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, September 13, 2012 A little better start this morning with MBS prices at 9:00 up 31 bp on FNMA 30s, the 10 yr note yield at 1.73% -3 bp. Weekly jobless claims were expected up 5K to 369K as reported claims increased 15K to 382K, last week’s claims were revived up 2K frm 365K to 367K. Claims the highest in two months. Tropical Storm Isaac resulted in about 9,000 applications for benefits, the Labor Dept. said. The four-week moving average, a less volatile measure than the weekly figures, climbed to 375,000 last week, the highest in almost two months, from 371,750. The number of people continuing to receive jobless benefits dropped by 49,000 in the week ended Sept. 1 to 3.28 million. Wholesale prices in the U.S. increased in August by the most in more than three years, reflecting a surge in energy costs. The producer price index climbed 1.7% after an increase of 0.3% in July, the Labor Department reported. The core rate, ex food and energy was in line with estimates, up 0.2%. Compared with a year ago, companies paid 2.0% more for goods, after a 0.5% gain in the 12 months ended in July. The core index increased 2.5% in the year ended in August, matching the rise a month earlier. Fuel costs surged 6.4% from the prior month after five straight declines. Gasoline prices advanced 13.6%, while home heating oil costs increased 10.8%, the most since October 2010. The producer price index is one of several inflation measures monitored by the Fed. The consumer price index, due tomorrow, is projected to increase 0.6%. At 9:30 the DJIA opened +2, NASDAQ and S&P +1. The 10 yr note at 1.72% -4 bp frm yesterday’s close with MBS prices +20 bp. It is all about what the FOMC policy statement will say at 12:30 this afternoon and Bernanke’s press conference at 2:15. Markets generally believe some kind of easing will be announced by the Fed; interesting though this morning, there is talk that the Fed easing won’t be enough or do much good for the economy; something we have been saying for weeks. Buying treasuries and/or MBSs won’t increase employment or get businesses to spend. The calendar continues to click off days until the election and what Congress will do with the Bush tax cuts and the SS cut that will end at the end of the year. What the Fed does is secondary to how those issues will be resolved. Don’t expect businesses and consumers to increase spending until Congress and the Administration deal with them. If at the end of the day today the 10 yr note yield is higher than yesterday’s close (1.76%) we will want to lock all loans regardless of the date to closing. The bond market has to hold here; most of the safety trades into the bond market over the last two years have been closed out; any additional increase in rates will be a result of a stronger economic outlook. Technically, the 10 yr note has been bearish now for over a week, mostly due to the risk off on so-called progress in Europe. The ECB will buy bonds from Spain and Italy, however those economies are declining; Greece is just a waiting game before it has to exit the EU.