Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com US markets opened unchanged this morning; the 10 yr and MBSs unchanged from yesterday’s close at 8:00. Weekly jobless claims were released at 8:30, claims were expected to have declined to 415K frm 439K last week. Claims were down 41K to 410K with last week’s claims revised to 451K. Claims are being impacted by Sandy, as such there is little reaction to the data until the effect diminishes. The level of claims reflects the economic drag associated with Sandy, which made landfall in the Northeast on Oct. 29, killing more than 100 in the U.S. and leaving about 8 million homes and businesses without power for days. Before the storm- related surge in unemployment applications, companies limited hiring in the wake of a global economic slowdown and uncertain U.S. fiscal outlook. In Europe Greece is still the topic; European Union finance ministers meeting in Brussels yesterday left the next tranche of Greek aid frozen until another meeting on Nov. 26. They failed to tackle the dual task of steering an extra 32.6 billion euros to Greece through 2016 while finding a way to tame the resulting increase in the nation’s debt, already the highest in Europe. Spain’s interest rates declined today on comments from Angela Merkel that she saw a chance for a deal to save Greece. There isn’t any reaction to current issues on Europe’s debt crisis; no safety moves to US treasuries. At 9:00 the 10 yr note unchanged at 1.67%, 30 yr MBSs +3 bp; a quiet start today in the bond and stock markets ahead of the holiday. A lot of talk about Black Friday and how consumers will spend over the weekend. At 9:30 the stock indexes opened unchanged then gained a some momentum after the open; 10 yr note up 2 bp at 1.69%, now above its 20 and 40 day averages. MBSs at 9:30 unch on 30s. At 9:55 the final Nov. U. of Michigan consumer sentiment index was expected at 84.0 frm 84.9, the index fell to 82.7. There was little reaction to the weaker index; it still is the highest final month index read in four years. Unlikely the decline will have any impact on the outlook for Black Friday and Christmas shopping. The final data this week; at 10:00 October leading economic indicators was expected +0.2%, it was right on at +0.2%. LEI doesn’t generally elicit much market reaction. Trading today will be on the light side ahead of Thanksgiving and a short session on Friday. The stock market will trade all day today and will be open until 1:00 on Friday; the bond market will traded until 2:00 on Friday. Unless there is some kind of unexpected shock out of Europe markets will likely sit quietly now until next week when Congress and the Administration re-start talks on the deficit and that famed cliff. There have been a lot of forecasts that US interest rates are likely to decline and MBS rates hitting new lows in interest rates. Talk is one thing, price action in the markets is where the rubber meets the road and presently rates are increasing. We still hold that MBS rates saw their lows last July and believe rates won’t decline to those low rates. The 10 yr yield fell to 1.40% in late July, now climbing to 1.69% above its 20 and 40 day averages with the relative strength index now slightly bearish. Although we don’t expect new lows in rates, equally we are not expecting rates will increase much. Today and Friday trading will be thin, at times thin markets can exaggerate movements.