Mortgage Blog
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Wednesday, September 7, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, September 07, 2011
After three days of selling in the stock market, the equity markets opening better this morning. Stocks up, interest rate prices lower; that is what we live with these days. The 10 yr note -12/32 at 9:15 the lowest of the session so far, the rate at 2.03%; mortgage prices -7/32 (.22 bp). The 10 yr note still working at 2.00%; yesterday morning in Europe the note yield fell to 1.91% then spent the US trading moving slowly higher to end the day at 1.98%. At 9:15 this morning the stock indexes were aiming to a higher open; the DJIA +137 and moving up into the 9:30 open.
There are no economic reports today until 2:00 this afternoon when the Fed will release its Beige Book; the Fed's detailed economic data from the 12 Fed districts. Generally nothing in the Book that markets are not aware of, but it does provide more detail from specific districts The Book normally doesn't present any surprises.
Early this morning the weekly MBA mortgage applications for last week showed minor gains in purchases but a decline in re-finances. The composite index for the week -4.9%. Low rates aren't boosting demand for refinancing or home purchasing, according to the Mortgage Bankers Association whose refinance index fell for the third straight week, down 6.3% in the September 2 week, with the purchase index up only 0.2% to hold near record lows. The 30-year mortgage rate, down nine basis points in the week to 4.23%, is near the record the low of last October. The 15-year rate, down eight basis points at 3.41%, is at a record low. This report offers very timely indications on the housing market as will this afternoon's commentary in the Beige Book.
Consumers have little reason or incentive to buy these days with prices and interest rates falling. Many that would like to re-finance and improve their financial situation are unable due to extreme tight underwriting and low appraisals. If the President and Congress want to do something that doesn't cost and may increase consumer confidence and spending they should open the pipeline increasing re-financing. Instead we have the FHFA launching $200B of lawsuits against banks and individuals over sub-prime bad loans. Will the FHFA also sue S&P, Moody's and Fitch for rating the CDOs made up of sub prime loans at AAA? No! If the government were to get out of the way the US economy would improve more quickly. Re-finance all mortgages that are current and have been current for six months with no appraisals and no credit underwriting; but no cash outs unless the appraisal allows it. Lowering mortgage payments is the same as getting a bonus or an increase in pay.
At 9:30 the DJIA opened +130, the 10 yr note -13/32 at 2.03% +5 bp and mortgage prices -7/32 (.22 bp) on 30s and -3/32 (.09 bp) on 15s.
The world is waiting for Obama tomorrow evening and what the opposition party will do with his proposals. Some of what he will announce is already out there; what isn't clear is how the Republicans will take it. Obama over the weekend set it up, saying politics has to be put aside. Yesterday John Boehner sent a letter to Obama indicating a somewhat conciliatory tone.
The 10 yr note really testing the 2.00% level, unable to sustain it below 2.00% for any length of time. We don't expect it will be easy to push rates much lower, however if the Fed steps up and increases buying at the long end of the curve the 10 will have an easier time of it. If, and it is a huge if, Obama and the Republicans can turn the outlook around with his plans the 10 won't hold below 2.00% and likely will edge higher----but not much.
MORTGAGE PRICES AT 10:05 AM, NOW 8/32 (.25 BP) LOWER THAN AT 9:30.
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, September 07, 2011
After three days of selling in the stock market, the equity markets opening better this morning. Stocks up, interest rate prices lower; that is what we live with these days. The 10 yr note -12/32 at 9:15 the lowest of the session so far, the rate at 2.03%; mortgage prices -7/32 (.22 bp). The 10 yr note still working at 2.00%; yesterday morning in Europe the note yield fell to 1.91% then spent the US trading moving slowly higher to end the day at 1.98%. At 9:15 this morning the stock indexes were aiming to a higher open; the DJIA +137 and moving up into the 9:30 open.
There are no economic reports today until 2:00 this afternoon when the Fed will release its Beige Book; the Fed's detailed economic data from the 12 Fed districts. Generally nothing in the Book that markets are not aware of, but it does provide more detail from specific districts The Book normally doesn't present any surprises.
Early this morning the weekly MBA mortgage applications for last week showed minor gains in purchases but a decline in re-finances. The composite index for the week -4.9%. Low rates aren't boosting demand for refinancing or home purchasing, according to the Mortgage Bankers Association whose refinance index fell for the third straight week, down 6.3% in the September 2 week, with the purchase index up only 0.2% to hold near record lows. The 30-year mortgage rate, down nine basis points in the week to 4.23%, is near the record the low of last October. The 15-year rate, down eight basis points at 3.41%, is at a record low. This report offers very timely indications on the housing market as will this afternoon's commentary in the Beige Book.
Consumers have little reason or incentive to buy these days with prices and interest rates falling. Many that would like to re-finance and improve their financial situation are unable due to extreme tight underwriting and low appraisals. If the President and Congress want to do something that doesn't cost and may increase consumer confidence and spending they should open the pipeline increasing re-financing. Instead we have the FHFA launching $200B of lawsuits against banks and individuals over sub-prime bad loans. Will the FHFA also sue S&P, Moody's and Fitch for rating the CDOs made up of sub prime loans at AAA? No! If the government were to get out of the way the US economy would improve more quickly. Re-finance all mortgages that are current and have been current for six months with no appraisals and no credit underwriting; but no cash outs unless the appraisal allows it. Lowering mortgage payments is the same as getting a bonus or an increase in pay.
At 9:30 the DJIA opened +130, the 10 yr note -13/32 at 2.03% +5 bp and mortgage prices -7/32 (.22 bp) on 30s and -3/32 (.09 bp) on 15s.
The world is waiting for Obama tomorrow evening and what the opposition party will do with his proposals. Some of what he will announce is already out there; what isn't clear is how the Republicans will take it. Obama over the weekend set it up, saying politics has to be put aside. Yesterday John Boehner sent a letter to Obama indicating a somewhat conciliatory tone.
The 10 yr note really testing the 2.00% level, unable to sustain it below 2.00% for any length of time. We don't expect it will be easy to push rates much lower, however if the Fed steps up and increases buying at the long end of the curve the 10 will have an easier time of it. If, and it is a huge if, Obama and the Republicans can turn the outlook around with his plans the 10 won't hold below 2.00% and likely will edge higher----but not much.
MORTGAGE PRICES AT 10:05 AM, NOW 8/32 (.25 BP) LOWER THAN AT 9:30.
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, September 07, 2011
After three days of selling in the stock market, the equity markets opening better this morning. Stocks up, interest rate prices lower; that is what we live with these days. The 10 yr note -12/32 at 9:15 the lowest of the session so far, the rate at 2.03%; mortgage prices -7/32 (.22 bp). The 10 yr note still working at 2.00%; yesterday morning in Europe the note yield fell to 1.91% then spent the US trading moving slowly higher to end the day at 1.98%. At 9:15 this morning the stock indexes were aiming to a higher open; the DJIA +137 and moving up into the 9:30 open.
There are no economic reports today until 2:00 this afternoon when the Fed will release its Beige Book; the Fed's detailed economic data from the 12 Fed districts. Generally nothing in the Book that markets are not aware of, but it does provide more detail from specific districts The Book normally doesn't present any surprises.
Early this morning the weekly MBA mortgage applications for last week showed minor gains in purchases but a decline in re-finances. The composite index for the week -4.9%. Low rates aren't boosting demand for refinancing or home purchasing, according to the Mortgage Bankers Association whose refinance index fell for the third straight week, down 6.3% in the September 2 week, with the purchase index up only 0.2% to hold near record lows. The 30-year mortgage rate, down nine basis points in the week to 4.23%, is near the record the low of last October. The 15-year rate, down eight basis points at 3.41%, is at a record low. This report offers very timely indications on the housing market as will this afternoon's commentary in the Beige Book.
Consumers have little reason or incentive to buy these days with prices and interest rates falling. Many that would like to re-finance and improve their financial situation are unable due to extreme tight underwriting and low appraisals. If the President and Congress want to do something that doesn't cost and may increase consumer confidence and spending they should open the pipeline increasing re-financing. Instead we have the FHFA launching $200B of lawsuits against banks and individuals over sub-prime bad loans. Will the FHFA also sue S&P, Moody's and Fitch for rating the CDOs made up of sub prime loans at AAA? No! If the government were to get out of the way the US economy would improve more quickly. Re-finance all mortgages that are current and have been current for six months with no appraisals and no credit underwriting; but no cash outs unless the appraisal allows it. Lowering mortgage payments is the same as getting a bonus or an increase in pay.
At 9:30 the DJIA opened +130, the 10 yr note -13/32 at 2.03% +5 bp and mortgage prices -7/32 (.22 bp) on 30s and -3/32 (.09 bp) on 15s.
The world is waiting for Obama tomorrow evening and what the opposition party will do with his proposals. Some of what he will announce is already out there; what isn't clear is how the Republicans will take it. Obama over the weekend set it up, saying politics has to be put aside. Yesterday John Boehner sent a letter to Obama indicating a somewhat conciliatory tone.
The 10 yr note really testing the 2.00% level, unable to sustain it below 2.00% for any length of time. We don't expect it will be easy to push rates much lower, however if the Fed steps up and increases buying at the long end of the curve the 10 will have an easier time of it. If, and it is a huge if, Obama and the Republicans can turn the outlook around with his plans the 10 won't hold below 2.00% and likely will edge higher----but not much.
MORTGAGE PRICES AT 10:05 AM, NOW 8/32 (.25 BP) LOWER THAN AT 9:30.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, September 07, 2011
After three days of selling in the stock market, the equity markets opening better this morning. Stocks up, interest rate prices lower; that is what we live with these days. The 10 yr note -12/32 at 9:15 the lowest of the session so far, the rate at 2.03%; mortgage prices -7/32 (.22 bp). The 10 yr note still working at 2.00%; yesterday morning in Europe the note yield fell to 1.91% then spent the US trading moving slowly higher to end the day at 1.98%. At 9:15 this morning the stock indexes were aiming to a higher open; the DJIA +137 and moving up into the 9:30 open.
There are no economic reports today until 2:00 this afternoon when the Fed will release its Beige Book; the Fed's detailed economic data from the 12 Fed districts. Generally nothing in the Book that markets are not aware of, but it does provide more detail from specific districts The Book normally doesn't present any surprises.
Early this morning the weekly MBA mortgage applications for last week showed minor gains in purchases but a decline in re-finances. The composite index for the week -4.9%. Low rates aren't boosting demand for refinancing or home purchasing, according to the Mortgage Bankers Association whose refinance index fell for the third straight week, down 6.3% in the September 2 week, with the purchase index up only 0.2% to hold near record lows. The 30-year mortgage rate, down nine basis points in the week to 4.23%, is near the record the low of last October. The 15-year rate, down eight basis points at 3.41%, is at a record low. This report offers very timely indications on the housing market as will this afternoon's commentary in the Beige Book.
Consumers have little reason or incentive to buy these days with prices and interest rates falling. Many that would like to re-finance and improve their financial situation are unable due to extreme tight underwriting and low appraisals. If the President and Congress want to do something that doesn't cost and may increase consumer confidence and spending they should open the pipeline increasing re-financing. Instead we have the FHFA launching $200B of lawsuits against banks and individuals over sub-prime bad loans. Will the FHFA also sue S&P, Moody's and Fitch for rating the CDOs made up of sub prime loans at AAA? No! If the government were to get out of the way the US economy would improve more quickly. Re-finance all mortgages that are current and have been current for six months with no appraisals and no credit underwriting; but no cash outs unless the appraisal allows it. Lowering mortgage payments is the same as getting a bonus or an increase in pay.
At 9:30 the DJIA opened +130, the 10 yr note -13/32 at 2.03% +5 bp and mortgage prices -7/32 (.22 bp) on 30s and -3/32 (.09 bp) on 15s.
The world is waiting for Obama tomorrow evening and what the opposition party will do with his proposals. Some of what he will announce is already out there; what isn't clear is how the Republicans will take it. Obama over the weekend set it up, saying politics has to be put aside. Yesterday John Boehner sent a letter to Obama indicating a somewhat conciliatory tone.
The 10 yr note really testing the 2.00% level, unable to sustain it below 2.00% for any length of time. We don't expect it will be easy to push rates much lower, however if the Fed steps up and increases buying at the long end of the curve the 10 will have an easier time of it. If, and it is a huge if, Obama and the Republicans can turn the outlook around with his plans the 10 won't hold below 2.00% and likely will edge higher----but not much.
MORTGAGE PRICES AT 10:05 AM, NOW 8/32 (.25 BP) LOWER THAN AT 9:30.
Tuesday, September 6, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, September 06, 2011
This Week; there isn't much in the way of key economic data. The week is all focused on Thursday evening when the President will speak to a joint session of Congress to lay out his plans to create jobs. Yes, it will be interesting but it will be mostly political, chiding Republicans to get on board his plan what ever it might be. In the meantime the economy is continuing to slide; no new jobs created in August rocked the markets last Friday. Likely the President will announce a lot of construction jobs such as bridges, airports and roads since they can be up and running quickly. Unlikely he will ever use the phrase "shovel-ready" again since his last attempt to increase jobs that were "shovel-ready" turned out to be a dud. It will require more spending, how will that go down with conservatives? Not well. Consensus among pundits is that his speech will be the foundation of his agenda for the economic recovery that will set the tone for next year.
Over the weekend foreign equity markets were hit hard. The 10-yr yield to a record low 1.911%. A flight to safety in response to Monday's sell off in equity markets around the world was reversed after the Swiss National Bank took drastic measures, announcing a peg of 1.20 euro per 1 franc (trading at 1.10 pre-announcement). At 8:30 this morning the 10 yr traded at 1.94%. Mortgage markets will likely drag along but won't move as much as rates fall as treasuries. At 8:30 the 10 yr note +14/32, mortgage prices -3/32.
The increasing view is that the Fed will do another easing by increasing its balance sheet with longer dated maturities while selling shorted dated notes. Mostly talk so far but we hear it coming from many different sources. Markets are the measuring stick and traders are anticipating the move. In the last couple of days the 10 yr note and 30 yr bond yields declined while the middle of the curve (5 yr note) has remained generally unchanged and the 2 yr note actually increased in rate. If that will be the Fed's easing plan, will it get businesses to spend and hire, will it jump start home buying, will it support job growth? There will be no place to go to earn any return on cash; the stock market isn't going to improve if employment remains stagnant, can't park money in the bond markets, the 30 yr bond has fallen 37 bp in the last two weeks---maybe some corporates, but not much; gold will likely continue higher as investors scramble for any kind of return. Commodities may increase but again without economic growth there is a limit on how much higher prices will go. The Federal Reserve is essentially out of bullets; from now on it is up to fiscal policies (Congress and the Administration).
At 9:30 the DJIA opened down 210 points, the 10 yr note +16/32 at 1.94% -6 bp; mortgage prices +1/32 (.03 p). By 9:35 the DJIA down 270, NASDAQ -58 and the S&P -28.
At 10:00 the August ISM services sector index, expected at 51.0 frm 52.7 in July, was at 53.3. The components; new orders 52.8 frm 51.7, employment 51.6 frm 52.5 and prices pd at 64.2 frm 56.6. Not much reaction to the slightly better data on services. Although better the services sector is still generally flat based on the data. Prices pd did increase, the first increase in many weeks. No recession based on the data but no real growth either.
This Week's Economic Calendar:
Wednesday;
7:00 am weekly MBA mortgage applications
2:00 pm Fed Beige Book
Thursday;
8:30 am weekly jobless claims (-9K to 400K; con't clams 3.70 mil from 3.735 mil last week)
July US trade balance (-$51.5B)
3:00 pm July consumer credit (+$5.0B)
8:00 pm President Obama's speech
Friday;
10:00 am July wholesale inventories (+0.7%)
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, September 06, 2011
This Week; there isn't much in the way of key economic data. The week is all focused on Thursday evening when the President will speak to a joint session of Congress to lay out his plans to create jobs. Yes, it will be interesting but it will be mostly political, chiding Republicans to get on board his plan what ever it might be. In the meantime the economy is continuing to slide; no new jobs created in August rocked the markets last Friday. Likely the President will announce a lot of construction jobs such as bridges, airports and roads since they can be up and running quickly. Unlikely he will ever use the phrase "shovel-ready" again since his last attempt to increase jobs that were "shovel-ready" turned out to be a dud. It will require more spending, how will that go down with conservatives? Not well. Consensus among pundits is that his speech will be the foundation of his agenda for the economic recovery that will set the tone for next year.
Over the weekend foreign equity markets were hit hard. The 10-yr yield to a record low 1.911%. A flight to safety in response to Monday's sell off in equity markets around the world was reversed after the Swiss National Bank took drastic measures, announcing a peg of 1.20 euro per 1 franc (trading at 1.10 pre-announcement). At 8:30 this morning the 10 yr traded at 1.94%. Mortgage markets will likely drag along but won't move as much as rates fall as treasuries. At 8:30 the 10 yr note +14/32, mortgage prices -3/32.
The increasing view is that the Fed will do another easing by increasing its balance sheet with longer dated maturities while selling shorted dated notes. Mostly talk so far but we hear it coming from many different sources. Markets are the measuring stick and traders are anticipating the move. In the last couple of days the 10 yr note and 30 yr bond yields declined while the middle of the curve (5 yr note) has remained generally unchanged and the 2 yr note actually increased in rate. If that will be the Fed's easing plan, will it get businesses to spend and hire, will it jump start home buying, will it support job growth? There will be no place to go to earn any return on cash; the stock market isn't going to improve if employment remains stagnant, can't park money in the bond markets, the 30 yr bond has fallen 37 bp in the last two weeks---maybe some corporates, but not much; gold will likely continue higher as investors scramble for any kind of return. Commodities may increase but again without economic growth there is a limit on how much higher prices will go. The Federal Reserve is essentially out of bullets; from now on it is up to fiscal policies (Congress and the Administration).
At 9:30 the DJIA opened down 210 points, the 10 yr note +16/32 at 1.94% -6 bp; mortgage prices +1/32 (.03 p). By 9:35 the DJIA down 270, NASDAQ -58 and the S&P -28.
At 10:00 the August ISM services sector index, expected at 51.0 frm 52.7 in July, was at 53.3. The components; new orders 52.8 frm 51.7, employment 51.6 frm 52.5 and prices pd at 64.2 frm 56.6. Not much reaction to the slightly better data on services. Although better the services sector is still generally flat based on the data. Prices pd did increase, the first increase in many weeks. No recession based on the data but no real growth either.
This Week's Economic Calendar:
Wednesday;
7:00 am weekly MBA mortgage applications
2:00 pm Fed Beige Book
Thursday;
8:30 am weekly jobless claims (-9K to 400K; con't clams 3.70 mil from 3.735 mil last week)
July US trade balance (-$51.5B)
3:00 pm July consumer credit (+$5.0B)
8:00 pm President Obama's speech
Friday;
10:00 am July wholesale inventories (+0.7%)
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, September 06, 2011
This Week; there isn't much in the way of key economic data. The week is all focused on Thursday evening when the President will speak to a joint session of Congress to lay out his plans to create jobs. Yes, it will be interesting but it will be mostly political, chiding Republicans to get on board his plan what ever it might be. In the meantime the economy is continuing to slide; no new jobs created in August rocked the markets last Friday. Likely the President will announce a lot of construction jobs such as bridges, airports and roads since they can be up and running quickly. Unlikely he will ever use the phrase "shovel-ready" again since his last attempt to increase jobs that were "shovel-ready" turned out to be a dud. It will require more spending, how will that go down with conservatives? Not well. Consensus among pundits is that his speech will be the foundation of his agenda for the economic recovery that will set the tone for next year.
Over the weekend foreign equity markets were hit hard. The 10-yr yield to a record low 1.911%. A flight to safety in response to Monday's sell off in equity markets around the world was reversed after the Swiss National Bank took drastic measures, announcing a peg of 1.20 euro per 1 franc (trading at 1.10 pre-announcement). At 8:30 this morning the 10 yr traded at 1.94%. Mortgage markets will likely drag along but won't move as much as rates fall as treasuries. At 8:30 the 10 yr note +14/32, mortgage prices -3/32.
The increasing view is that the Fed will do another easing by increasing its balance sheet with longer dated maturities while selling shorted dated notes. Mostly talk so far but we hear it coming from many different sources. Markets are the measuring stick and traders are anticipating the move. In the last couple of days the 10 yr note and 30 yr bond yields declined while the middle of the curve (5 yr note) has remained generally unchanged and the 2 yr note actually increased in rate. If that will be the Fed's easing plan, will it get businesses to spend and hire, will it jump start home buying, will it support job growth? There will be no place to go to earn any return on cash; the stock market isn't going to improve if employment remains stagnant, can't park money in the bond markets, the 30 yr bond has fallen 37 bp in the last two weeks---maybe some corporates, but not much; gold will likely continue higher as investors scramble for any kind of return. Commodities may increase but again without economic growth there is a limit on how much higher prices will go. The Federal Reserve is essentially out of bullets; from now on it is up to fiscal policies (Congress and the Administration).
At 9:30 the DJIA opened down 210 points, the 10 yr note +16/32 at 1.94% -6 bp; mortgage prices +1/32 (.03 p). By 9:35 the DJIA down 270, NASDAQ -58 and the S&P -28.
At 10:00 the August ISM services sector index, expected at 51.0 frm 52.7 in July, was at 53.3. The components; new orders 52.8 frm 51.7, employment 51.6 frm 52.5 and prices pd at 64.2 frm 56.6. Not much reaction to the slightly better data on services. Although better the services sector is still generally flat based on the data. Prices pd did increase, the first increase in many weeks. No recession based on the data but no real growth either.
This Week's Economic Calendar:
Wednesday;
7:00 am weekly MBA mortgage applications
2:00 pm Fed Beige Book
Thursday;
8:30 am weekly jobless claims (-9K to 400K; con't clams 3.70 mil from 3.735 mil last week)
July US trade balance (-$51.5B)
3:00 pm July consumer credit (+$5.0B)
8:00 pm President Obama's speech
Friday;
10:00 am July wholesale inventories (+0.7%)
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, September 06, 2011
This Week; there isn't much in the way of key economic data. The week is all focused on Thursday evening when the President will speak to a joint session of Congress to lay out his plans to create jobs. Yes, it will be interesting but it will be mostly political, chiding Republicans to get on board his plan what ever it might be. In the meantime the economy is continuing to slide; no new jobs created in August rocked the markets last Friday. Likely the President will announce a lot of construction jobs such as bridges, airports and roads since they can be up and running quickly. Unlikely he will ever use the phrase "shovel-ready" again since his last attempt to increase jobs that were "shovel-ready" turned out to be a dud. It will require more spending, how will that go down with conservatives? Not well. Consensus among pundits is that his speech will be the foundation of his agenda for the economic recovery that will set the tone for next year.
Over the weekend foreign equity markets were hit hard. The 10-yr yield to a record low 1.911%. A flight to safety in response to Monday's sell off in equity markets around the world was reversed after the Swiss National Bank took drastic measures, announcing a peg of 1.20 euro per 1 franc (trading at 1.10 pre-announcement). At 8:30 this morning the 10 yr traded at 1.94%. Mortgage markets will likely drag along but won't move as much as rates fall as treasuries. At 8:30 the 10 yr note +14/32, mortgage prices -3/32.
The increasing view is that the Fed will do another easing by increasing its balance sheet with longer dated maturities while selling shorted dated notes. Mostly talk so far but we hear it coming from many different sources. Markets are the measuring stick and traders are anticipating the move. In the last couple of days the 10 yr note and 30 yr bond yields declined while the middle of the curve (5 yr note) has remained generally unchanged and the 2 yr note actually increased in rate. If that will be the Fed's easing plan, will it get businesses to spend and hire, will it jump start home buying, will it support job growth? There will be no place to go to earn any return on cash; the stock market isn't going to improve if employment remains stagnant, can't park money in the bond markets, the 30 yr bond has fallen 37 bp in the last two weeks---maybe some corporates, but not much; gold will likely continue higher as investors scramble for any kind of return. Commodities may increase but again without economic growth there is a limit on how much higher prices will go. The Federal Reserve is essentially out of bullets; from now on it is up to fiscal policies (Congress and the Administration).
At 9:30 the DJIA opened down 210 points, the 10 yr note +16/32 at 1.94% -6 bp; mortgage prices +1/32 (.03 p). By 9:35 the DJIA down 270, NASDAQ -58 and the S&P -28.
At 10:00 the August ISM services sector index, expected at 51.0 frm 52.7 in July, was at 53.3. The components; new orders 52.8 frm 51.7, employment 51.6 frm 52.5 and prices pd at 64.2 frm 56.6. Not much reaction to the slightly better data on services. Although better the services sector is still generally flat based on the data. Prices pd did increase, the first increase in many weeks. No recession based on the data but no real growth either.
This Week's Economic Calendar:
Wednesday;
7:00 am weekly MBA mortgage applications
2:00 pm Fed Beige Book
Thursday;
8:30 am weekly jobless claims (-9K to 400K; con't clams 3.70 mil from 3.735 mil last week)
July US trade balance (-$51.5B)
3:00 pm July consumer credit (+$5.0B)
8:00 pm President Obama's speech
Friday;
10:00 am July wholesale inventories (+0.7%)
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