Mortgage investors returning from the Thanksgiving Holiday are hopeful the Fed's planned purchase of $39 billion worth Treasury debt obligations this week will help support a market pounded by last week Wednesday's heavy selling. The price drubbing in the credit markets just before the holiday break was triggered in large part by a much stronger than expected weekly jobless claims number.
Even though last week's initial claims data fell outside of the survey period for Friday's much more important November nonfarm payroll statistics - mortgage investors will take turns scaring the heck out of each other with "whisper" numbers sharply higher than the expected 145,000 job gain already priced into the mortgage market.
If Friday's headline nonfarm payroll number posts a reading of 150,000 or more and/or should the national jobless rate slips to 9.5% or less - look for stocks to rally at the expense of higher mortgage interest rates. A softer than expected headline number and/or a jobless rate of 9.7% or higher will likely put a pretty sizable dent in stock prices while simultaneously restoring the shine to the prospects for notably lower mortgage interest rates.
For what it is worth -- data suggests Friday's nonfarm payroll will be stronger-than-expected. A stronger-than-expected November nonfarm payroll report will favor the stock markets at the expense of fractionally higher mortgage interest rates. Heads up.
Monday, November 29, 2010
Monday, November 22, 2010
Monday, November 22, 2010
Trading activity in the mortgage market so far today has been thin and listless.
There is a little bit of "flight-to-quality" buying seeping into the mortgage market as a result of Ireland's weekend agreement on an international bailout to save their swooning banking system.
Concerns about the package's impact on the Irish government's balance sheet and fears that the debt contagion might spread to other struggling European nation's sent global investors scurrying to park their capital in the relative safe-haven of dollar denominated assets like Treasury debt obligations and mortgage-backed securities.
The timing of all this "flight-to-safety" stuff could not have come at a better time for Uncle Sam. The Treasury Department will be in the credit markets over the next three day's peddling a total of $99 billion worth of debt obligations.
First up is today's sale of a $35 billion stack of 2-year notes - a security almost "custom fit" for risk adverse investors seeking a safe place to park money. If today's auction goes as well as expected -- it will tend to be supportive of the near-term prospects for steady to fractionally lower mortgage interest rates.
Just as reminder -- the mortgage market will operate on a normal schedule on Wednesday, November 24th, it will be closed on Thursday for the Thanksgiving Holiday and the mortgage market will operate on an abbreviated schedule on Friday, November 26th with an early close at 2:00 p.m. ET
There is a little bit of "flight-to-quality" buying seeping into the mortgage market as a result of Ireland's weekend agreement on an international bailout to save their swooning banking system.
Concerns about the package's impact on the Irish government's balance sheet and fears that the debt contagion might spread to other struggling European nation's sent global investors scurrying to park their capital in the relative safe-haven of dollar denominated assets like Treasury debt obligations and mortgage-backed securities.
The timing of all this "flight-to-safety" stuff could not have come at a better time for Uncle Sam. The Treasury Department will be in the credit markets over the next three day's peddling a total of $99 billion worth of debt obligations.
First up is today's sale of a $35 billion stack of 2-year notes - a security almost "custom fit" for risk adverse investors seeking a safe place to park money. If today's auction goes as well as expected -- it will tend to be supportive of the near-term prospects for steady to fractionally lower mortgage interest rates.
Just as reminder -- the mortgage market will operate on a normal schedule on Wednesday, November 24th, it will be closed on Thursday for the Thanksgiving Holiday and the mortgage market will operate on an abbreviated schedule on Friday, November 26th with an early close at 2:00 p.m. ET
Friday, November 19, 2010
Friday, November 19, 2010
Trading activity in the mortgage market so far today has been thin and listless. The economic calendar offered nothing for investors to chew on. Normally under these conditions mortgage investors tend to look to the stock markets for directional cues when setting rates and prices for the day - but nothing much is shaking in that arena either.
Looking ahead to next week -- Uncle Sam will be in the credit markets Monday through Wednesday conducting a $96 billion, three-part auction featuring 2-, 5- and 7-year notes. All three offerings will likely be well bid. If so, these events will not likely influence the direction of mortgage interest rates one way or the other.
The economic calendar will feature revised Q3 Gross Domestic Product figures on Tuesday. The Existing Home Sales and New Home Sales data will appear at 10:00 a.m. ET on Tuesday and Wednesday respectively. This battery of macro-economic data is individually and collectively expected to be mortgage market neutral.
The mortgage market will operate on a normal schedule on Wednesday, November 24th, it will be closed on Thursday for the Thanksgiving Holiday and the mortgage market will operate on an abbreviated schedule on Friday, November 26th with an early close at 2:00 p.m. ET.
Looking ahead to next week -- Uncle Sam will be in the credit markets Monday through Wednesday conducting a $96 billion, three-part auction featuring 2-, 5- and 7-year notes. All three offerings will likely be well bid. If so, these events will not likely influence the direction of mortgage interest rates one way or the other.
The economic calendar will feature revised Q3 Gross Domestic Product figures on Tuesday. The Existing Home Sales and New Home Sales data will appear at 10:00 a.m. ET on Tuesday and Wednesday respectively. This battery of macro-economic data is individually and collectively expected to be mortgage market neutral.
The mortgage market will operate on a normal schedule on Wednesday, November 24th, it will be closed on Thursday for the Thanksgiving Holiday and the mortgage market will operate on an abbreviated schedule on Friday, November 26th with an early close at 2:00 p.m. ET.
Thursday, November 18, 2010
Thursday, November 18, 2010
The number of people standing in line to file first-time jobless benefits rose slightly last week, but the underlying trend remained slanted toward improvement. During the week ended November 13th initial claims for unemployment benefits climbed 2,000 to a seasonally adjusted 439,000, according to the data wonks at the Labor Department. Until/unless the seasonally adjusted claims number can manage to fall to 400,000 or less on a sustained basis - this data will tend to support steady to perhaps fractionally lower mortgage interest rates.
This week's initial jobless claims data covered the survey week for the more important November nonfarm payroll report scheduled for release on Friday, December 3rd -- and did nothing to change mortgage investors' expectation that the economy probably created 100,000 more jobs than it lost this month. The economy needs to create at least 150,000 jobs every month -- just to absorb new entrants -- and will need to do considerably better than that to put a meaningful dent in the nation's almost 10% unemployment rate.
This week's initial jobless claims data covered the survey week for the more important November nonfarm payroll report scheduled for release on Friday, December 3rd -- and did nothing to change mortgage investors' expectation that the economy probably created 100,000 more jobs than it lost this month. The economy needs to create at least 150,000 jobs every month -- just to absorb new entrants -- and will need to do considerably better than that to put a meaningful dent in the nation's almost 10% unemployment rate.
Wednesday, November 17, 2010
Wednesday, November 17, 2010
Today's economic news was generally supportive of the prospects for steady to fractionally lower mortgage interest rates. Consumer inflation was subdued in October and new home building slumped to it lowest level in more than 18 months.
The Labor Department said its Consumer Price Index rose 0.2% last month -- after edging up 0.1% in September. Excluding the more volatile food and energy price components, the so called "core" cost-of-living was flat for a third straight month in October. On a year-over-year basis the core consumer price index has risen by 0.6% -- the smallest gain since the Labor Department started keeping records of this inflation measuring series in 1958.
In a separate report, the Commerce Department said housing starts plunged by 11.7% in October. The lion's share of the decline in the housing starts figures was contributed by the multi-family component of the data. Starts of single-family homes were up 1.0% last month. Overall, building permits were 0.5% higher in October - with the single-family component of the data posting a 1.0% gain.
According to data compiled by the Mortgage Bankers of America interest rates near record-lows failed to prompt an increase in loan applications last week. While 30-year fixed rate mortgages hovered near the all-time low of 4.21% during the week ended October 8th -- overall loan demand slumped by 14.4% from the prior week. The sizable week-over-week decline was largely the result of a 16.5% drop in refinance applications. Demand for loans to purchase a home slumped by 5.0% over the same period. During the survey week the contract rate for 30-year fixed mortgages climbed 18 basis-points higher to 4.46%, up by 12 basis-points from four weeks prior, and down by 36 basis points from the year earlier mark.
The Labor Department said its Consumer Price Index rose 0.2% last month -- after edging up 0.1% in September. Excluding the more volatile food and energy price components, the so called "core" cost-of-living was flat for a third straight month in October. On a year-over-year basis the core consumer price index has risen by 0.6% -- the smallest gain since the Labor Department started keeping records of this inflation measuring series in 1958.
In a separate report, the Commerce Department said housing starts plunged by 11.7% in October. The lion's share of the decline in the housing starts figures was contributed by the multi-family component of the data. Starts of single-family homes were up 1.0% last month. Overall, building permits were 0.5% higher in October - with the single-family component of the data posting a 1.0% gain.
According to data compiled by the Mortgage Bankers of America interest rates near record-lows failed to prompt an increase in loan applications last week. While 30-year fixed rate mortgages hovered near the all-time low of 4.21% during the week ended October 8th -- overall loan demand slumped by 14.4% from the prior week. The sizable week-over-week decline was largely the result of a 16.5% drop in refinance applications. Demand for loans to purchase a home slumped by 5.0% over the same period. During the survey week the contract rate for 30-year fixed mortgages climbed 18 basis-points higher to 4.46%, up by 12 basis-points from four weeks prior, and down by 36 basis points from the year earlier mark.
Thursday, November 4, 2010
Thursday, November 4, 2010
SORRY FOR MY ABSENCE THE PAST FEW DAYS...
The number of Americans standing in line to file first-time jobless benefits rose by a stronger-than-expected 20,000 last week. Today's jobless claims report will have no influence on tomorrow morning's far more important nonfarm payroll figures because the weekly data fell outside of survey period for the larger and more comprehensive October national employment figures.
In a separate report Labor Department figures showed third-quarter non-farm productivity rose a much stronger-than-anticipated 1.9% while unit labor costs, a gauge of potential wage driven inflation pressures watched by the Fed, dropped 0.1%.
Today's macroeconomic mumbo-jumbo collectively and individually tells a story of a labor market that is not improving as much as had been hoped. Until/unless the labor sector shows sustained improvement on both a week-over-week and month-over-month basis - this data will tend to be supportive of steady to perhaps fractionally lower mortgage interest rates.
Most analysis believe tomorrow morning's 8:30 a.m. ET release of the October nonfarm payroll data will show the economy created roughly 75,000 more jobs than it lost - a condition that supported the national jobless rate at 9.6% -- the same level it has held since September. If this forecast proves accurate, the October payroll figure will be the first positive reading for the monthly jobs number since May. Investors have already priced in this expected outcome into the mortgage market - making an "as expected" report at best mortgage market neutral and at worst slightly mortgage interest rate unfriendly.
In order to be completely supportive of a notable move to lower rates and higher prices the October nonfarm payroll headline number will need to show the economy lost more jobs than it created while the unemployment rate edged up to 9.7% or higher. While such an outcome is certainly possible - at this juncture it does not appear to be very probable.
The number of Americans standing in line to file first-time jobless benefits rose by a stronger-than-expected 20,000 last week. Today's jobless claims report will have no influence on tomorrow morning's far more important nonfarm payroll figures because the weekly data fell outside of survey period for the larger and more comprehensive October national employment figures.
In a separate report Labor Department figures showed third-quarter non-farm productivity rose a much stronger-than-anticipated 1.9% while unit labor costs, a gauge of potential wage driven inflation pressures watched by the Fed, dropped 0.1%.
Today's macroeconomic mumbo-jumbo collectively and individually tells a story of a labor market that is not improving as much as had been hoped. Until/unless the labor sector shows sustained improvement on both a week-over-week and month-over-month basis - this data will tend to be supportive of steady to perhaps fractionally lower mortgage interest rates.
Most analysis believe tomorrow morning's 8:30 a.m. ET release of the October nonfarm payroll data will show the economy created roughly 75,000 more jobs than it lost - a condition that supported the national jobless rate at 9.6% -- the same level it has held since September. If this forecast proves accurate, the October payroll figure will be the first positive reading for the monthly jobs number since May. Investors have already priced in this expected outcome into the mortgage market - making an "as expected" report at best mortgage market neutral and at worst slightly mortgage interest rate unfriendly.
In order to be completely supportive of a notable move to lower rates and higher prices the October nonfarm payroll headline number will need to show the economy lost more jobs than it created while the unemployment rate edged up to 9.7% or higher. While such an outcome is certainly possible - at this juncture it does not appear to be very probable.
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