Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Mortgage backed securities (MBS) lost -35 basis points from Friday's close which caused 30 year fixed rates to move upward. In fact, yesterday's sell off completely erased all of the prior week's improvement. MBS sold off immediately after the release of the ISM Manufacturing data. The market was expecting a reading of 54.0 and it came in at 55.7. A reading above 50 shows economic expansion (which is negative for your pricing) As a result, the benchmark FNMA 4.0 September coupon "tanked" to their worst levels of the day of -63BPS at 10:36EDT. Construction Spending was also better than market expectations (0.6% vs 0.3%) which was also negative for your pricing. But MBS climbed off of their bottom and started to regain some (but not all) of their early morning losses, rising from -63BPS to -39BPS on news that the Republican House Leader would support any action by President Obama against Syria. This temporarily gave some momentum to the speculation that Obama will get the support he needs from Congress and then launch a strike against Syria.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Mortgage backed securities (MBS) gained +22 basis points from last Friday's close which caused 30 year fixed rates to move slightly lower from the prior week. We had a very positive week for domestic economic data. Durable Goods Orders, Consumer Confidence, Consumer Sentiment, and GDP were all better than expected and showed some nice levels of growth in our economy. Normally, this would cause rates to rise because rates do go up hand-in-hand with economic growth. But instead, rates moved lower...why? This was due to solely to concerns over a U.S. military strike against Syria. Any military action always caused a "flight to safety". This is where domestic and international traders "park" their money in the very low-return but very safe U.S. bond market while they wait out any potential volatility due to the after effects and unintended consequences of any forceful action. This causes a temporary spike in demand for our bonds which in turn, lowers rates. But this type of improvement is only temporary.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Mortgage backed securities (MBS) lost -39 basis points from Tuesday's close which caused 30 year fixed rates to move higher and completely wiped out Tuesday's gains. Pending Home Sales disappointed, coming in at -1.3% which was worse than the consensus estimates of about -0.9% to +0.2% range. MBS were down -32BPS prior to the release of this report. And it was not enough off a disappointment to reverse MBS's downward trend. 5YR Treasury Auction results:$35 billion at 1.624% with a Bid To Cover 2.38 vs avg 2.74. This represented a pull back in demand compared to the last 10 auctions and provided a little more downward pressure on MBS. MBS essentially gave up a portion (but not all) of our "fear factor" rally that is due to concern that military action may escalate between Syria and the U.S. But as it is becoming clearer that White House will take more time for tests and confirmation to come in before deciding on which course of punishment (if any) will be dealt out to Syria, some of the temporary "fear factor" demand has pulled back causing your rates to rise.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Mortgage backed securities (MBS) gained +33 basis points from Monday's close which caused 30 year fixed rates to move slightly lower. It was our second straight day of +33BPS gains. The Case-Shiller Homer Price Index was a tad higher than market expectations (12.1% vs est of 12.0%). This is not a report that can impact your pricing this morning. Consumer Confidence was also better than expected (81.5 vs est of 80.0%). But both of these reports were overshadowed. We had two stories that provided a lift to MBS. First, Syria continues to grow as a concern among traders. If military action escalates it will provide a large amount of instability and uncertainty in the region and will cause (as all military conflicts do) a rush to the safe haven of our boring bonds. Secondly, its our debt ceiling. Treasury Secretary Jack Lew stated that we would hit our debt ceiling in October which is sooner than market had forecast. The last round of talks ended in our sequester and traders are concerned that the President and Congress are just as dysfunctional now as they were last time. As a result of the escalation of concern over a probable military strike in Syria, MBS reached their best levels of the day at +40BPS at 2:00EDT. We had a 2 year U.S. Treasury auction. Results: $34 billion at 0.386% with a bid-to-cover ratio of 3.21 vs. the recent avg of 3.48. As we have discussed, this is too short of a term to impact longer bond prices.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Mortgage backed securities (MBS) gained +28 basis points from last Friday's close which caused 30 year fixed rates to move lower. We had a fairly light week in terms of the number of economic releases and there were no major U.S. Treasury auctions to guide bond trades. It was a very choppy week as MBS sold off on Monday (higher rates), rebounded Tuesday (lower rates) and then sold off again on Wednesday (higher rates). On Friday, MBS rallied (better rates). We had a mixed bag of housing data as Existing Home Sales were much stronger than expected, while New Home Sales were much weaker than expected. The Federal Reserve Open Market Committee (FOMC) released the minutes from their last meeting. While it didn't provide any clear direction on the Fed's time table to start reducing their monthly bond purchases, it did appear as though a larger percentage of the voting members were open to some sort of taper in September. Friday's rally gave you the best rates of the week. This was due to the Fed's Bullard making a comment that the Fed can "afford to be deliberate" about their timing of reducing their monthly bond purchases. The rally was accelerated by a much weaker than expected New Home Sales report.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Mortgage backed securities (MBS) gained +62 basis points from Monday's close. This almost erased Monday's sell off of -68BPS, so far this week the net effect is that pricing is moving sideways. It was our second straight day of no major economic reports or Treasury auctions yesterday to guide traders. MBS moved upward right out of the gate, recovering some lost pricing after Monday's big sell-off. The reason for this? A temporary surge in demand from the emerging markets as fear of a Fed taper and subsequent higher U.S. rates, has the emerging markets scrambling to lock in some lower rates for their governments.

Mortgage Rates

Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Mortgage backed securities (MBS) lost -68 basis points from Friday and closed at their worst levels of 2013 which means that you saw your highest rates of 2013. MBS started the day selling off (worse pricing for you) as speculation among bond traders that the Fed would begin tapering their monthly MBS purchases on Sept 18th continued to mount. There were no economic release or Treasury auctions. Once again, the stock market and bond market moved in the same direction (both sold off). If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Mortgage Rates

Mortgage Rates We have a very light week for economic releases with Existing Home Sales and Weekly Initial Jobless Claims being the most important. The most impactful events this week will not economic reports but Fed events. Wednesday's FOMC minutes will be a major driving force in pricing as traders look to see how much traction tapering talk had at the last FOMC meeting. Thursday and Friday the market will focus on the Jackson Hole Wyoming meeting as Central Bankers and economists from around the world attend the retreat. Traders will be focusing on any discussion on the timing of the Fed's tapering of bond purchases and who the next Fed Chair will be. Sentiment continues to mount that the Fed will taper in September. We will need some new commentary from the Fed's talking heads that changes trader's minds from expecting a taper in September to December for MBS to see any improvement in pricing.

Mortgage Rates

Lock Advice 7-Day Neutral 7-15 Day Locking 15-30 Day Locking Mortgage backed securities (MBS) lost-49 basis points from Wednesday's close which caused 30 year fixed rates to move upward. MBS have now lost a big -135BPS from Monday's open to yesterday's close. Once again, we started the day selling off before our first dose of economic data even hit due to the German Sund (there version of our U.S. Treasury 10 Year note) saw their yields shoot up on continued optimism for growth in Germany and in Europe. This zapped money out of U.S. bonds which caused MBS pricing to rise. Then, Initial Jobless Claims were much better than expected (320K vs estimates of 335K) and hit a 6 year low. This is the type of data that traders think will cause the Fed to taper in September which of course pressured MBS further. enough to reverse the course of the morning's sell off.The Home Builder's Index was much stronger than expected (59 vs est 56) could count on these moving in opposite directions? They actually have been moving inthe same direction more often than not since April. This tells us that these markets are not as tethered as they once were and in many cases operate independently of each other. The stock market was under pressure due to earnings reports from CISCO and Walmart. The bond market was down due to strength in Europe,a better than expected Initial Weekly Jobless Claims report - which in turn led to great speculation about the Fed tapering in September. We had a mixed bag of economic data this morning. Both Building Permits and Housing Starts improved from their prior reading but came ina litue lighter than market expectations. These reports do not have the same impact as they did 5 years ago and probably wont until we get some readings consistently above 1M. Unit Labor Costs rose, this is not a big market mover but needs to be closely watched moving forward. Ifthis is a trend, then it is inflationary in nature and therefore negatiw for bonds longer term. Non-Fann Productivity was much better than expected (0.9% vs 0.5%). Now, normally this would cause MBS to rally. Because bonds love strong productivity levels. But offsetting this data was the fact that the prior reading of 0.5% was revised downward to -1.7%. We still have our biggest report of the day, Consumer Sentiment hdex due out just before 10EDT today. Pre-Market Status: Neutral. Overall, MBS did not really move on this morning's data. It looks like our floor of support is going to hold for the second straight trading session. It is all on today's Consumer Sentiment Index reading this morning. If we get a stronger than expected number, then it could provide enough momentum for us to break below our support level which would be ugly for your pricing. lfwe get a weaker than expected number, we could make up some lost ground from yesterday.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Mortgage backed securities (MBS) gained a paltry +8 basis points from Tuesday's close which caused 30 year fixed rates to move sideways. Both the headline and core PPI numbers were lighter than expected. This is normally (and the term "normally" doesn't always apply in today's market place) positive for bonds as it shows very low inflation. But it was very close to market expectations (0.1% vs est of 0.2%) and did not materially impacting pricing as MBS had some headwinds from Europe. The Eurozone posted 0.3 percent growth in the second quarter of 2013 from the first, beating expectations for 0.2 percent growth and signaling the end of the longest recession in continental Europe in over 40 years. This better than expected news has helped to keep pressure on MBS pricing yesterday. MBS traded in a fairly narrow range that was only 23BPS wide from our highs to our lows of the day and were confined to trade within the trading channel. The stock market (as measured by the DOW) tanked -113.35 but MBS barely moved...just another data point that demonstrates that stocks and bonds are operating independently of each other.

Mortgage Raes

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Mortgage backed securities (MBS) lost -68 basis points from Monday's close which caused 30 year fixed rates to move upward for the second straight trading session. MBS started the day with a -36BPS sell off (higher for you) even before the first U.S. economic report hit the wires. This was partially due to a carry over from Monday's momentum that was driven by tapering fears in the bond market. It was also partially due to a better than expected Sentiment data out of Germany. Remember, as we get better news out of Europe...MBS will sell off causing mortgage rates to rise. We had a mixed bag with yesterday morning's economic data. The headline Retail Sales data came in just a little lighter than market expectations (0.2% vs est of 0.3%) but the prior period was revised upward from 0.4% to 0.6%. Retail Sales Ex Autos were 0.5% vs est of 0.4%. Still, Retail Sales were up and not down and that also provided some slight pressure on pricing. Import Prices were lower than expected (0.2% vs 0.6%). This was very low if viewed on an inflationary basis and a slight positive for bonds but this report and the weaker than expected Business Inventories were overshadowed by the traction that Europe is gaining. The theme for yesterday was two-fold. 1) Bond traders' speculation that the Fed would begin tapering in September and 2) Growing sentiment among economists that Europe is about to emerge from their recession.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Mortgage backed securities (MBS) lost -26 basis points from Friday's close which caused 30 year fixed rates to move upward. MBS started the day on an upswing, primarily due to speculation about the upcoming German GDP report. By then end of the day, MBS had sold off -53BPS from our intra-day high. Besides pulling back for technical reasons, MBS sold off in the afternoon after the economists at the San Francisco Fed released a report estimating that the asset purchases (Treasuries and MBS) procured via QE3 have added only "a moderate boost" to economic growth. The economic letter, written by Vasco Curdia and Andrea Ferrero, senior economists at the San Francisco regional bank, focused on the Fed’s second round of asset purchases: $600 billion of long-term Treasuries purchased between November 2010 and June 2011. The economists said the purchases added about 0.13 percentage point to real GDP growth. And without the guidance from the Fed that rates would be held close to zero, QE2 would only have added 0.04 percentage point to growth, the economists found. Essentially, traders view this as the Fed nearing tapering in September since the "bang for the buck" doesn't seem to be there. And of course (not to beat a dead horse), the greater the threat of a taper in September....the more pressure on MBS and therefore, the higher the mortgage rate.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Mortgage backed securities (MBS) gained +0 basis points from last Friday's close which caused 30 year fixed rates to move sideways. So, for the past two weeks, MBS have moved only +8BPS which have kept mortgage rates fairly steady. Mortgage backed securities traded in a tight range and we avoided the major swings in pricing that we had in the prior week. We had light week in terms of the number of economic releases that hit the market and reports that were released were a mixed-bag. ISM Services came in much stronger than expected (56.0 vs est of 53.0) but Wholesale Inventories disappointed (-0.2% vs est of +0.2%). Initial Weekly Jobless Claims were very close to market expectations (333K vs est of 336K). So, the economic data didn't really drive our pricing last week. Instead it was Treasury auctions and Fed speak that were the major force in bond trades. We had three major U.S. Treasury auctions with the market focusing on the 10 year note and 30 year bond. Last week was all about the Fed and jobs. Both the 10 year and 30 year auctions came off weaker than their recent averages as measured by their bid-to-cover ratio but were still strong enough to keep MBS pricing up. Talking Feds: We had six different speeches by different Federal Reserve members, but few of them were voting members. Essentially, they all said the same thing: 1) the Fed needs to cut back their monthly bond purchases of Treasuries and mortgage backed securities, 2) it will most likely happen in 2013, 3) they need to see more economic improvement from the second half of this year before they move to taper and 4) they would not give a specific date for the first taper. The fact that there was no specific date for the Fed to begin tapering kept MBS at an elevated level which kept rates low.

Mortgage Rates

Mortgage Rates The benchmark FNMA 3.5% August coupon gained +13 basis points from Wednesday's close which gave a very small improvement to pricing. Initial Jobless Claims dropped lower and slightly beat the consensus estimates (333K vs 336K). This ls a nice level and is generally negative for MBS. But offsetting that headline data snippet is the fact that the prior week was revised upward and the Continuing Claims were worse than expected. As a result MBS rallied (better pricing for you). We reached our best levels of the day +30BPS at 11:45EDT. Many of you received a reprice for the better after that point But MBS started to retreat from their highs after the 30 year Treasury bond auction results were released at 1:05EDT. The bid-to-cover ratio (a key measure of demand) fell from the recent average of 2.55 down to 2.11 for this auction. This was negative for MBS and the benchmark FNMA 3.5% August coupon pulled back -21BPS from our highs as a result (worse pricing for you). MBS still closed in positive territory for the day but clearly our rally has "topped out". We issued a Special Report that informed you that we would be completing the monthly bond coupon rollover from August to September Friday morning.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com The benchmark FNMA 3.5% August coupon lost -13 basis points from Monday's close and traded in a fairly narrow range that was only -34BPS wide from our highs to our lows. The stock market, as measured by the DOW lost -93 points AND MBS are trading lower at -14BPS. This once again demonstrates that stocks and bonds are more often moving in the same direction. Our Trade Balance was a smaller deficit than expected. This does show some additional economic improvement and normally would have pressured MBS more but did not materially impact MBS pricing. The Economic Optimism Index was 45.1 vs est of 47.9, this is another report that doesn't usually impact pricing. We had a 3 year U.S. Treasury note auction. Results: $32 Billion at 0.651% with a bid-to-cover ratio of 3.21. That measurement of demand was lower than our last 10 year auction at 3.44. Talking "Feds": The President of the Chicago Fed, told reporters he expects growth in the second half of the year to accelerate to a 2.5% annual growth rate, from a paltry 1% rate over the past three quarters, and reach over 3% growth rate in 2014. Based on this forecast, the central bank is “quite likely” to slow down its $85 billion a-month asset purchase plan “starting later this year,” Evans said. The Chicago Fed president said he could not predict exactly at which meeting the central bank would start to taper. “I couldn’t tell you exactly which month that will be,” Evans said. “We need stronger evidence of accelerating growth, a little more momentum,” he added. “We’re not far from that.” As we have discussed several times, the market fully expects some sort of taper by the end of the year. The only question is: Will it be September or December? From a technical perspective, MBS have now traded below our proprietary ceiling of resistance for the tenth consecutive trading session.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com The benchmark FNMA 3.5% August coupon lost -99 BPS from Wednesday's close. We received more jobs data yesterday. Initial Jobless Claims were much lower than expected and dropped 19K from the previous week. The more closely watched 4 week moving average dropped 4,250. This coupled with Wednesday's strong ADP Private Payroll report once again had traders thinking that Friday's Non-Farm Payroll Report will be stronger than previously expected. As a result, MBS sold off (worse pricing for you). ISM Manufacturing was much stronger than expected (55.4 vs est of 52.0). This added fuel to the fire as traders speculated that Friday's employment data would improve. Construction Spending was down and that would have normally pressured MBS and helped mortgage rates but the prior reading was revised upward and so it was a wash.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com MBS sold off -52BPS (higher rates for you)on stronger than expected ADP Private Payrolls (200K vs 182K Est) and then we got hit with a much better than expected 2nd QTR GDP number (1.7 vs 1.2 estimate). We had a decent Chicago PMI report but it was less than market expectations and helped MBS to climb off of our lows for the morning and stay above our newest support level. There were no surprises with the FOMC meeting. They left their key interest rate unchanged and reaffirmed their previous guidance that they could continue to purchase $45 billion of U.S. Treasuries and $40 billion of GSE MBS each month. They also reaffirmed that they would increase or decrease the level of monthly bond purchases if they thought the economic data would support it. You can read the Fed's policy statement here: http://www.federalreserve.gov/newsevents/press/monetary/20130731a.htm As a result, MBS rebounded and rallied and moved back into positive territory. The FNMA Benchmark 3.5% August coupon moved from -30BPS at 2:00EDT to +30BPS by 3:15EDT...that is a +60BPS swing (better rates for you). This rally is not to be trusted though. As we stated, there was no new information yesterday and most likely their statement was prepared prior to baking in yesterday's ADP Private Payroll report. IF, Friday's Non-Farm Payroll report mirrors that of yesterday's ADP report, MBS will give up all of yesterday's late rally...so that is your risk vs. reward.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com The benchmark FNMA 3.5% August coupon lost -11BPS from Friday's close. We had a fairly quiet day...perhaps the "calm before the storm" this week. Pending Home Sales were better than expected (-0.4% vs -1.0%) and this is during the period where mortgage rates where near their highest of 2013. But MBS were not materially impacted by this report. From a technical perspective, MBS traded in a very tight range that was only 24BPS wide from our highs to our lows. Once again appetite for MBS decreased at the top of our trading channel which is our ceiling of resistance. However, the rest of the week is packed with highly influential economic data and other events that can significantly impact mortgage rates movement. There are seven economic reports that may affect mortgage pricing in addition to another FOMC meeting that certainly has the potential to cause chaos in the financial and mortgage markets. There is important economic data scheduled for release each of the remaining four days, so there is a strong likelihood of seeing noticeable mortgage rate movement several days, with more than including an intra-day revision. Overall, I am expecting to see an extremely active week for the financial markets and mortgage rates. I think that the most important day is either going to be Wednesday due to the GDP release and FOMC adjournment or Friday with July’s employment numbers being posted.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Mortgage backed securities (MBS) lost -49 basis points from last Friday's close which caused 30 year fixed rates to move higher. This ended the bond rally that had lasted for the two weeks prior to last week. We had a spread of 124 basis points between our highs and lows of the week. As we have discussed, MBS sell off when there is positive economic news. We certainly could have sold off even more given last week's data with Durable Goods Orders much stronger than expected (4.2 vs 0.5) and the Consumer Sentiment Index rising from 84.1 to 85.1. Existing Home Sales missed the market expectations but was still robust. New Home Sales enjoyed some nice gains in terms of unit sales and price increases. Demand for our 7 year Treasury auction saw some decent demand but our 5 year and 2 year auctions saw decreased demand. MBS would have lost more ground (even higher rates for you) if it weren't for a WSJ article that speculated that the Fed would change their language at this week's FOMC meeting to calm the markets that they would not be increasing their rates for a long time. We agree. They will certainly leave their Fed Funds rate alone but they will eventually have to start to pull back on bond purchases and those bond purchases are what impacts your mortgage rates...not their Fed Fund rate.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Mortgage backed securities (MBS) lost -53 basis points from Tuesday's close which caused 30 year fixed rates to move higher. The benchmark FNMA coupon has now lost -88BPS from Monday's highs. MBS were under pressure right from the first trade as they tanked -34BPS right out of the gate.Traders have been selling off of their positions as they no longer believe that the benchmark FNMA 3.5% August coupon can sustain their lofty levels of Monday's intra-day high. New Home Sales hit a five year high as they rose 8.3% in June. The seasonally adjusted annualized rate of 497K units is still a very small piece of the housing picture and so this report doesn't have the impact on pricing that it once did. But still it was positive economic news and did provide a light amount of pressure on pricing. The sell off of MBS was accelerated in response to the Flash Eurozone PMI rose to 50.4 (an 18th month high). A reading above 50 shows economic expansion. U.S. based bonds such as MBS have been a huge beneficiary of European weakness - so when European data surprises to the upside, U.S. bonds sell off. Which is what happened here. We had a 5 year Treasury note auction and the results were released at 1:05EDT. Results: $35 billion at 1.41% with a bid-to-cover ratio of 2.46 which is weaker demand than the 2.57 ratio of the last 10 year note auction. This also pressured MBS and drove us to our worst pricing levels of the day at 1:46EDT which was -82BPS from yesterday's close. But there was some good news - we did find a new temporary bottom and did get a nice bounce of that support level as MBS rallied from -82 BPS to -54BPS by 3:00EDT. That is a +28BPS improvement in pricing from our worst levels of the day.