Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com The bond and mortgage markets were closed yesterday for Columbus Day, the stock market traded. Key indexes were lower yesterday with the DJIA down 26.50 and NASDAQ -24. This morning in pre-market trade stock indexes were better indicating a better open at 9:30. The 10 yr note this morning at 7:00 am was up15/32 to 1.69% frm 1.74% at the close on Friday; by 9:00 however the 10 yr gave back most of the overnight improvement, at 1.72% up 6/32. Mortgage prices at 9:00 up just slightly +8 bp. There are no economic reports today. At 1:00 Treasury will auction $32B of 3 yr notes beginning three days of borrowing. Wednesday $21b of 10 yr notes and Thursday $13B of 30 yr bonds. The U.S. government has attracted a record $3.16 in bids for each dollar of the $1.59 trillion of securities it has sold in 2012, according to data compiled by Bloomberg. That exceeds the previous high of $3.04 set last year. Good demand primarily driven by safety moves against the on-going morass in Europe. The World Bank said growth in developing East Asia, which excludes Japan and India, will probably ease to 7.2% this year from 8.3% in 2011. That is the slowest pace since 2001, according to World Bank data, and lower than a forecast in May of 7.6% The International Monetary Fund is set to revise down its global outlook for this year tomorrow at an annual meeting in Tokyo where officials will tackle a slowdown triggered by Europe’s sovereign-debt crisis. European officials will move to prevent Spain from triggering a new round of convulsions as policy makers begin preparing for a summit next week aimed at easing the region’s three-year-old debt crisis. European finance ministers met in Luxembourg yesterday to discuss Spain’s overhaul effort and closer banking cooperation. Today, German Chancellor Angela Merkel makes her first visit to Greece since the crisis began in 2009. Spanish Prime Minister Mariano Rajoy travels for talks with French president Francois Hollande in Paris. EU leaders gather for a summit in Brussels on Oct. 18-19. German industrial production declined in August as the debt crisis damped economic growth and prompted companies to scale back investment. Production fell 0.5% from July, when it gained 1.2%, the Economy Ministry in Berlin said yesterday. Economists had forecast a drop of 0.6%. German bonds slipped as Chancellor Angela Merkel arrived in Athens for her first visit to Greece since the financial crisis began in 2009. The 10-year bund yield added two basis points to 1.50% today. Last Friday’s Sept employment report is still being debated; some think it was a conspiracy driven by the Administration, others see it at as flawed data. Neither is correct (I hope), I can’t wrap my arms around the theory advanced by ex CEO of GE Jack Welch. The data is surely to be revised in future reports. The markets (bonds and stocks) didn’t take the report seriously as there was only a minor improvement for the key indexes and then yesterday the meager Friday gains were taken back. The interest rate markets didn’t sell off as would be expected if the 0.4% decline in the unemployment rate in one month was taken seriously. The economy is growing at less than 2.0%, no way that many real jobs were generated in one month, no other data suggests anything near that. Traders are simply ignoring the report and moving on. The National Federation of Independent Business’s optimism index fell to 92.8 from an August reading of 92.9. Four of the 10 components that make up the gauge decreased. Confidence among U.S. small businesses cooled in September as fewer companies said they planned to hire or invest in new equipment. The fourth decline in the past five months for the measure showed business leaders are probably putting off some of their hiring and investment decisions because of a lack of clarity on tax and regulatory policy. At the same time, more companies expected better economic conditions in six months, signaling a pickup in sales and employment may take time to develop. At 9:30 the DJIA opened -24, NASDAQ -12, S&P -3. The 10 yr note +6/32 1.72% -2 bp; 30 yr MBS prices +9 bp.