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.
Thursday, February 10, 2011
Weekly jobless claims at 8:30 were another surprise; claims were expected to be down 3K to 412K as reported claims fell 36K to 383K, the lowest level of weekly filings since July 2008. Continuing claims also fell more than expected, to 3.888 mil frm 3.935 mil. Measuring the actual status of the employment sector is increasingly more difficult. In Jan the unemployment rate fell to 9.0% from 9.4% in Dec, non-farm jobs were anemic at best. Today weekly claims added more confusion. Is the weather the culprit or is the employment situation actually better than most believe? Eighteen states and territories reported an increase in claims, while 35 had a decrease. The initial reaction to the data wasn't much, the stock indexes didn't budge, the rate markets held levels prior to the report. By 9:00 however the bearish interest rate markets did back off, prices of mortgages and treasuries fell.
Recent employment data is almost impossible to square with conflicting data becoming the norm. Spinning the employment report in either direction to fit ones outlook has become easy with recent data points measuring the job sector. Earlier this week a Labor Department report showed job openings in the U.S. decreased by 139,000 to 3.06 million, the fewest since September. The number of people hired also dropped along with the number of workers fired. Fed Chairman Bernanke told the House Budget Committee yesterday that while the declines in the jobless rate in December and January “do provide some grounds for optimism,” companies need to hire more to reduce joblessness. “With employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level,” Bernanke said.
At 9:30 the stock market opened weaker; the DJIA down 50 on the open. The 10 yr note lower in price with its yield up 2 basis points on the new 10 yr auctioned yesterday. Mortgage prices at 9:30 -7.32 (.22 bp)
At 10:00 Dec wholesale inventories, expected up 0.6%, were up 1.0%. Sales increased 0.4% with consensus at +1.3%; the sales to inventory ratio at 1.16 months from 1.5 months in Nov. No initial reaction to the report.
At 1:00 Treasury will auction $16B of 30 yr bonds; the 10 yr auction yesterday was exceptionally well bid fueling short-covering and improvement in the rate markets.
Over night the Bank of England left its base interest rate unchanged as expected. Stock markets in Europe all weaker today. Today’s debates were based on new quarterly economic forecasts, that will be released on Feb. 16. Inflation accelerated to 3.7% in December, the fastest pace in eight months, and the rate may rise above 4% before easing to the bank’s 2% target. Food prices increased the most in 19 months in January. The BOE as well as Germany and other European countries facing inflation while here in the US our Fed is more concerned that our inflation remains too low.
The recent spike in interest rates wasn't unexpected; the rate markets have been technically bearish for three months. Rates likely will continue to increase through the year however we still hold that while rates are likely to increase the magnitude won't be severe. Presently we are not expecting the bellwether 10 yr note to exceed 4.00% and mortgage rates to hold at 5.50%.
Thursday, February 10, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: http://www.equityinvestmentcapital.com/
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, February 10, 2011
Weekly jobless claims at 8:30 were another surprise; claims were expected to be down 3K to 412K as reported claims fell 36K to 383K, the lowest level of weekly filings since July 2008. Continuing claims also fell more than expected, to 3.888 mil frm 3.935 mil. Measuring the actual status of the employment sector is increasingly more difficult. In Jan the unemployment rate fell to 9.0% from 9.4% in Dec, non-farm jobs were anemic at best. Today weekly claims added more confusion. Is the weather the culprit or is the employment situation actually better than most believe? Eighteen states and territories reported an increase in claims, while 35 had a decrease. The initial reaction to the data wasn't much, the stock indexes didn't budge, the rate markets held levels prior to the report. By 9:00 however the bearish interest rate markets did back off, prices of mortgages and treasuries fell.
Recent employment data is almost impossible to square with conflicting data becoming the norm. Spinning the employment report in either direction to fit ones outlook has become easy with recent data points measuring the job sector. Earlier this week a Labor Department report showed job openings in the U.S. decreased by 139,000 to 3.06 million, the fewest since September. The number of people hired also dropped along with the number of workers fired. Fed Chairman Bernanke told the House Budget Committee yesterday that while the declines in the jobless rate in December and January “do provide some grounds for optimism,” companies need to hire more to reduce joblessness. “With employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level,” Bernanke said.
At 9:30 the stock market opened weaker; the DJIA down 50 on the open. The 10 yr note lower in price with its yield up 2 basis points on the new 10 yr auctioned yesterday. Mortgage prices at 9:30 -7.32 (.22 bp)
At 10:00 Dec wholesale inventories, expected up 0.6%, were up 1.0%. Sales increased 0.4% with consensus at +1.3%; the sales to inventory ratio at 1.16 months from 1.5 months in Nov. No initial reaction to the report.
At 1:00 Treasury will auction $16B of 30 yr bonds; the 10 yr auction yesterday was exceptionally well bid fueling short-covering and improvement in the rate markets.
Over night the Bank of England left its base interest rate unchanged as expected. Stock markets in Europe all weaker today. Today’s debates were based on new quarterly economic forecasts, that will be released on Feb. 16. Inflation accelerated to 3.7% in December, the fastest pace in eight months, and the rate may rise above 4% before easing to the bank’s 2% target. Food prices increased the most in 19 months in January. The BOE as well as Germany and other European countries facing inflation while here in the US our Fed is more concerned that our inflation remains too low.
The recent spike in interest rates wasn't unexpected; the rate markets have been technically bearish for three months. Rates likely will continue to increase through the year however we still hold that while rates are likely to increase the magnitude won't be severe. Presently we are not expecting the bellwether 10 yr note to exceed 4.00% and mortgage rates to hold at 5.50%.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: http://www.equityinvestmentcapital.com/
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, February 10, 2011
Weekly jobless claims at 8:30 were another surprise; claims were expected to be down 3K to 412K as reported claims fell 36K to 383K, the lowest level of weekly filings since July 2008. Continuing claims also fell more than expected, to 3.888 mil frm 3.935 mil. Measuring the actual status of the employment sector is increasingly more difficult. In Jan the unemployment rate fell to 9.0% from 9.4% in Dec, non-farm jobs were anemic at best. Today weekly claims added more confusion. Is the weather the culprit or is the employment situation actually better than most believe? Eighteen states and territories reported an increase in claims, while 35 had a decrease. The initial reaction to the data wasn't much, the stock indexes didn't budge, the rate markets held levels prior to the report. By 9:00 however the bearish interest rate markets did back off, prices of mortgages and treasuries fell.
Recent employment data is almost impossible to square with conflicting data becoming the norm. Spinning the employment report in either direction to fit ones outlook has become easy with recent data points measuring the job sector. Earlier this week a Labor Department report showed job openings in the U.S. decreased by 139,000 to 3.06 million, the fewest since September. The number of people hired also dropped along with the number of workers fired. Fed Chairman Bernanke told the House Budget Committee yesterday that while the declines in the jobless rate in December and January “do provide some grounds for optimism,” companies need to hire more to reduce joblessness. “With employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level,” Bernanke said.
At 9:30 the stock market opened weaker; the DJIA down 50 on the open. The 10 yr note lower in price with its yield up 2 basis points on the new 10 yr auctioned yesterday. Mortgage prices at 9:30 -7.32 (.22 bp)
At 10:00 Dec wholesale inventories, expected up 0.6%, were up 1.0%. Sales increased 0.4% with consensus at +1.3%; the sales to inventory ratio at 1.16 months from 1.5 months in Nov. No initial reaction to the report.
At 1:00 Treasury will auction $16B of 30 yr bonds; the 10 yr auction yesterday was exceptionally well bid fueling short-covering and improvement in the rate markets.
Over night the Bank of England left its base interest rate unchanged as expected. Stock markets in Europe all weaker today. Today’s debates were based on new quarterly economic forecasts, that will be released on Feb. 16. Inflation accelerated to 3.7% in December, the fastest pace in eight months, and the rate may rise above 4% before easing to the bank’s 2% target. Food prices increased the most in 19 months in January. The BOE as well as Germany and other European countries facing inflation while here in the US our Fed is more concerned that our inflation remains too low.
The recent spike in interest rates wasn't unexpected; the rate markets have been technically bearish for three months. Rates likely will continue to increase through the year however we still hold that while rates are likely to increase the magnitude won't be severe. Presently we are not expecting the bellwether 10 yr note to exceed 4.00% and mortgage rates to hold at 5.50%.
Wednesday, February 9, 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, February 09, 2011
A better start this morning in the bond and mortgage markets. As we noted in yesterday's 4:30 comments the rate markets are temporarily oversold after seven consecutive days of prices falling and yields increases. Technically both the bellwether 10 yr note, driver of MBSs and the MBSs themselves are now registering very oversold momentum oscillators and some rebound is likely. While improvement is likely, it will not change the overall bearish longer term outlook for the rate markets. We suggest using any improvements to get deals done but not adopt a bullish view. Although we have been bearish on rates since last Nov, we still hold that interest rates for mortgages will not increase over 5.5% and the 10 yr note won't move above 4.00% this year. Any improvements in longer term rates should be seen as opportunities, interest rates will not likely fall much from these current levels.
Markets were rattled yesterday on very weak demand frm foreign investors for the $32B 3 yr notes sold at the Treasury auction. After the recent spike in rates traders were more optimistic than they should have been that the 3 would see strong demand. At last month's 3 yr auction it was the same; it didn't see much demand. Today Treasury will offer $24B of new 10 yr notes, the demand should be much better, just as it was for last month's 10 yr.
Ben Bernanke is about to begin his testimony to the House Budget Committee; the first such appearance under the Republican leadership. He will be questioned on economic issues, trade issues, the dollar's worth, the Fed's quantative easing that has come under increasing fire both within the Fed and in Congress. When initiated last Nov Bernanke made the point that by buying $600B of treasuries would keep interest rate low; most bought into it, we however said it wouldn't and of course it didn't. Congress will ask today whether the Fed will do another easing move; Bernanke will dance around it but it is highly unlikely there will be more money printing-----so-called easing is over. The economy is recovering, slowly but nicely; the Fed should stop. An increasing number of Fed officials are voicing opposition. The Fed is continuing to chip away at purchases everyday; today $6 to $8B of issues maturing 2015/2016.
The weekly MBA mortgage applications out early this morning for the week ending February 4, 2011. The Market Composite Index, a measure of mortgage loan application volume, decreased 5.5% from one week earlier. The Refinance Index decreased 7.7% from the previous week. The seasonally adjusted Purchase Index decreased 1.4% from one week earlier.
The four week moving average for the seasonally adjusted Market Index is down 0.9%. The four week moving average is down 0.8% for the seasonally adjusted Purchase Index, while the average is down 1.5% for the Refinance Index. The refinance share of mortgage activity decreased to 66.6% of total applications from 69.3% the previous week. This is the lowest refinance share observed in the survey since the beginning of May 2010. The adjustable-rate mortgage (ARM) share of activity increased to 5.9% from 5.5% of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 5.13% from 4.81%, with points decreasing to 0.84 from 1.02 (including the origination fee) for 80%loans. This is the highest contract 30-year rate recorded in the survey since the week ending April 9, 2010. The 32 basis point jump is the largest rate increase since June 2009. The average contract interest rate for 15-year fixed-rate mortgages increased to 4.29% from 4.13%, with points increasing to 1.02 from 1.01 (including the origination fee) for 80% loans. This is the highest contract 15-year rate recorded in the survey since the week ending May 7, 2010.
The rest of the day is about Bernanke's testimony and the results of the $24B 10 yr note auction at 1:00 this afternoon.
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, February 09, 2011
A better start this morning in the bond and mortgage markets. As we noted in yesterday's 4:30 comments the rate markets are temporarily oversold after seven consecutive days of prices falling and yields increases. Technically both the bellwether 10 yr note, driver of MBSs and the MBSs themselves are now registering very oversold momentum oscillators and some rebound is likely. While improvement is likely, it will not change the overall bearish longer term outlook for the rate markets. We suggest using any improvements to get deals done but not adopt a bullish view. Although we have been bearish on rates since last Nov, we still hold that interest rates for mortgages will not increase over 5.5% and the 10 yr note won't move above 4.00% this year. Any improvements in longer term rates should be seen as opportunities, interest rates will not likely fall much from these current levels.
Markets were rattled yesterday on very weak demand frm foreign investors for the $32B 3 yr notes sold at the Treasury auction. After the recent spike in rates traders were more optimistic than they should have been that the 3 would see strong demand. At last month's 3 yr auction it was the same; it didn't see much demand. Today Treasury will offer $24B of new 10 yr notes, the demand should be much better, just as it was for last month's 10 yr.
Ben Bernanke is about to begin his testimony to the House Budget Committee; the first such appearance under the Republican leadership. He will be questioned on economic issues, trade issues, the dollar's worth, the Fed's quantative easing that has come under increasing fire both within the Fed and in Congress. When initiated last Nov Bernanke made the point that by buying $600B of treasuries would keep interest rate low; most bought into it, we however said it wouldn't and of course it didn't. Congress will ask today whether the Fed will do another easing move; Bernanke will dance around it but it is highly unlikely there will be more money printing-----so-called easing is over. The economy is recovering, slowly but nicely; the Fed should stop. An increasing number of Fed officials are voicing opposition. The Fed is continuing to chip away at purchases everyday; today $6 to $8B of issues maturing 2015/2016.
The weekly MBA mortgage applications out early this morning for the week ending February 4, 2011. The Market Composite Index, a measure of mortgage loan application volume, decreased 5.5% from one week earlier. The Refinance Index decreased 7.7% from the previous week. The seasonally adjusted Purchase Index decreased 1.4% from one week earlier.
The four week moving average for the seasonally adjusted Market Index is down 0.9%. The four week moving average is down 0.8% for the seasonally adjusted Purchase Index, while the average is down 1.5% for the Refinance Index. The refinance share of mortgage activity decreased to 66.6% of total applications from 69.3% the previous week. This is the lowest refinance share observed in the survey since the beginning of May 2010. The adjustable-rate mortgage (ARM) share of activity increased to 5.9% from 5.5% of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 5.13% from 4.81%, with points decreasing to 0.84 from 1.02 (including the origination fee) for 80%loans. This is the highest contract 30-year rate recorded in the survey since the week ending April 9, 2010. The 32 basis point jump is the largest rate increase since June 2009. The average contract interest rate for 15-year fixed-rate mortgages increased to 4.29% from 4.13%, with points increasing to 1.02 from 1.01 (including the origination fee) for 80% loans. This is the highest contract 15-year rate recorded in the survey since the week ending May 7, 2010.
The rest of the day is about Bernanke's testimony and the results of the $24B 10 yr note auction at 1:00 this afternoon.
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: http://www.equityinvestmentcapital.com/
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, February 09, 2011
A better start this morning in the bond and mortgage markets. As we noted in yesterday's 4:30 comments the rate markets are temporarily oversold after seven consecutive days of prices falling and yields increases. Technically both the bellwether 10 yr note, driver of MBSs and the MBSs themselves are now registering very oversold momentum oscillators and some rebound is likely. While improvement is likely, it will not change the overall bearish longer term outlook for the rate markets. We suggest using any improvements to get deals done but not adopt a bullish view. Although we have been bearish on rates since last Nov, we still hold that interest rates for mortgages will not increase over 5.5% and the 10 yr note won't move above 4.00% this year. Any improvements in longer term rates should be seen as opportunities, interest rates will not likely fall much from these current levels.
Markets were rattled yesterday on very weak demand frm foreign investors for the $32B 3 yr notes sold at the Treasury auction. After the recent spike in rates traders were more optimistic than they should have been that the 3 would see strong demand. At last month's 3 yr auction it was the same; it didn't see much demand. Today Treasury will offer $24B of new 10 yr notes, the demand should be much better, just as it was for last month's 10 yr.
Ben Bernanke is about to begin his testimony to the House Budget Committee; the first such appearance under the Republican leadership. He will be questioned on economic issues, trade issues, the dollar's worth, the Fed's quantative easing that has come under increasing fire both within the Fed and in Congress. When initiated last Nov Bernanke made the point that by buying $600B of treasuries would keep interest rate low; most bought into it, we however said it wouldn't and of course it didn't. Congress will ask today whether the Fed will do another easing move; Bernanke will dance around it but it is highly unlikely there will be more money printing-----so-called easing is over. The economy is recovering, slowly but nicely; the Fed should stop. An increasing number of Fed officials are voicing opposition. The Fed is continuing to chip away at purchases everyday; today $6 to $8B of issues maturing 2015/2016.
The weekly MBA mortgage applications out early this morning for the week ending February 4, 2011. The Market Composite Index, a measure of mortgage loan application volume, decreased 5.5% from one week earlier. The Refinance Index decreased 7.7% from the previous week. The seasonally adjusted Purchase Index decreased 1.4% from one week earlier.
The four week moving average for the seasonally adjusted Market Index is down 0.9%. The four week moving average is down 0.8% for the seasonally adjusted Purchase Index, while the average is down 1.5% for the Refinance Index. The refinance share of mortgage activity decreased to 66.6% of total applications from 69.3% the previous week. This is the lowest refinance share observed in the survey since the beginning of May 2010. The adjustable-rate mortgage (ARM) share of activity increased to 5.9% from 5.5% of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 5.13% from 4.81%, with points decreasing to 0.84 from 1.02 (including the origination fee) for 80%loans. This is the highest contract 30-year rate recorded in the survey since the week ending April 9, 2010. The 32 basis point jump is the largest rate increase since June 2009. The average contract interest rate for 15-year fixed-rate mortgages increased to 4.29% from 4.13%, with points increasing to 1.02 from 1.01 (including the origination fee) for 80% loans. This is the highest contract 15-year rate recorded in the survey since the week ending May 7, 2010.
The rest of the day is about Bernanke's testimony and the results of the $24B 10 yr note auction at 1:00 this afternoon.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: http://www.equityinvestmentcapital.com/
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, February 09, 2011
A better start this morning in the bond and mortgage markets. As we noted in yesterday's 4:30 comments the rate markets are temporarily oversold after seven consecutive days of prices falling and yields increases. Technically both the bellwether 10 yr note, driver of MBSs and the MBSs themselves are now registering very oversold momentum oscillators and some rebound is likely. While improvement is likely, it will not change the overall bearish longer term outlook for the rate markets. We suggest using any improvements to get deals done but not adopt a bullish view. Although we have been bearish on rates since last Nov, we still hold that interest rates for mortgages will not increase over 5.5% and the 10 yr note won't move above 4.00% this year. Any improvements in longer term rates should be seen as opportunities, interest rates will not likely fall much from these current levels.
Markets were rattled yesterday on very weak demand frm foreign investors for the $32B 3 yr notes sold at the Treasury auction. After the recent spike in rates traders were more optimistic than they should have been that the 3 would see strong demand. At last month's 3 yr auction it was the same; it didn't see much demand. Today Treasury will offer $24B of new 10 yr notes, the demand should be much better, just as it was for last month's 10 yr.
Ben Bernanke is about to begin his testimony to the House Budget Committee; the first such appearance under the Republican leadership. He will be questioned on economic issues, trade issues, the dollar's worth, the Fed's quantative easing that has come under increasing fire both within the Fed and in Congress. When initiated last Nov Bernanke made the point that by buying $600B of treasuries would keep interest rate low; most bought into it, we however said it wouldn't and of course it didn't. Congress will ask today whether the Fed will do another easing move; Bernanke will dance around it but it is highly unlikely there will be more money printing-----so-called easing is over. The economy is recovering, slowly but nicely; the Fed should stop. An increasing number of Fed officials are voicing opposition. The Fed is continuing to chip away at purchases everyday; today $6 to $8B of issues maturing 2015/2016.
The weekly MBA mortgage applications out early this morning for the week ending February 4, 2011. The Market Composite Index, a measure of mortgage loan application volume, decreased 5.5% from one week earlier. The Refinance Index decreased 7.7% from the previous week. The seasonally adjusted Purchase Index decreased 1.4% from one week earlier.
The four week moving average for the seasonally adjusted Market Index is down 0.9%. The four week moving average is down 0.8% for the seasonally adjusted Purchase Index, while the average is down 1.5% for the Refinance Index. The refinance share of mortgage activity decreased to 66.6% of total applications from 69.3% the previous week. This is the lowest refinance share observed in the survey since the beginning of May 2010. The adjustable-rate mortgage (ARM) share of activity increased to 5.9% from 5.5% of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 5.13% from 4.81%, with points decreasing to 0.84 from 1.02 (including the origination fee) for 80%loans. This is the highest contract 30-year rate recorded in the survey since the week ending April 9, 2010. The 32 basis point jump is the largest rate increase since June 2009. The average contract interest rate for 15-year fixed-rate mortgages increased to 4.29% from 4.13%, with points increasing to 1.02 from 1.01 (including the origination fee) for 80% loans. This is the highest contract 15-year rate recorded in the survey since the week ending May 7, 2010.
The rest of the day is about Bernanke's testimony and the results of the $24B 10 yr note auction at 1:00 this afternoon.
Tuesday, February 8, 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, February 08, 2011
Treasuries and mortgage markets opened softer this morning but nothing major. Over night China raised interest rates for the third time since the middle of Oct as its inflation rate hangs at 4.0% for the third month. In Europe German Dec industrial production fell unexpectedly for a second consecutive month on colder weather that hampered construction, down 1.5% frm Nov and against +0.2% that was expected. The US stock market isn't being hit early but with the weaker data from Germany Europe's stock markets trading lower. In Germany, where the economy is booming and import-price inflation is running at the fastest pace in 29 years, workers are demanding bigger pay increases. Inflation concerns are spreading abroad (China, India, Germany to name a few); not here yet but investors in long term fixed income investments (10 yr notes and 30 yr bonds and long term corporates) are not waiting for the whites of the eyes. With interest rate so low any thoughts of inflation are going to pressure rate markets.
Are we headed for an increase in inflation? If so, will it be much of an increase? Inflation concerns are currently based on rising energy and commodity prices, it depends on whether commodity prices remain at these or higher levels; producers and businesses so far have been able to absorb price increases but that is likely over. Unless prices decline inflation will increase a little; the Fed wants it up to 2.0% frm the present 0.8% to 1.0% rate. The bond market is moving up in yield anticipating deflation is now dead, with the very low existing rates just the talk of a small increase in inflation has driven rates up 30 basis points on the 10 yr and 20 basis points on mortgages in less than a week.
Earlier this morning Richmond Fed's Lacker was speaking, he said he wants the Fed to re-consider the remaining QE 2 now that the economy is growing faster than the Fed expected. Lacker has been dissenting on about every QE move the Fed has undertaken. He is concerned that inflation will increase as it is in China and many emerging markets. It is highly unlikely the Fed will abandon QE 2 but equally unlikely there will be a QE 3 as some have mused recently. Lacker estimates the US economy to grow 4.0% this year; he sees a better jobs market, "robust" consumer spending, and the inflation rate between 1.5% and 2.0%.
The Johnson Redbook retail report this morning reported chain store sales for the first week of Feb up 1.7% frm Jan; yr/yr +2.7% frm the the first week of Feb. 2010.
Looking to tomorrow, Ben Bernanke is scheduled to testify at the House Budget Committee. He will be grilled to explain what the Fed is planning to withdraw its easing. His testimony is the first that we don't have Barney Frank running to testimony, although barney will have his moment. With Republicans now in control of the committee the hearing will get a lot of attention.
The only thing scheduled today is the $32B 3 yr note auction at 1:00 this afternoon. Auctions this week will be interesting to monitor as yields have broken out of their month and a half long ranges and may entice buyers at these higher levels. If demand isn't strong look for the bond and mortgage markets to work higher in rate and lower prices. The 3 yr usually sees decent demand, tomorrow's 10 yr auction is what we are concerned with, weak demand will push mortgage rates higher.
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, February 08, 2011
Treasuries and mortgage markets opened softer this morning but nothing major. Over night China raised interest rates for the third time since the middle of Oct as its inflation rate hangs at 4.0% for the third month. In Europe German Dec industrial production fell unexpectedly for a second consecutive month on colder weather that hampered construction, down 1.5% frm Nov and against +0.2% that was expected. The US stock market isn't being hit early but with the weaker data from Germany Europe's stock markets trading lower. In Germany, where the economy is booming and import-price inflation is running at the fastest pace in 29 years, workers are demanding bigger pay increases. Inflation concerns are spreading abroad (China, India, Germany to name a few); not here yet but investors in long term fixed income investments (10 yr notes and 30 yr bonds and long term corporates) are not waiting for the whites of the eyes. With interest rate so low any thoughts of inflation are going to pressure rate markets.
Are we headed for an increase in inflation? If so, will it be much of an increase? Inflation concerns are currently based on rising energy and commodity prices, it depends on whether commodity prices remain at these or higher levels; producers and businesses so far have been able to absorb price increases but that is likely over. Unless prices decline inflation will increase a little; the Fed wants it up to 2.0% frm the present 0.8% to 1.0% rate. The bond market is moving up in yield anticipating deflation is now dead, with the very low existing rates just the talk of a small increase in inflation has driven rates up 30 basis points on the 10 yr and 20 basis points on mortgages in less than a week.
Earlier this morning Richmond Fed's Lacker was speaking, he said he wants the Fed to re-consider the remaining QE 2 now that the economy is growing faster than the Fed expected. Lacker has been dissenting on about every QE move the Fed has undertaken. He is concerned that inflation will increase as it is in China and many emerging markets. It is highly unlikely the Fed will abandon QE 2 but equally unlikely there will be a QE 3 as some have mused recently. Lacker estimates the US economy to grow 4.0% this year; he sees a better jobs market, "robust" consumer spending, and the inflation rate between 1.5% and 2.0%.
The Johnson Redbook retail report this morning reported chain store sales for the first week of Feb up 1.7% frm Jan; yr/yr +2.7% frm the the first week of Feb. 2010.
Looking to tomorrow, Ben Bernanke is scheduled to testify at the House Budget Committee. He will be grilled to explain what the Fed is planning to withdraw its easing. His testimony is the first that we don't have Barney Frank running to testimony, although barney will have his moment. With Republicans now in control of the committee the hearing will get a lot of attention.
The only thing scheduled today is the $32B 3 yr note auction at 1:00 this afternoon. Auctions this week will be interesting to monitor as yields have broken out of their month and a half long ranges and may entice buyers at these higher levels. If demand isn't strong look for the bond and mortgage markets to work higher in rate and lower prices. The 3 yr usually sees decent demand, tomorrow's 10 yr auction is what we are concerned with, weak demand will push mortgage rates higher.
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: http://www.equityinvestmentcapital.com/
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, February 08, 2011
Treasuries and mortgage markets opened softer this morning but nothing major. Over night China raised interest rates for the third time since the middle of Oct as its inflation rate hangs at 4.0% for the third month. In Europe German Dec industrial production fell unexpectedly for a second consecutive month on colder weather that hampered construction, down 1.5% frm Nov and against +0.2% that was expected. The US stock market isn't being hit early but with the weaker data from Germany Europe's stock markets trading lower. In Germany, where the economy is booming and import-price inflation is running at the fastest pace in 29 years, workers are demanding bigger pay increases. Inflation concerns are spreading abroad (China, India, Germany to name a few); not here yet but investors in long term fixed income investments (10 yr notes and 30 yr bonds and long term corporates) are not waiting for the whites of the eyes. With interest rate so low any thoughts of inflation are going to pressure rate markets.
Are we headed for an increase in inflation? If so, will it be much of an increase? Inflation concerns are currently based on rising energy and commodity prices, it depends on whether commodity prices remain at these or higher levels; producers and businesses so far have been able to absorb price increases but that is likely over. Unless prices decline inflation will increase a little; the Fed wants it up to 2.0% frm the present 0.8% to 1.0% rate. The bond market is moving up in yield anticipating deflation is now dead, with the very low existing rates just the talk of a small increase in inflation has driven rates up 30 basis points on the 10 yr and 20 basis points on mortgages in less than a week.
Earlier this morning Richmond Fed's Lacker was speaking, he said he wants the Fed to re-consider the remaining QE 2 now that the economy is growing faster than the Fed expected. Lacker has been dissenting on about every QE move the Fed has undertaken. He is concerned that inflation will increase as it is in China and many emerging markets. It is highly unlikely the Fed will abandon QE 2 but equally unlikely there will be a QE 3 as some have mused recently. Lacker estimates the US economy to grow 4.0% this year; he sees a better jobs market, "robust" consumer spending, and the inflation rate between 1.5% and 2.0%.
The Johnson Redbook retail report this morning reported chain store sales for the first week of Feb up 1.7% frm Jan; yr/yr +2.7% frm the the first week of Feb. 2010.
Looking to tomorrow, Ben Bernanke is scheduled to testify at the House Budget Committee. He will be grilled to explain what the Fed is planning to withdraw its easing. His testimony is the first that we don't have Barney Frank running to testimony, although barney will have his moment. With Republicans now in control of the committee the hearing will get a lot of attention.
The only thing scheduled today is the $32B 3 yr note auction at 1:00 this afternoon. Auctions this week will be interesting to monitor as yields have broken out of their month and a half long ranges and may entice buyers at these higher levels. If demand isn't strong look for the bond and mortgage markets to work higher in rate and lower prices. The 3 yr usually sees decent demand, tomorrow's 10 yr auction is what we are concerned with, weak demand will push mortgage rates higher.
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Email: tony@equityinvestmentcapital.com
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Tuesday, February 08, 2011
Treasuries and mortgage markets opened softer this morning but nothing major. Over night China raised interest rates for the third time since the middle of Oct as its inflation rate hangs at 4.0% for the third month. In Europe German Dec industrial production fell unexpectedly for a second consecutive month on colder weather that hampered construction, down 1.5% frm Nov and against +0.2% that was expected. The US stock market isn't being hit early but with the weaker data from Germany Europe's stock markets trading lower. In Germany, where the economy is booming and import-price inflation is running at the fastest pace in 29 years, workers are demanding bigger pay increases. Inflation concerns are spreading abroad (China, India, Germany to name a few); not here yet but investors in long term fixed income investments (10 yr notes and 30 yr bonds and long term corporates) are not waiting for the whites of the eyes. With interest rate so low any thoughts of inflation are going to pressure rate markets.
Are we headed for an increase in inflation? If so, will it be much of an increase? Inflation concerns are currently based on rising energy and commodity prices, it depends on whether commodity prices remain at these or higher levels; producers and businesses so far have been able to absorb price increases but that is likely over. Unless prices decline inflation will increase a little; the Fed wants it up to 2.0% frm the present 0.8% to 1.0% rate. The bond market is moving up in yield anticipating deflation is now dead, with the very low existing rates just the talk of a small increase in inflation has driven rates up 30 basis points on the 10 yr and 20 basis points on mortgages in less than a week.
Earlier this morning Richmond Fed's Lacker was speaking, he said he wants the Fed to re-consider the remaining QE 2 now that the economy is growing faster than the Fed expected. Lacker has been dissenting on about every QE move the Fed has undertaken. He is concerned that inflation will increase as it is in China and many emerging markets. It is highly unlikely the Fed will abandon QE 2 but equally unlikely there will be a QE 3 as some have mused recently. Lacker estimates the US economy to grow 4.0% this year; he sees a better jobs market, "robust" consumer spending, and the inflation rate between 1.5% and 2.0%.
The Johnson Redbook retail report this morning reported chain store sales for the first week of Feb up 1.7% frm Jan; yr/yr +2.7% frm the the first week of Feb. 2010.
Looking to tomorrow, Ben Bernanke is scheduled to testify at the House Budget Committee. He will be grilled to explain what the Fed is planning to withdraw its easing. His testimony is the first that we don't have Barney Frank running to testimony, although barney will have his moment. With Republicans now in control of the committee the hearing will get a lot of attention.
The only thing scheduled today is the $32B 3 yr note auction at 1:00 this afternoon. Auctions this week will be interesting to monitor as yields have broken out of their month and a half long ranges and may entice buyers at these higher levels. If demand isn't strong look for the bond and mortgage markets to work higher in rate and lower prices. The 3 yr usually sees decent demand, tomorrow's 10 yr auction is what we are concerned with, weak demand will push mortgage rates higher.
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