is worth watching for. If stocks do rebound this afternoon, we could see an upward revision to rates because a good portion of this morning’s improvement was a result of the early stock losses.

Next week is light in terms of economic releases, especially if comparing to this week. We have a couple of housing related reports and a future economic growth prediction index as the only relevant monthly reports. The big news will likely be Fed Chairman Bernanke’s semi-annual testimony to congress about the state of the economy and monetary policy in the middle of the week. There is no relevant news or data scheduled for Monday, but look for details on next week’s events in Sunday’s weekly preview.

If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… Float if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now…

Market Commentary for Thursday, July 15 2010

Posted: July 15, 2010 in Uncategorized

Thursday’s bond market has opened in positive territory after this morning’s important economic data failed to show any significant surprises. The stock markets are helping by starting the day with noticeable losses. The Dow is currently down 94 points while the Nasdaq had lost 23 points. The bond market is currently up 4/32, which with yesterday’s late gains should improve this morning’s mortgage rates by approximately .125 – .250 of a discount point.

Today’s key data came from the Labor Department, who said June’s Producer Price Index (PPI) fell 0.5%. This was a bigger decline than was expected, but the more important core reading that excludes costs for more volatile food and energy items matched forecasts with a 0.1% increase. Since the core data matched expectations, the data has failed to have much of an impact on this morning’s bond trading or mortgage rates.

The Labor Department also said that only 429,000 new claims for unemployment benefits were filed last week. Analysts were expecting to see 450,000 new claims, so this report can be considered negative news for the bond market. But, since it tracks only a single week’s worth of new claims, its impact on the markets is minimal.

June’s Industrial Production data was also released this morning. It showed that output at U.S. factories, mines and utilities rose 0.1% last month. This was slightly higher than forecasts, but not by enough that would signal manufacturing sector growth. Therefore, this data has also had little influence on today’s mortgage rates.

We saw strength in bonds late yesterday as a result of the FOMC minutes that did give us some unexpected details about the Fed’s thoughts on the economy. There appears to be some concern that more stimulus may be needed if the economy does not continue to expand at their projected pace. They also revised their growth estimates for the economy lower than they previously predicted. They now expect the economy to grow this year at an annual rate of between 3.0% and 3.5%, down from the 3.2% – 3.7% range that was made in April. This news made long-term securities such as mortgage-related bonds more attractive to investors and helped boost bond prices during afternoon trading yesterday.

Tomorrow morning brings us the release of two more reports for the markets to digest. The first is extremely important to the bond market and mortgage rates. That is June’s Consumer Price Index (CPI), which is the sister report to today’s PPI. The CPI measures inflationary pressures at the more important consumer level of the economy, where today’s tracks producer level inflation. Analysts have forecasted no change in the overall index and a 0.1% rise in the core data. The core data is considered to be the key reading because it gives us a more stable measure of inflation. Higher than expected readings could raise inflation fears and push mortgage rates higher tomorrow, while readings that fall short of forecasts could lead to lower rates.

The second report of the day is the University of Michigan’s Index of Consumer Sentiment. This index is released in a preliminary form each month and then followed up two weeks later with a final reading. The preliminary reading for July will be posted late tomorrow morning and is expected to fall from June’s final reading of 76.0. This would indicate that consumers were less comfortable with their own financial situations this month than last month. It is believed that if consumers are confident in their own finances, they are more apt to make large purchases in the near future. And with consumer spending making up two-thirds of our economy, investors pay close attention to reports such as these.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Float if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now…