Mortgage Rate Update
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Friday, June 29, 2012
Mortgage Rates
Stocks strong this morning with the bond and mortgage markets trading lower in price and higher in yield. French President Francois Hollande led a revolt against Germany’s austerity-first doctrine for combating the financial crisis, winning easier aid terms for Spain and Italy in an effort to reshape the balance of power in Europe. At the 19th European summit since the crisis broke out, Hollande pushed through the concessions by threatening to delay endorsement of a deficit-reduction treaty that German Chancellor Angela Merkel touted as one of her signature achievements. Euro leaders agreed to let the permanent bailout fund pour money into Spanish banks directly, instead of channeling it via the Spanish government. Direct recapitalizations will be possible once Europe sets up a single banking supervisor, possibly as early as 2013. Spanish and Italian bonds surged after euro-area leaders expanded steps to stem the debt crisis by easing repayment rules for emergency loans to Spain’s banks and relaxing conditions on potential help for Italy. Given past non-performances when EU summits were held, this one is being considered some kind of success.
May personal income increased 0.2% while spending was unchanged, income was on target but spending was weaker than +0.1% expected.
At 9:30 the DJIA opened +120, NASDAQ +58; the 10 yr note at 9:30 -22/32 1.66% +8 bp, 30 yr MBS price -7/32 (.22 bp) frm yesterday’s close.
At 9:45 the June Chicago purchasing mgrs. index, expected at 52.4, came at 52.9 frm 52.4 in May. The employment index at 60.4 frm 57.0, new orders at 51.9 frm 52.9 and prices pd at 54.0 frm 60.4. The data slightly better than expected but no noticeable reaction to it as the stock market was already up over 170 points and the 10 yr -19/32 at 1.65% +7 bp.
At 9:55 the U. of Michigan consumer sentiment index was expected at 74.1, it fell to 73.2; the current conditions index at 81.5 frm82.1, the expectations index at 67.8 frm 68.9. All the indexes are the lowest since last Dec. There was no selling on the data as markets are totally consumed with what is presently seen as significant progress at the EU summit. More likely, a relief since there was little belief that anything would come from the 19th summit since the first 18 didn’t lead to anything of substance.
Although there was better news out of the EU summit that was widely expected to be anther summit with nothing emerging, the US interest rate markets continue to drift in their trendless and sideways moves. The 10 yr note support remains at 1.70% and strong resistance at 1.56%. The bullish bias on the US rate markets is still intact but is losing momentum over the last three weeks; we will hold for now but a move on the 10 yr above 1.70% will set off additional selling and rates will inch up. ON the downside for yields, there isn’t any momentum or reason now to add more bond buying.
Stocks strong this morning with the bond and mortgage markets trading lower in price and higher in yield. French President Francois Hollande led a revolt against Germany’s austerity-first doctrine for combating the financial crisis, winning easier aid terms for Spain and Italy in an effort to reshape the balance of power in Europe. At the 19th European summit since the crisis broke out, Hollande pushed through the concessions by threatening to delay endorsement of a deficit-reduction treaty that German Chancellor Angela Merkel touted as one of her signature achievements. Euro leaders agreed to let the permanent bailout fund pour money into Spanish banks directly, instead of channeling it via the Spanish government. Direct recapitalizations will be possible once Europe sets up a single banking supervisor, possibly as early as 2013. Spanish and Italian bonds surged after euro-area leaders expanded steps to stem the debt crisis by easing repayment rules for emergency loans to Spain’s banks and relaxing conditions on potential help for Italy. Given past non-performances when EU summits were held, this one is being considered some kind of success.
May personal income increased 0.2% while spending was unchanged, income was on target but spending was weaker than +0.1% expected.
At 9:30 the DJIA opened +120, NASDAQ +58; the 10 yr note at 9:30 -22/32 1.66% +8 bp, 30 yr MBS price -7/32 (.22 bp) frm yesterday’s close.
At 9:45 the June Chicago purchasing mgrs. index, expected at 52.4, came at 52.9 frm 52.4 in May. The employment index at 60.4 frm 57.0, new orders at 51.9 frm 52.9 and prices pd at 54.0 frm 60.4. The data slightly better than expected but no noticeable reaction to it as the stock market was already up over 170 points and the 10 yr -19/32 at 1.65% +7 bp.
At 9:55 the U. of Michigan consumer sentiment index was expected at 74.1, it fell to 73.2; the current conditions index at 81.5 frm82.1, the expectations index at 67.8 frm 68.9. All the indexes are the lowest since last Dec. There was no selling on the data as markets are totally consumed with what is presently seen as significant progress at the EU summit. More likely, a relief since there was little belief that anything would come from the 19th summit since the first 18 didn’t lead to anything of substance.
Although there was better news out of the EU summit that was widely expected to be anther summit with nothing emerging, the US interest rate markets continue to drift in their trendless and sideways moves. The 10 yr note support remains at 1.70% and strong resistance at 1.56%. The bullish bias on the US rate markets is still intact but is losing momentum over the last three weeks; we will hold for now but a move on the 10 yr above 1.70% will set off additional selling and rates will inch up. ON the downside for yields, there isn’t any momentum or reason now to add more bond buying.
Thursday, June 28, 2012
Mortgage Rates
The equity markets opened weaker this morning boosting the rate markets. Still no directional trend though as the bond and mortgage markets continue in their tight ranges. At 8:30 weekly jobless claims were expected down 2K but fell 6K to 386K; however not a good report. Last week’s claims were revised higher to 392K from 387K continuing the trend of upward revisions on claims. Continuing claims did fall, to 3.296 mil frm 3.311.mil and the 4 wk average also declined a little, to 386,750 from 387,500 last week. There wasn’t much reaction in the markets to the data. The final report on Q1 GDP was right on, +1.9% unchanged from last month’s preliminary report.
Unemployment remains elevated on concerns about the fallout from the European debt crisis and the so-called fiscal cliff that will face the U.S. at the end of this year may prompt employers to keep payrolls lean. The Bush tax cuts set to expire at the end of this year and the reduced SS payments also set to end. Given the elections and the inability of Congress to do anything along with declining economic outlooks for most of the global markets are not building blocks to recovery and lower unemployment. Payrolls in May expanded by 69,000 workers, the slowest pace in a year, and have cooled each month since January. The jobless rate, which climbed to 8.2% in May, has been stuck above 8 percent since February 2009, the longest stretch of such elevated levels in the post-World War II era.
JP Morgan Chase’s losses on that hedge trade that went wrong are now seen to be as high as $9B, up from the $2 to $4B that Janie Dimon had talked about. The increased loss estimates are sending the bank’s stock down and dragging the rest of the big banks with it. Yesterday Britain’s Barclay Bank was fined $431 mil for ostensively manipulating LIBOR rates. Its shares dropped as much as 18% as U.K. Chancellor of the Exchequer called for a criminal probe amid speculation that lenders could face billions of dollars in lawsuits. Traders at the U.K.’s second-biggest bank by assets routinely coordinated with counterparts from at least four other banks in an attempt to move interest rate benchmarks, according to documents released yesterday by the U.S. Commodity Futures Trading Commission, the U.S. Justice Department and the U.K. Financial Services Authority. Nearly a day goes by without some kind of scandal or negative news with big banks; a trend that is now 5 years old and with no end of it in sight.
An index of executive and consumer sentiment in the 17-nation euro area dropped to 89.9 from a revised 90.5 in May, the European Commission in Brussels said today. That’s the lowest since October 2009. In Germany, the number of people out of work rose a seasonally adjusted 7,000 to 2.88 million. Germany’s adjusted jobless rate held at 6.8% in June, but with no agreement on how to deal with debts in a number of EU countries the economy of the euro region is going to fall further. A gauge of sentiment among European manufacturers fell to minus 12.7 from minus 11.4 in May, the commission’s report showed. That’s the lowest since February 2010. An indicator of services confidence dropped to minus 7.4 from minus 5.2, while a gauge of consumer sentiment slipped to minus 19.8 from minus 19.3. The EU summit is underway now in Brussels however Germany put a bucket of water on creating euro bonds earlier this week, now there isn’t much expected when the summit concludes tomorrow.
The DJIA opened -85, NASDAQ +23; the 10 yr note at 1.58% down 5 bp and up 12/32; 30 yr mortgage prices up 5/32 (.15 bp) frm yesterday’s closes.
Markets are waiting for the Supreme Court’s decision on Obamacare that will be released today. Talk that in the next hour. The ruling will have a number of potential impacts depending on what the Court says. I the meantime videos of people in front of the Court resembles a circus atmosphere with one sign being carried saying, “you can’t make this kind of thing up”. Just as we send this Reuters is reporting the individual mandate has been upheld.
Treasury will auction $29B of 7 yr note this afternoon at 1:00.
The equity markets opened weaker this morning boosting the rate markets. Still no directional trend though as the bond and mortgage markets continue in their tight ranges. At 8:30 weekly jobless claims were expected down 2K but fell 6K to 386K; however not a good report. Last week’s claims were revised higher to 392K from 387K continuing the trend of upward revisions on claims. Continuing claims did fall, to 3.296 mil frm 3.311.mil and the 4 wk average also declined a little, to 386,750 from 387,500 last week. There wasn’t much reaction in the markets to the data. The final report on Q1 GDP was right on, +1.9% unchanged from last month’s preliminary report.
Unemployment remains elevated on concerns about the fallout from the European debt crisis and the so-called fiscal cliff that will face the U.S. at the end of this year may prompt employers to keep payrolls lean. The Bush tax cuts set to expire at the end of this year and the reduced SS payments also set to end. Given the elections and the inability of Congress to do anything along with declining economic outlooks for most of the global markets are not building blocks to recovery and lower unemployment. Payrolls in May expanded by 69,000 workers, the slowest pace in a year, and have cooled each month since January. The jobless rate, which climbed to 8.2% in May, has been stuck above 8 percent since February 2009, the longest stretch of such elevated levels in the post-World War II era.
JP Morgan Chase’s losses on that hedge trade that went wrong are now seen to be as high as $9B, up from the $2 to $4B that Janie Dimon had talked about. The increased loss estimates are sending the bank’s stock down and dragging the rest of the big banks with it. Yesterday Britain’s Barclay Bank was fined $431 mil for ostensively manipulating LIBOR rates. Its shares dropped as much as 18% as U.K. Chancellor of the Exchequer called for a criminal probe amid speculation that lenders could face billions of dollars in lawsuits. Traders at the U.K.’s second-biggest bank by assets routinely coordinated with counterparts from at least four other banks in an attempt to move interest rate benchmarks, according to documents released yesterday by the U.S. Commodity Futures Trading Commission, the U.S. Justice Department and the U.K. Financial Services Authority. Nearly a day goes by without some kind of scandal or negative news with big banks; a trend that is now 5 years old and with no end of it in sight.
An index of executive and consumer sentiment in the 17-nation euro area dropped to 89.9 from a revised 90.5 in May, the European Commission in Brussels said today. That’s the lowest since October 2009. In Germany, the number of people out of work rose a seasonally adjusted 7,000 to 2.88 million. Germany’s adjusted jobless rate held at 6.8% in June, but with no agreement on how to deal with debts in a number of EU countries the economy of the euro region is going to fall further. A gauge of sentiment among European manufacturers fell to minus 12.7 from minus 11.4 in May, the commission’s report showed. That’s the lowest since February 2010. An indicator of services confidence dropped to minus 7.4 from minus 5.2, while a gauge of consumer sentiment slipped to minus 19.8 from minus 19.3. The EU summit is underway now in Brussels however Germany put a bucket of water on creating euro bonds earlier this week, now there isn’t much expected when the summit concludes tomorrow.
The DJIA opened -85, NASDAQ +23; the 10 yr note at 1.58% down 5 bp and up 12/32; 30 yr mortgage prices up 5/32 (.15 bp) frm yesterday’s closes.
Markets are waiting for the Supreme Court’s decision on Obamacare that will be released today. Talk that in the next hour. The ruling will have a number of potential impacts depending on what the Court says. I the meantime videos of people in front of the Court resembles a circus atmosphere with one sign being carried saying, “you can’t make this kind of thing up”. Just as we send this Reuters is reporting the individual mandate has been upheld.
Treasury will auction $29B of 7 yr note this afternoon at 1:00.
Wednesday, June 27, 2012
Mortgage Rates
The bond and mortgage markets continue to trade quietly with little change this week ahead of the EU summit beginning tomorrow. The stock indexes a little better early on as May durable goods orders were better than thought. Durables up 1.1% with forecasts of +0.5%; ex the volatile transportation orders up 0.4%, less than 0.7% expected. April ex transportation orders were revised from -0.9% to -0.6%. Growth is cooling as a slowdown in global markets emanating from Europe harms exports and curtails equipment spending, hurting sales at manufacturers.
At 9:30 the DJIA opened +45, NASDAQ +12; the 10 yr note at 9:30 +1/32 at 1.62% while mortgage prices were down 1/32 (.03 bp) frm yesterday’s close.
Italy’s 10-year bond yield fell three basis points, or 0.03 percentage point, to 6.15%, after rising to 6.20%, the highest level since June 14. Spain’s 10-year yield declined two basis points to 6.85%, after jumping 49 basis points over the past two days. Spain and other countries are going to push for measures to bring down borrowing costs when European Union leaders meet for a two-day summit starting tomorrow in Brussels. German Chancellor Angela Merkel said today issuing common bonds is the “wrong way” to achieve the greater integration needed to resolve the debt crisis. She said Spain was right to request for help for its banks and Italy was on path to growth. Merkel has caused tension among EU members by resisting calls for joint euro bonds. Germany’s 10-year bund yield climbed four basis points to 1.55% after dropping to 1.46% two days ago, the lowest level since June 19. It wasn’t too long ago that the German 10 yr traded 30 basis points lower in yield than US 10s, now just 7 bps lower.
Merkel said that euro bonds, euro bills and debt redemption funds are unconstitutional in Germany and economically “wrong and counterproductive.” The EU summit appears to be an attempt to get euro bonds to take the heat off Spain and Italy as well as other debt ladened countries in the region. “I fear that at the summit there will be much too much talk about mutual liability and far too little about improved oversight and structural measures,” she said. “Oversight and liability have to go hand in hand. There can only be joint liability when adequate oversight is ensured;” Germany isn’t about to tie itself to poorly managed countries. “The sovereign debt crisis shows us daily that deficiencies in one euro-zone country can cause difficulties in the entire euro zone,” Merkel commented. “It also shows us that national answers aren’t enough to secure the euro area’s stability.” The summit isn’t going anywhere as long as Germany doesn’t get its way.
The NAR reported May pending home sales up 5.9% with forecasts of an increase of 1.0%. Much stronger with strength coming from the West where prices are increasing in places like Phoenix and Las Vegas. Yr/yr pending home sales up 13.3%. On the news the stock market increased a little but the bond and mortgage markets showed no reaction.
This afternoon Treasury will auction $35B of 5 yr notes; yesterday’s 2 yr was OK but not unusually strong; the 5 yr may also have a little less bidding today.
Mortgage applications decreased 7.1% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 22, 2012. The Refinance Index decreased 8.0% from the previous week. The seasonally adjusted Purchase Index decreased 1.0% from one week earlier. The refinance share of mortgage activity decreased to 79 percent of total applications from over 80 percent the previous week. The adjustable-rate mortgage (ARM) share of activity is about 4.0% of total applications. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.88% from 3.87%, with points decreasing to 0.40 from 0.49 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.12% from 4.06%, with points decreasing to 0.35 from 0.38 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.71% from 3.72%, with points decreasing to 0.46 from 0.47 (including the origination fee) for 80% loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.24% from 3.25%, with points decreasing to 0.44 from 0.45 (including the origination fee) for 80% loans. The average contract interest rate for 5/1 ARMs increased to 2.81% from 2.75%, with points increasing to 0.41 from 0.33 (including the origination fee) for 80% loans.
The bond and mortgage markets continue to trade quietly with little change this week ahead of the EU summit beginning tomorrow. The stock indexes a little better early on as May durable goods orders were better than thought. Durables up 1.1% with forecasts of +0.5%; ex the volatile transportation orders up 0.4%, less than 0.7% expected. April ex transportation orders were revised from -0.9% to -0.6%. Growth is cooling as a slowdown in global markets emanating from Europe harms exports and curtails equipment spending, hurting sales at manufacturers.
At 9:30 the DJIA opened +45, NASDAQ +12; the 10 yr note at 9:30 +1/32 at 1.62% while mortgage prices were down 1/32 (.03 bp) frm yesterday’s close.
Italy’s 10-year bond yield fell three basis points, or 0.03 percentage point, to 6.15%, after rising to 6.20%, the highest level since June 14. Spain’s 10-year yield declined two basis points to 6.85%, after jumping 49 basis points over the past two days. Spain and other countries are going to push for measures to bring down borrowing costs when European Union leaders meet for a two-day summit starting tomorrow in Brussels. German Chancellor Angela Merkel said today issuing common bonds is the “wrong way” to achieve the greater integration needed to resolve the debt crisis. She said Spain was right to request for help for its banks and Italy was on path to growth. Merkel has caused tension among EU members by resisting calls for joint euro bonds. Germany’s 10-year bund yield climbed four basis points to 1.55% after dropping to 1.46% two days ago, the lowest level since June 19. It wasn’t too long ago that the German 10 yr traded 30 basis points lower in yield than US 10s, now just 7 bps lower.
Merkel said that euro bonds, euro bills and debt redemption funds are unconstitutional in Germany and economically “wrong and counterproductive.” The EU summit appears to be an attempt to get euro bonds to take the heat off Spain and Italy as well as other debt ladened countries in the region. “I fear that at the summit there will be much too much talk about mutual liability and far too little about improved oversight and structural measures,” she said. “Oversight and liability have to go hand in hand. There can only be joint liability when adequate oversight is ensured;” Germany isn’t about to tie itself to poorly managed countries. “The sovereign debt crisis shows us daily that deficiencies in one euro-zone country can cause difficulties in the entire euro zone,” Merkel commented. “It also shows us that national answers aren’t enough to secure the euro area’s stability.” The summit isn’t going anywhere as long as Germany doesn’t get its way.
The NAR reported May pending home sales up 5.9% with forecasts of an increase of 1.0%. Much stronger with strength coming from the West where prices are increasing in places like Phoenix and Las Vegas. Yr/yr pending home sales up 13.3%. On the news the stock market increased a little but the bond and mortgage markets showed no reaction.
This afternoon Treasury will auction $35B of 5 yr notes; yesterday’s 2 yr was OK but not unusually strong; the 5 yr may also have a little less bidding today.
Mortgage applications decreased 7.1% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 22, 2012. The Refinance Index decreased 8.0% from the previous week. The seasonally adjusted Purchase Index decreased 1.0% from one week earlier. The refinance share of mortgage activity decreased to 79 percent of total applications from over 80 percent the previous week. The adjustable-rate mortgage (ARM) share of activity is about 4.0% of total applications. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.88% from 3.87%, with points decreasing to 0.40 from 0.49 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.12% from 4.06%, with points decreasing to 0.35 from 0.38 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.71% from 3.72%, with points decreasing to 0.46 from 0.47 (including the origination fee) for 80% loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.24% from 3.25%, with points decreasing to 0.44 from 0.45 (including the origination fee) for 80% loans. The average contract interest rate for 5/1 ARMs increased to 2.81% from 2.75%, with points increasing to 0.41 from 0.33 (including the origination fee) for 80% loans.
Tuesday, June 26, 2012
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