Mortgage Rate Update
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Friday, March 2, 2012
Mortgage Rates
Treasuries and mortgage markets opened a little better this morning after three days of selling taking the 10 yr to 2.03% yesterday. Stock indexes opening a little weaker. There are no economic releases to deal with today, likely the markets will trade quietly into the weekend.
European leaders met in yet another summit in Brussels declaring a “turning point” after confirming the second bailout for Greece (the 17th summit meeting in the last two years). Leaders signed the deficit control treaty while Europe’s economy is still in recession mode; “We’re not out of the economic crisis yet but we are turning the page of the financial crisis,” French President Nicolas Sarkozy said. “It’s a reassuring picture which is still very fragile because we have a lot of uncertainty and the countries of Europe have to persevere,” ECB President Mario Draghi said at the summit. “It’s a much much better picture than we had until November.” German Chancellor Angela Merkel apparently changed her mind at the summit, agreeing to speed the payments into the planned 500 billion-euro permanent rescue fund barely a year after she won a deal to slow them down. “We are still in a fragile situation,” Merkel said. ‘This situation has calmed down a bit, but the crisis is hardly over and further steps will be required to get there.’’ And the beat goes on.
Crude oil markets were subject to another rumor yesterday, sending crude prices higher on reports apparently out of Iran’s media that a pipeline explosion occurred in Saudi Arabia. The rumor spiked prices but was totally denied by the Saudi officials. This morning crude oil is down about a dollar after the explosion was seen as a ruse by Iran; there was a fire at a refinery in the area but did didn’t cause any serious damage to the refinery or a pipeline. That crude hasn’t fallen much from the rumor reminds that the situation with Iran’s nuke program is escalating. The Obama administration is escalating warnings that the U.S. may join Israel in an attack on the nuclear facilities if Iran doesn’t dispel concern that its atomic-research program is aimed at producing weapons. Air Force Chief of Staff General Norton Schwartz told reporters this week that the Joint Chiefs of Staff have prepared military options.
At 9:30 the DJIA opened down 7 points, the 10 yr note +6/32 at 2.01% -2 bp and MBS prices +4/32 (.12 bp).
In the absence of any direct data today Tim Geithner’s op-ed piece in the WSJ is worth perusing. The point of the piece is that Wall Street continues to fight the number of new regulations forced on it after the financial disaster the Street and large banks foisted on America that set up the worst recession since the depression. ……” In the spring of 2008, more Americans were starting to face higher mortgage payments as teaser interest rates reset and they could no longer refinance out of them because the value of their homes stopped rising—the leading edge of a wave of foreclosures and a terrible fall in house prices. By the time Bear Stearns failed, the recession was then already several months old, but it would of course get much worse in coming months. These problems were partly the result of amnesia. There was no memory of extreme crisis, no memory of what can happen when a nation allows huge amounts of risk to build up outside of the safeguards all economies require.”…… To read the piece online, visit this link.
Yesterday the 10 yr note rose to 2.06% before closing the day at 2.03%; it hit its near term support and held, just as when it falls to its resistance at 1.90%. The 10 and mortgage rates are well contained in their respective ranges, it’s been that way for months and likely to continue. At 10:00 the 10 yr is back under 2.00% at 1.99% on weaker stock indexes. MBS prices already better than where prices traded when lenders priced this morning. The rest of the day should trade quietly with no driving news.
Treasuries and mortgage markets opened a little better this morning after three days of selling taking the 10 yr to 2.03% yesterday. Stock indexes opening a little weaker. There are no economic releases to deal with today, likely the markets will trade quietly into the weekend.
European leaders met in yet another summit in Brussels declaring a “turning point” after confirming the second bailout for Greece (the 17th summit meeting in the last two years). Leaders signed the deficit control treaty while Europe’s economy is still in recession mode; “We’re not out of the economic crisis yet but we are turning the page of the financial crisis,” French President Nicolas Sarkozy said. “It’s a reassuring picture which is still very fragile because we have a lot of uncertainty and the countries of Europe have to persevere,” ECB President Mario Draghi said at the summit. “It’s a much much better picture than we had until November.” German Chancellor Angela Merkel apparently changed her mind at the summit, agreeing to speed the payments into the planned 500 billion-euro permanent rescue fund barely a year after she won a deal to slow them down. “We are still in a fragile situation,” Merkel said. ‘This situation has calmed down a bit, but the crisis is hardly over and further steps will be required to get there.’’ And the beat goes on.
Crude oil markets were subject to another rumor yesterday, sending crude prices higher on reports apparently out of Iran’s media that a pipeline explosion occurred in Saudi Arabia. The rumor spiked prices but was totally denied by the Saudi officials. This morning crude oil is down about a dollar after the explosion was seen as a ruse by Iran; there was a fire at a refinery in the area but did didn’t cause any serious damage to the refinery or a pipeline. That crude hasn’t fallen much from the rumor reminds that the situation with Iran’s nuke program is escalating. The Obama administration is escalating warnings that the U.S. may join Israel in an attack on the nuclear facilities if Iran doesn’t dispel concern that its atomic-research program is aimed at producing weapons. Air Force Chief of Staff General Norton Schwartz told reporters this week that the Joint Chiefs of Staff have prepared military options.
At 9:30 the DJIA opened down 7 points, the 10 yr note +6/32 at 2.01% -2 bp and MBS prices +4/32 (.12 bp).
In the absence of any direct data today Tim Geithner’s op-ed piece in the WSJ is worth perusing. The point of the piece is that Wall Street continues to fight the number of new regulations forced on it after the financial disaster the Street and large banks foisted on America that set up the worst recession since the depression. ……” In the spring of 2008, more Americans were starting to face higher mortgage payments as teaser interest rates reset and they could no longer refinance out of them because the value of their homes stopped rising—the leading edge of a wave of foreclosures and a terrible fall in house prices. By the time Bear Stearns failed, the recession was then already several months old, but it would of course get much worse in coming months. These problems were partly the result of amnesia. There was no memory of extreme crisis, no memory of what can happen when a nation allows huge amounts of risk to build up outside of the safeguards all economies require.”…… To read the piece online, visit this link.
Yesterday the 10 yr note rose to 2.06% before closing the day at 2.03%; it hit its near term support and held, just as when it falls to its resistance at 1.90%. The 10 and mortgage rates are well contained in their respective ranges, it’s been that way for months and likely to continue. At 10:00 the 10 yr is back under 2.00% at 1.99% on weaker stock indexes. MBS prices already better than where prices traded when lenders priced this morning. The rest of the day should trade quietly with no driving news.
Thursday, March 1, 2012
Mortgage Rates
Prior to 8:30 economic releases the US bond and mortgage markets were under selling pressure; the 10 yr note yield at 2.04% +6 bp frm yesterday’s close and MBS prices down 12/32 (.37 bp) frm the close yesterday. Stock indexes were trading a little higher but not much.
At 8:30 weekly jobless claims were about unchanged from last week, -2K to 351K, the previous week claims were revised slightly, down 2K from 355K to 353K. Claims continue to reflect that employers, while still not hiring are not firing and cutting jobs. Jan personal income expected to be up 0.4% increased 0.3%; personal spending expected up 0.4% was up just 0.2%. The reaction to the data wasn’t much but treasuries early this morning were in wholesale selling mode on continuing improvement on Europe’s debt problems. The 10 yr shot up to 2.05% (+7 bp) and MBS prices at 9:00 -11/32 (.34 bp).
Comments from Italy’s Prime Minister Mario Monti this morning saying the worst may be over for the euro region’s most distressed bonds. He believes there will be a plan worked out by the end of this month to increase the firewall around the debt crisis in the EU. Meanwhile Germany is continuing to resist an increase in the bailout plans; Germany is saying it isn’t the time to increase the bailout fund. Today begins the EU leaders’ summit in Brussels. Italian bonds are improving, lessening the urgency to increase the firewall according the German government. Yesterday the ECB added more to the kitty than had been expected, adding to the current prevailing view that Europe may actually dodge the bullet. The safety trade into US treasuries is being unwound as investors are less concerned that defaults will occur. All that said, it is still a moving target that can swing from one extreme to another in a blink of an eye.
At 9:30 the DJIA opened +50, the 10 yr -21/32 to 2.05% and MBS prices -11/32 (.34 bp).
Two data points at 10:00; the Feb ISM manufacturing index was thought to be at 54.6 frm 54.1 in Jan, it fell to 52.4. New orders fell to 54.9 frm 57.6 and employment index fell to 53.2 frm 54.3. The initial reaction to the weak ISM data pulled stock indexes down from 60 to 26 and the 10 yr note from -21/32 to -14/32, mortgage prices at 9:30 -11/32 (.34 bp) at 10:05 +8/32 (.25 bp). Jan construction spending was expected up 1.0% as reported it fell to -0.1%, the first decline in construction spending since last July.
Yesterday Ben Bernanke essentially implied the Fed isn’t likely to ease again by purchasing MBSs or treasuries; given the reaction in the rate markets it appeared there were more than a few betting that the Fed would do another QE. No easing and more positive news from Europe are combining to push interest rates higher as traders and investors step away from long bond positions.
Since the beginning of November the bellwether 10 yr has spent 90% of the time in the range between 2.10% and 1.90%, 20 basis points over 4 months. Mortgage rates also in a very narrow range, about 12 basis points in rates. This morning the 10 yr at 2.05% is at the top of the range, we expect the range will continue to hold. If however circumstances push the 10 over 2.10% then the last port in the storm is 2.15%. Although the Fed isn’t going to ease again, it will continue to keep short rates low (Fed funds) and in turn keep the long end and mortgage rates from increasing much.
Prior to 8:30 economic releases the US bond and mortgage markets were under selling pressure; the 10 yr note yield at 2.04% +6 bp frm yesterday’s close and MBS prices down 12/32 (.37 bp) frm the close yesterday. Stock indexes were trading a little higher but not much.
At 8:30 weekly jobless claims were about unchanged from last week, -2K to 351K, the previous week claims were revised slightly, down 2K from 355K to 353K. Claims continue to reflect that employers, while still not hiring are not firing and cutting jobs. Jan personal income expected to be up 0.4% increased 0.3%; personal spending expected up 0.4% was up just 0.2%. The reaction to the data wasn’t much but treasuries early this morning were in wholesale selling mode on continuing improvement on Europe’s debt problems. The 10 yr shot up to 2.05% (+7 bp) and MBS prices at 9:00 -11/32 (.34 bp).
Comments from Italy’s Prime Minister Mario Monti this morning saying the worst may be over for the euro region’s most distressed bonds. He believes there will be a plan worked out by the end of this month to increase the firewall around the debt crisis in the EU. Meanwhile Germany is continuing to resist an increase in the bailout plans; Germany is saying it isn’t the time to increase the bailout fund. Today begins the EU leaders’ summit in Brussels. Italian bonds are improving, lessening the urgency to increase the firewall according the German government. Yesterday the ECB added more to the kitty than had been expected, adding to the current prevailing view that Europe may actually dodge the bullet. The safety trade into US treasuries is being unwound as investors are less concerned that defaults will occur. All that said, it is still a moving target that can swing from one extreme to another in a blink of an eye.
At 9:30 the DJIA opened +50, the 10 yr -21/32 to 2.05% and MBS prices -11/32 (.34 bp).
Two data points at 10:00; the Feb ISM manufacturing index was thought to be at 54.6 frm 54.1 in Jan, it fell to 52.4. New orders fell to 54.9 frm 57.6 and employment index fell to 53.2 frm 54.3. The initial reaction to the weak ISM data pulled stock indexes down from 60 to 26 and the 10 yr note from -21/32 to -14/32, mortgage prices at 9:30 -11/32 (.34 bp) at 10:05 +8/32 (.25 bp). Jan construction spending was expected up 1.0% as reported it fell to -0.1%, the first decline in construction spending since last July.
Yesterday Ben Bernanke essentially implied the Fed isn’t likely to ease again by purchasing MBSs or treasuries; given the reaction in the rate markets it appeared there were more than a few betting that the Fed would do another QE. No easing and more positive news from Europe are combining to push interest rates higher as traders and investors step away from long bond positions.
Since the beginning of November the bellwether 10 yr has spent 90% of the time in the range between 2.10% and 1.90%, 20 basis points over 4 months. Mortgage rates also in a very narrow range, about 12 basis points in rates. This morning the 10 yr at 2.05% is at the top of the range, we expect the range will continue to hold. If however circumstances push the 10 over 2.10% then the last port in the storm is 2.15%. Although the Fed isn’t going to ease again, it will continue to keep short rates low (Fed funds) and in turn keep the long end and mortgage rates from increasing much.
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