Mortgage Rates

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. Weekly jobless claims this morning were up 8K to 365K frm the revised 357K last week (originally 353K). The median forecast of 47 economists surveyed by Bloomberg News called for an increase to 370,000. The past three weeks of claims have been less reliable as a true read on unemployment filings. Starting next week, the data should be clear of any influence from the annual auto plant re-tooling closures that make it difficult to adjust the data for seasonal variations, a Labor Department spokesman said as the report was released to the press. The four-week moving average for jobless claims, a less volatile measure than the weekly figures, fell to 365,500 last week, the lowest since March, from 368,250. The number of people continuing to receive jobless benefits dropped by 19,000 in the week ended July 21 to 3.27 million, a two-month low. Early this morning the US financial markets (stocks and bonds) were volatile. The stock indexes traded higher at about 8:00, the 10 yr note yield jumped to 1.58%, up 5 bp frm yesterday’s close. About 8:30 the ECB press conference started and turned markets over; the DJIA went from +84 early to -87 at 9:15 prior to the open. The 10 yr note yield declined to 1.47% as Spain and Italy saw selling in their markets. While the ECB did not announce any details of specific plans, Draghi made it clear the bank was ready to move after working out details over the next few weeks. He signaled the bank will join forces with governments to buy sovereign bonds in sufficient quantities to remove all doubts about the future of the euro. The yield on Italy’s 10-year government bond rose 23 basis point to 6.129% and the yield on Spain’s 10-year bond climbed 7 basis points to 6.716% on disappointment that it so far is just more talk The ECB intends to join forces with governments to buy bonds in sufficient quantities to ease the region’s debt crisis, while conceding that Germany’s Bundesbank has reservations about the plan. ECB bond purchases would likely focus on shorter-term maturities, would be conducted in a way to soothe investors’ concerns about seniority, and wouldn’t breach European Union rules prohibiting the financing of government deficits, Draghi told reporters in Frankfurt. ECB officials are working on the plan and details will be fleshed out in coming weeks, he said. While Draghi’s proposals go further than the ECB’s market interventions to date, he signaled that the 23-member Governing Council has yet to reach a final agreement. “It is clear and it is known that Mr. Weidmann and the Bundesbank have their reservations about programs that buy bonds,” Draghi said, referring to the head of the German central bank. The reaction to the ECB meeting so far is bolstering the US bond market on disappointment that there were no specifics from the meeting. Traders have been conditioned over the last three years to take whatever comes from the Europe debt problems with a handful of salt; at the moment safety moves are returning to treasuries and Europe and US stock markets decline on concerns that there are still huge hurdles that the ECB has to jump before anything actually will occur. At 9:30 the DJIA opened down 84, NASDAQ -26; the 10 yr note yield at 1.48% -5 bp and 30 yr MBSs +24 bp frm yesterday’s close. At 10:00 June factory orders expected +0.6%, declined 0.5%; another poor reading for the manufacturing sector that is slowing quickly now. Although the bond and mortgage markets are doing better this morning, the 10 yr note remains unable to break below 1.47%, the low yield that has been tested now four out of the last five sessions. Technically the wider perspective remains bullish but the short term outlook is at best neutral with momentum slowing.