Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Markets back to full strength today after being down yesterday and most of Monday. After two days of no trading the open at 9:30 was orderly, no wild movements. The stock indexes trading in the futures markets prior to the 9:30 open were slightly better; the 10 yr note and MBSs slightly weaker. Yesterday stocks and bond markets were closed all day; Monday the bond market did trade until 12:00, the 10 yr note yield fell 3 bp frm Friday’s close to 1.72% and MBS prices were +6 bp. In early trade this morning the 10 yr started at 1.75%. Being employment week on Friday, normally today ADP would release its report on non-farm private jobs but it is delayed until tomorrow due to the storm, the present estimate is for an increase of 155K jobs, better than estimates at the beginning of the week. Wednesday is also the day the weekly MBA mortgage applications are reported, it too has been delayed. At 8:30 Q3 Employment cost inflation nudged down in the third quarter, posting at a quarterly 0.4% gain, following a 0.5% rise in Q2. However, the year-ago pace is warming at 2.0% versus 1.7% in the second quarter. While the US was focused on the severe storm, in Europe markets traded as usual; both Monday and Tuesday the key markets in the region rallied. Stronger earnings from BP and banks and improvement in Italy’s and Spain’s interest rate markets supported markets. Two shares advanced for every one that fell in the European Stoxx 600, bringing this month’s gain to 1.3%. The gauge is on course for five straight months of gains, the longest winning streak in six years. The yield on Italy’s 10-year bond fell four basis points to 4.96%, declining for a second day. Similar-maturity Spanish debt yields slipped six basis points to 5.62%. The DJIA opened +20 at 9:30, NASDAQ unchanged and the S&P +2. At 9:30 the 10 yr note at 1.74% +2 bp frm the short day on Monday and -1 bp frm last Friday’s close. The 30 yr MBS unchanged frm Monday and +6 bp frm Friday’s close. At 9:45 the October Chicago purchasing mgrs. index, expected at 51.0 frm 49.7 in Sept, as reported 49.9. The Sept index was the first below the pivot 50 since the recovery began, now October adds another month. Readings below 50 indicate contraction while above 50 expansion. There was no reaction to the report in the equity markets but the 10 yr note dropped 1 bp to 1.72%. Markets so far are very subdued after the closures; no real activity so far. The bond market still holds a slightly bullish bias as does the MBS market. Today isn’t a day to make much of the trading. There is month end demand for treasuries, the end of the month generally causes trades in equities that have more to do with end of month positioning than longer term thoughts. The employment report is due on Friday; so far there isn’t any announcement that it will be delayed until Monday. And of course the election next Tuesday is a factor that will likely keep markets in narrow ranges.