The Commerce Department reported earlier this morning that sales of new homes rose in September by 6.6% to an annual rate of 307,000 as compared to the prior month. Even with this month's gain, the pace of sales is barely above its 47-year low. Slow job growth, tight credit, and low consumer confidence remain the primary impediments to improvement in the housing sector. Nothing new here - so mortgage investors shrugged off the report.
In a separate release, the Mortgage Bankers of America reported their national mortgage application index, a combined view of the demand for both refinance and purchase money mortgages, climbed 3.2% higher during the week ended October 22nd. Purchase applications rose 3.9% following two consecutive weekly declines while refinance demand rose 3.0% after falling 11.2% the previous week. Refinance requests continue to represent four out of every five loan applications currently in process on a national basis.
Uncle Sam will be conducting an auction of $35 billion worth of 5-year notes this afternoon. The broad consensus among analysts is that this offering will be very well bid -- since both by rhetoric and by action the Fed is telegraphing their intention to maintain their benchmark interest rates at exceptionally low levels for an extended period of time.
Wednesday, October 27, 2010
Tuesday, October 26, 2010
Tuesday, October 26, 2010
Consumer Confidence improved slightly in October but remained at its second lowest level since February. The index rose to a reading of 50.2 from September's 48.6 mark. Consumer's buying plans remain weak, and only 9.1% of consumers expect their incomes to rise in the next six months.
Concerns about lack of job growth, slipping home values, and still tight credit conditions at the consumer level are the most obvious drivers of weak consumer confidence.
Until/unless those three primary elements collectively show sustained improvement over a multi-month period the prospects for accelerating economic growth remain small - a condition supportive of the prospects for steady to perhaps fractionally lower mortgage interest rates.
Uncle Sam will be conducting an auction of $35 billion worth of 2-year notes this afternoon. The broad consensus among analysts is that this offering will be very well bid -- since both by rhetoric and by action the Fed is telegraphing their intention to maintain their benchmark interest rates at exceptionally low levels for an extended period of time.
Concerns about lack of job growth, slipping home values, and still tight credit conditions at the consumer level are the most obvious drivers of weak consumer confidence.
Until/unless those three primary elements collectively show sustained improvement over a multi-month period the prospects for accelerating economic growth remain small - a condition supportive of the prospects for steady to perhaps fractionally lower mortgage interest rates.
Uncle Sam will be conducting an auction of $35 billion worth of 2-year notes this afternoon. The broad consensus among analysts is that this offering will be very well bid -- since both by rhetoric and by action the Fed is telegraphing their intention to maintain their benchmark interest rates at exceptionally low levels for an extended period of time.
Monday, October 25, 2010
Monday, October 25, 2010
The National Association of Realtors reported this morning that September Existing Home Sales posted a stronger than expected month-over-month increase of 10.0% -- a value well above most economists' projections calling for a 4.0% improvement. That is the good news. The bad news is that even with the September improvement, we're still at remarkably depressed levels. Existing home sales are almost 20% below year-ago-levels. This data series will probably continue to be supportive of steady to fractionally lower mortgage interest rates until the fundamental driver of housing demand -- job growth - can generate sustained upward momentum - something most analysts do not expect to occur until mid-2011 at the earliest.
Credit market participants are bracing for a big four-part Treasury auction that kicks off this week. On the auction block today will be a $10 billion stack of 5-year inflation-indexed securities that will be followed by $35 billion of 2-year notes tomorrow, $35 billion of 5-year notes on Wednesday and will wrap-up with the sale of $29 billion of 7-year notes on Thursday. A consensus is building around the idea that the Fed will focus a large part of their "QE2" buying appetite on Treasury obligations with 5-year to 10-year maturities - an outlook that will likely prove very supportive for the majority of the offerings on the blocks for sale this week. If so, Uncle Sam's borrowing spree this week will not likely take much, if any toll on the current level of mortgage interest rates.
Credit market participants are bracing for a big four-part Treasury auction that kicks off this week. On the auction block today will be a $10 billion stack of 5-year inflation-indexed securities that will be followed by $35 billion of 2-year notes tomorrow, $35 billion of 5-year notes on Wednesday and will wrap-up with the sale of $29 billion of 7-year notes on Thursday. A consensus is building around the idea that the Fed will focus a large part of their "QE2" buying appetite on Treasury obligations with 5-year to 10-year maturities - an outlook that will likely prove very supportive for the majority of the offerings on the blocks for sale this week. If so, Uncle Sam's borrowing spree this week will not likely take much, if any toll on the current level of mortgage interest rates.
Thursday, October 21, 2010
Thursday, October 21, 2010
Trading activity in the mortgage market is light again this morning. Investors have little to guide their rate setting decisions so the majority of them appear content to move to the sidelines as they await next week's big $109 billion four-part Treasury auction, a 2-day Federal Open Market Committee meeting, the results of the midterm elections and the release of the October nonfarm payroll report. Under current market conditions look for trading action in the mortgage market to be more sideways rather than directional for the balance of the week.
The Labor Department reported earlier this morning that initial claims for state unemployment benefits fell 23,000 during the week ended October 16th. The prior week's figures were revised up by 13,000, to the highest level since late August. Those workers who have used up their traditional benefits and are now collecting emergency and extended government payments increased by roughly 279,000 to 5.07 million during the latest reporting period. Most investors see this report as making it all but certain the Fed will launch another round of quantitative easing at the conclusion of their meeting on Wednesday, November 3rd. This expectation is already priced into the mortgage market so when the announcement is formally made - the reaction as reflected on investors' rate sheets will likely be muted.
There are a number of reasons to believe "the Dow and the Nasdaq will likely put in a cycle high this week - probably on Wednesday or Thursday." If that assessment proves accurate, the migration of capital leaving riskier assets like stocks for the safety of the Treasury and mortgage-backed security markets should prove supportive of the prospects for steady to perhaps fractionally lower mortgage interest rates this week.
The Labor Department reported earlier this morning that initial claims for state unemployment benefits fell 23,000 during the week ended October 16th. The prior week's figures were revised up by 13,000, to the highest level since late August. Those workers who have used up their traditional benefits and are now collecting emergency and extended government payments increased by roughly 279,000 to 5.07 million during the latest reporting period. Most investors see this report as making it all but certain the Fed will launch another round of quantitative easing at the conclusion of their meeting on Wednesday, November 3rd. This expectation is already priced into the mortgage market so when the announcement is formally made - the reaction as reflected on investors' rate sheets will likely be muted.
There are a number of reasons to believe "the Dow and the Nasdaq will likely put in a cycle high this week - probably on Wednesday or Thursday." If that assessment proves accurate, the migration of capital leaving riskier assets like stocks for the safety of the Treasury and mortgage-backed security markets should prove supportive of the prospects for steady to perhaps fractionally lower mortgage interest rates this week.
Wednesday, October 20, 2010
Wednesday, October 20, 2010
Trading activity is light this morning in the mortgage market. Investors have little to guide their rate setting decisions.
The Mortgage Bankers of America said its seasonally adjusted index of mortgage applications, a value which includes both purchase and refinance loans, slumped 10.5% during the week ended October 15th. Demand for home refinancing fell for the sixth time in seven weeks - dropping by 11.2%. Purchase application requests slid 6.7% lower.
While it is true that interest rates on 15- and 30-year fixed-rate mortgages rose for the first time in six weeks during the survey period - they are still within shouting distance of their record all-time lows.
The Fed will release their "Beige Book" this afternoon at 2:00 p.m. ET. This report, named for the color of its cover, is a compilation of economic reports from all 12 Federal Reserve districts. The tone of these regional surveys will generally be gloomy - especially in terms of the employment picture. The chance any of the data contained in the "Beige Book" will surprise mortgage investors is small. This report will not likely exert any noticeable influence on the current trend trajectory of mortgage interest rates.
The Mortgage Bankers of America said its seasonally adjusted index of mortgage applications, a value which includes both purchase and refinance loans, slumped 10.5% during the week ended October 15th. Demand for home refinancing fell for the sixth time in seven weeks - dropping by 11.2%. Purchase application requests slid 6.7% lower.
While it is true that interest rates on 15- and 30-year fixed-rate mortgages rose for the first time in six weeks during the survey period - they are still within shouting distance of their record all-time lows.
The Fed will release their "Beige Book" this afternoon at 2:00 p.m. ET. This report, named for the color of its cover, is a compilation of economic reports from all 12 Federal Reserve districts. The tone of these regional surveys will generally be gloomy - especially in terms of the employment picture. The chance any of the data contained in the "Beige Book" will surprise mortgage investors is small. This report will not likely exert any noticeable influence on the current trend trajectory of mortgage interest rates.
Tuesday, October 19, 2010
Tuesday, October 19, 2010
The Commerce Department reported earlier this morning that housing starts unexpectedly rose in September to a five-month high, but permits for future home construction fell 5.6% -- driven by a sharp decline in permit filings for multi-family construction. This data had little impact on mortgage investors expectations the Fed will launch another round of economic stimulus at the conclusion of their upcoming two-day Open Market Committee meeting on November 2nd and 3rd.
Monday, October 18, 2010
Monday, October 18, 2010
After booming for more than a year, the manufacturing sector of the economy is starting to show signs of cooling off from its red-hot growth pace. Industrial production fell 0.2% in September - marking its biggest decline since June 2009.
Capacity Utilization, a measure of how much of a factory's total production quotient is in use, decreased to 74.7% last month from 74.8% in August. By comparison, the gauge averaged 80% over the past 20-years. It is abundantly clear to mortgage investors that capacity utilization remains well below levels where inflation inducting production bottlenecks might be expected to occur.
News of soft production growth together with a benign inflation measure from the manufacturing sector are supporting steady to slightly lower mortgage interest rates today.
There are a number of reasons to believe the Dow and the Nasdaq will likely put in a cycle high this week - probably on Wednesday or Thursday. If the assessment proves accurate, the migration of capital leaving riskier assets like stocks for the safety of the Treasury and mortgage-backed security markets should also prove supportive of the prospects for steady to perhaps fractionally lower mortgage interest rates this week.
Capacity Utilization, a measure of how much of a factory's total production quotient is in use, decreased to 74.7% last month from 74.8% in August. By comparison, the gauge averaged 80% over the past 20-years. It is abundantly clear to mortgage investors that capacity utilization remains well below levels where inflation inducting production bottlenecks might be expected to occur.
News of soft production growth together with a benign inflation measure from the manufacturing sector are supporting steady to slightly lower mortgage interest rates today.
There are a number of reasons to believe the Dow and the Nasdaq will likely put in a cycle high this week - probably on Wednesday or Thursday. If the assessment proves accurate, the migration of capital leaving riskier assets like stocks for the safety of the Treasury and mortgage-backed security markets should also prove supportive of the prospects for steady to perhaps fractionally lower mortgage interest rates this week.
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