Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Very early this morning the stock indexes were trading about unchanged while the Treasury and mortgage markets were better. At 9:00 the 10 yr note yield at 1.69% -3 bp, 30 yr MBSs +18 bp. Friday the bond and mortgage markets traded weaker in the morning then improved in the afternoon with many lenders re-pricing better; this morning the mortgage market better than Friday’s closes. Obviously the markets (and the world) are focused totally on the election tomorrow. The polls continue to be close and regardless of which poll one looks at all are within the margin of error. Most of the talk today is centered on the what if debate; what if Romney wins, what if Obama is re-elected? What is the outlook for the coming fiscal cliff that will increase all taxes if not extended? How will the make-up of the next Congress effect the necessary spending cuts and higher taxes be resolved, or will the gridlock continue? The unanswered questions are many; who will be the next Fed chairman, Bernanke’s term ends in 2014? In the meantime, until the election results are in the markets should trade quietly. At 9:30 the DJIA opened -23, NASADAQ -3, S&P -3. 10 yr note 1.69% -3 bp. 30 yr MBSs +23 bp frm Friday’s close. The only data point today; at 10:00 Oct ISM services index was expected at 54.9 frm 55.1 in Sept. As released the index fell to 54.2; still above 50 indicating expansion but like most of the other economic measurements not indicating a lot of improvement. The data added to selling in the stock markets. Europe still lurks in the background these days and Greece is returning to the front trying to get its budget in line with requirements in order to get another bail-out from the EU. The region has been quiet over the last couple of weeks; no real changes and nothing concrete coming out. Spain and Italy are the giants in the room in terms of getting assistance to keep their banks from defaulting. Spain remains reluctant to ask for aid from the ECB to buy its bonds to keep rates from increasing. Looking for the best deal the country can negotiate with the ECB keeps global markets focused. German 10-year bunds rose for a fourth day, pushing the yield to 1.43%, the lowest in more than a month, as investors sought Europe’s safest government securities. Spain’s 10-year yield climbed 10 basis points to 5.76%, the highest since Oct. 17, and adding to last week’s increase of seven basis points. NY, New Jersey and the rest of the region that suffered the brunt of last week’s storm are continuing to be without power in much of the area and gasoline is now being rationed in New Jersey. Now the weather is turning colder and there is another storm coming according to forecasters. A nor’easter may bring gusty winds, heavy rain and even snow this week across much of the U.S. East Coast that was hit by Hurricane Sandy last week. Winds of 45 to 55 miles (72 to 89 kilometers) per hour are expected to accompany coastal flooding and precipitation in New Jersey as the storm moves up the coast from Nov. 7 to 9, The economic and financial impact yet to be fully assessed. Tomorrow the election, according to some reports there are some precincts that are not likely to be up and running, then there is the difficulty of getting to the polls. Another one of the uncertainties that hang over the markets this week. The bond and mortgage markets continue their positive biases. Technically the 10 yr yield is trading under its 20, 40 and 200 day averages, trading has been choppy however with traders keeping the rates in narrow ranges for the past few weeks. So far any selling has not seen any follow-through, nor have rallies seen much movement. The US bond markets are improving today on minor safe haven moves ahead of the toss-up election.