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. Prior to 9:00 this morning the stock indexes were a little weaker while the rate markets saw more improvement. At 9:00 the June Case/Shiller 20 city home price index, expected unch frm May, increased 0.9%. and increased 0.5% from June 2011, the first gain since September 2010. The report said rising demand driven by mortgage costs close to a record low has trimmed the glut of unsold houses on the market, giving property values a lift. Prices covering all the U.S. increased 1.2% in the second quarter from the same time in 2011 compared with a 1.4% drop in the year ended March. “We seem to be witnessing exactly what we needed for a sustained recovery,” David Blitzer, chairman of the S&P index committee, said in a statement. “The market may have finally turned around.” Good news for the housing markets; recent data on existing and new home sales in July were also stronger than estimates when released last week. There was no noticeable reaction to the report. Markets looking toward the Jackson Hole conference beginning on Friday with Bernanke speaking, will he signal another easing at the Sept FOMC meeting, or disappoint markets that easing is not likely to occur in Sept? Most views and forecasts are that the Fed will ease soon with increased purchases of treasuries and mortgage-backed securities. Global economies are slowing, from Japan and China to Europe and the US; while some of the recent data is improving there is still weakness in employment, one of the Fed’s legal mandates. Easing again by the Fed will keep interest rates low but is unlikely to increase employment. Businesses are not likely to increase spending as long as Congress and the Administration are unable to agree on what to do when the Bush tax cuts and the SS cuts expire at the end of the year. Low rates are welcome but jobs are what will boost the economy. The Fed can’t help job growth by another easing move. The Jackson Hole conference that begins on Friday will be without ECB Pres. Draghi, he announced this morning he will not attend, saying his work load won’t allow him to attend. The ECB meeting is scheduled for Sept 6th, why he cancelled will be debated through the day. Is a deal to finally have a plan to help Greece, Spain and Italy getting closer? The calendar works against that view though; the ECB can’t achieve a plan of any substance until the German high court rules on the legality of the ECB’s EU constitution that restricts the bank from buying sovereign debt. Yields on Spanish and Italian bonds have plunged to three-month lows on optimism the ECB and the single currency’s 17 members will agree on a plan to use short-dated sovereign debt purchases to curb governments’ borrowing costs and win them time to implement fiscal changes. The German court will decide; what if the court deems it unconstitutional, then what-----another plan down the drain and the mess continues like a nightmare that won’t end. At 9:30 the DJIA opened -20, NASDAQ -5, S&P -3; the 10 yr note yield 1.64% -1 bp. MBS 30 yr price at 9:30 +15 bp frm yesterday’s close. At 10:00 August consumer confidence index declined more than though; the forecasts called for the index at 65.8, the index fell to 60.6 and July confidence was revised from 65.9 to 65.4. On the release the stock indexes declined a little while the bond and mortgage markets improved. The weaker index adds to the view that is dominant that the Fed is going to ease soon. Inch by inch the interest rate markets have improved on Fed easing. Technically the momentum oscillators have gained strength, the 10 yr found solid support last week when it increased to its 200 day average. Presently the rally has driven the 10 yr rate back down under its 20 day Average and now testing its 40 day.