New Years Eve 2013

Prev. Price
It was another calm day in bond market yesterday.
After a strong opening, which saw pricing improve, we
stayed in a very tight range with little movement
throughout the day. Trading volume has been
exceptionally low as we head into the last trading day of
the year. The economic news that we did receive
yesterday did not live up to expectations as Pending
Home Sales and the Dallas Fed Manufacturing Survey
both came in below the consensus. Today we have the
Case-Schiller Home Price Index at 9:00 AM, Chicago
PMI at 9:45 AM and Consumer Confidence at 10:00
AM. The markets will close early at 2:00 PM so we can
expect any movement to happen in the early hours.
Happy New Years Everyone!

Dec 30th 2013

Mortgage rates continued to drift with no major economic news to move them is either direction. Overnight 10 Year Treasury yields were just off their highest levels in two years as the U.S. economy continues to improve. The number of previously owned homes increased 1 percent in November according to the National Association of Realtors. Economists predict manufacturing activity will be reported at 56.9 this month, after growing in November at the fastest pace in more than two years. It’s another shorted trading week with the markets closed for the New Year.

Dec 26 2013

Mortgage rates rose late Tuesday as holiday trading and low production affected the bond market. Treasuries ended a two-day drop as growth in consumer prices grew less than expected, which bolstered the case the Fed might keep borrowing costs at a record low. The price index for personal consumption rose .9 percent in November falling short of the Fed’s long term target of 2 percent. The Labor Department is likely to say jobless claims decreased by 34,000 last week in a report due out today. The stronger the economic data the greater the expectation that the Fed will begin to taper bond purchases at a faster rate.

Dec 23 2013

Mortgage rates bounced back Friday, after an unexpected announcement that Mel Watt will delay the Gfee increase effective April 1st. He stated Friday night he would delay the increase until he had an opportunity to evaluate the rationale for the plan. Last week economic news continued to come in above forecast, the gross domestic product grew at its fastest pace in almost 2 years. This week is a shortened week due to the holiday. Today, Consumer Sentiment is out a 9:55, tomorrow Durable Goods Orders is announced at 8:30, and we will close the week with Jobless Claims on Thursday.

Dec 20th 2013

The market bounced back late in the day yesterday, causing a much needed re-price for the better just before the closing bell. Treasuries advanced over night amid speculation inflation will stay in check as the Fed reduces their economic support. The Fed’s balance sheet will expand to about $4.4 trillion by the time the current stimulus ends. The Commerce Department should say today the U.S. GDP expanded 3.6 percent in the third quarter, after growing 2.5 percent in the previous three months.


HAVE A GREAT WEEKEND!!

Dec 19th 2013

After almost six months of speculation the FOMC finally announced a taper timeline. The Fed will reduce bond purchases by $5 billion for both Treasuries and MBS. The initial reaction in the market was severe; however we regained most of the losses shortly after. Bernanke defended the tapering decision stating the cost of asset purchases will increase as the balance sheet grows. Meaning the benefits of buying at the current pace is not worth the risk. However, he reiterated the Fed is committed to keep interest rates low for the foreseeable future. Not to be forgotten, the Housing Start Index was up 22.7 percent, the largest increase since January 1990. This is just another sign the economy appears to be strengthening. Jobless Claims and Existing Home Sales are both announced the

Dec 18th 2013

So, today is the big day. The FOMC minutes will be released at 2 PM. The market remained flat despite the uncertainty of the Fed’s next move. Consumer Price Index met expectations yesterday and the NAHB Housing Market beating forecasts by 3 points. However, the market failed to move with weak trading yesterday as people head out for the holiday. Today should get people’s attention. Economists are placing their bets on the possible taper timeline. But, it’s all just a guess until 2 PM today…get ready.

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Dec 16th 2013

Treasuries advanced overnight as China announced their manufacturing growth slowed last quarter, increasing demand for safer securities. It’s a busy week ahead, but the main event is on Wednesday—the FOMC meeting. Investors are looking for any indication about the future of Fed’s bond purchase program. We have a lot of economic data prior to the big announcement; Empire State Manufacturing Index is released at 8:30 today, tomorrow Housing Starts and Consumer Price Index are announced and Housing Starts come out Wednesday morning.

Dec 12th 2013

The Bond Market broke its three day winning streak after a strong Petroleum Report was released. Rates started to increase into the afternoon, however the 10 Y Treasury auction tip the scale and caused a re-price for the worse. Headlines out of Washington claimed a budget deal from the House was close; causing investors to think tapering is eminent. Today the first real piece of economic news is releases, Jobless Claims and Retail Sales:  Good News  Retails sales were extremely STRONG.  However, jobless claims came in very weak at 68,000.  So Mixed news.

Dec 11th 2013

Mortgage bonds continued to trend up yesterday, bringing rates to the lowest levels this month. Overnight Treasuries declined amid speculation that U.S. budget agreement will support the economy and make it easier for the Fed to cut bond purchases. Retail sales accelerated in November economists predict. Jobless Claims will be released tomorrow and investors expect it will increase pressure on the Fed to begin tapering in early 2014.

Dec 10th 2013

Yesterday was a quiet day in the bond market; low trade volumes and no economic news releases caused no major movements. Today Wholesale Inventories will be released in the morning and the Fed will begin a Treasury auction this afternoon. The FHFA announced a GFee increase effective April 1st. This increase of 10 bps, is one of the larger increases we have seen to date.

Dec 9th 2013

Friday a strong Employment Report was released, causing many to believe a December taper is still a possibility. Overnight, Germany announced their industrial production fell for a second month, this added speculation that the ECB will also keep borrowing costs low to support growth in Euro zone. Today no economic new is scheduled to be released. The first important announcement is Thursday with Retail Sales, Jobless Claims, and Business inventories all released before 10 AM. We will close the week with a Producer Price Index report on Friday.

Dec 6th 2013

The market opened down yesterday on the heels of two stronger than expected economic reports. GDP and Jobless Claims both beat economists’ expectations. However, once everyone dug into the headline numbers, weaknesses were revealed causing MBS to bounce back. Todays employment number came in at 203000 exceeding expectations however the MBS market seems to have already priced in this news over the past week.  Currently MBS are at +28.  The unemployment rate dropped to 7%
Have a Great Weekend!!

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Dec 5th 2013

Yesterday was full of surprises we opened down after strong employment data was released. The U.S. economy added 185,000 jobs last month, following a gain of 204,000 in October. New home sales also surged and ISM claimed the economy is still growing at a moderate pace. However, we recovered some ground at the closing bell, which lowered rates slightly. Today is another day filled with news releases that could move our market GPD, Jobless Claims, and Factory Orders are all released before 10 AM. Economists are predicting all numbers should come in strong, which means it could be another volatile day.

Dec 3 2013 (22 days for Christmas)

Yesterday morning MBS markets opened down from their close on Friday and continued to slip further throughout the day. The PMI Manufacturing Index came in slightly better than economist had expected just before 9:00 AM and then at 10:00 AM the ISM Manufacturing Index was released. The report came in much strong then expected as manufacturing turned in its best month in over 2 years. The strong numbers continued to fuel speculation that the Fed could taper its bond buying program as early as December. Today’s economic news is light as we gear up for a busy rest of the week with several key reports due to be released before the end of the week.

Welcome to Dec 2013

We have a full docket of events lined up for us this week, following last Friday's uneventful day in the markets. Aside from this Friday's employment reports, the key releases to look for are todays manufacturing ISM, tomorrow's non-manufacturing ISM, as well as Thursdays GDP and jobless claims reports. Rates are moving higher this morning ahead of the reports that are forcasted to show growth in manufacturing and jobs.

Mon
10:00 AM
ISM Manufacturing
10:30 AM
Construction Spending

Wed
7:00 AM
MBA Mortgage Applications
8:15 AM
ADP Employment Change
8:30 AM
Trade Balance
10:00 AM
ISM Non-Manufacturing
10:00 AM
New Home Sales
2:00 PM
Federal Reserve Beige Book

Thurs
8:30 AM
Initial & Continuing Jobless Claims
8:30 AM
GDP
8:30 AM
Personal Consumption
10:00 AM
Factory Orders

Fri
8:30 AM
Change in Payrolls
8:30 AM
Unemployment Rate

Nov 29 2013

The market was closed yesterday for the Thanksgiving holiday after a sell off caused a late afternoon re-price Wednesday. Economic data consistently over performed to forecast dominating the bond market headlines. Treasuries fell overnight extending their first monthly loss since August. This move is based on speculation a U.S. jobs report due out next week will be strong enough to question the Federal Reserve’s bond buying program. Today is light on economic data; however we might see some unexpected market movements due to month end trading activity.

Nov 19 2013

Yesterday MBS went higher and tighter causing a re-price for the better. Origination was down and demand was strong, causing prices to improve mid day. Today U.S. Retail Sales rose .1 percent in October from September. The Fed Speakers just keep on coming with the Chicago Fed President Evans speaking at 2:15 P.M. and Big Ben takes the stage at 7 P.M tonight at the National Economists Club in Washington D.C. The FOMC minutes will be released tomorrow and investors are looking for any indication of future economic policy. Many believe it will be March of 2014; others are convinced December is not yet off the table.

Nov 15 2013

Stock and bonds both love Janet! Markets were up following Yellen’s confirmation hearing. However, Treasuries declined over night, after a two day gain. This move is before reports economists predict will show manufacturing grew at a faster pace than last month. Industrial production also expanded for the second month in a row, showing the economy is gaining momentum. This could add to market volatility today. Hopefully, we can head into the weekend holding onto the gains we made this week.

Nov 14 2013

The bond market is doing it for itself! A late day rally caused a much needed re-price for the better. There were no significant events that the improvement, but we will take it. Initial jobless claims declined to 330,000 last week from 336,000 the previous week. This may have investors questioning the Fed’s taper timeline. Europe might give us a boost this morning as headlines claim their economic recovery is faltering. This is on news the GDP for the Eurozone rose less than expected. Hopefully the market will remain positive today as Janet Yellen takes the stand for her confirmation hearing.

Nov 13 2013

Rates moved higher yesterday for no good reason, other than continued momentum from Friday’s strong Employment Report. We need a strong piece of economic data to reverse the trend; however the calendar is empty today. Treasuries rallied over night before Janet Yellen faces a confirmation hearing tomorrow. She will also defend the monetary stimulus plan already in place. Policy makers have stated that interest rates will remain low as long as inflation stays below 2.5 percent and unemployment remains above 6.5 percent. The jobless rate was 7.3 percent last month, making tomorrow’s Jobless Claims report the most important number of the week. Maybe it will give us the push we need to lower our rates.

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The Mortgage Update 11/7/2013

Yesterday was a slow day in the bond market with no economic news moving the needle in either direction. Today GDP and jobless claims are released at 8:30. GDP has the opportunity to step up to the plate and help us out today. If GDP shows the economy was hurt by the government shut down we could see rate improve, however if it shoes economic expansion we could see a sell off. Similarly, Jobless Claims data should show hiring improved last month. If it fails to meet expectations volatility could increase today. Tomorrow is the big day with another Employment Situation Report due out. Who doesn’t love a Jobs Friday?

The Mortgage Update 11/6/2013

The market sold off yesterday after the ISM Manufacturing Index was released. This adds to the concern that the Fed will begin to taper asset purchases sooner than expected. The next big piece of economic data that could move the market is Thursday, both GDP and Jobless Claims are announced. Economists are forecasting that expansion and hiring slowed this month. Those delayed reports and concerns over the ECB policy expectations; investors will be cautious in the bond market. Volatility will be the name of the game later this week…

The Mortgage Update 11/5/2013

The bond market was quiet yesterday with no economic news moving the needle. Buyers still outnumber the sellers in the market with origination continuing to decline. ISM Non-manufacturing report will be released at 10 AM; this is the only key piece of economic data before the Employment Situation Report due out on Friday. Investors are waiting for data to show the effects of the government shut down, we have not seen any yet. If a report underperforms to forecast it could move the market today, hopefully in our favor…

The Mortgage Update 11/4/2013

Mortgage rates inched higher on Friday following stronger than expected economic data. Manufacturing Reports suggest the economy is picking up steam, making investors question the Fed’s future economic policy. Federal Bank voting members Eric Rosengren and Richard Fisher will be speaking today advocating the Fed trim asset purchases. This could put pressure on rates today. This week starts off with Factory Orders followed by Jobless Claims on Thursday. We will close the week with another Employment Situation Report on Friday.

The Mortgage Update 11/1/2013

Just after pricing was set yesterday, we re-priced for the worse. The cause was a unexpected strong piece of economic data that showed business activity increased at a faster pace than economists estimated. This morning Treasuries declined over night before a report should show today that manufacturing expanded for a fifth month, weakening the case for the Fed to maintain their bond purchases. Good economic news has many wondering if a December tapper is still on the table..we will have to wait and see.

The Mortgage Update 10/31/2012

Yesterday MBS traded at its highest levels of the week. ADP employment numbers helped rates in the morning; however the FOMC announcement failed to define a timeline for tapering causing a re-price for the worse in the afternoon. Today Jobless Claims and Chicago PMI are released. Month end trading could cause late day volatility as investors firm up their books before heading out to trick or treat

The Mortgage Update 10/30/2013

Mortgage rates continue to hold around the 4% while Treasuries lost ground over night, despite the fact Consumer Confidence was weaker than expected. Today is another big day for economic news. Analysts predict U.S. companies added few workers this month, which could give the market a boost today. GDP is announced at 8:30; investors will be looking at this for inflation concerns. Federal Reserve policy makers end a two-day meeting today as well. Bernanke should announce their plan to maintain their bond purchase programs through March of next year at 2 PM.

The Mortgage Update 10/25/2013

All was quiet in the bond market yesterday. Economic data failed to move the market and weak trading levels didn’t help us out either. Most traders are waiting for next week’s month end trading and FOMC Announcement. Today Durable Goods, Consumer Sentiment and Wholesale inventories are set to be released. Although Durable goods orders increased 2.3 percent in September, the biggest gain since June, it shouldn’t have much effect on the market. Let’s see if we can just ease into the weekend, shall we?

The Mortgage Update 10/24/2013

Mortgage Rates improved slightly yesterday, but faded n the afternoon trading hours. With no economic news released yesterday trading levels defined the market movements. Today Jobless Claims and New Home Sales are the main economic drivers in the Bond Market. Reports should show the partial government shutdown cost the U.S. 120,000 jobs in October and trimmed .25 percentage points from the 4th quarter economic growth. Our Rally will be tested today, let’s see if we can maintain it….

The Mortgage Update 10/23/2013

Mortgage rates improved quickly yesterday after a surprising Jobs Report was released. Economists had predicted job growth had improved, however the actual employment numbers were weaker than expected. Overnight Treasuries rose for a second straight day on speculation the Fed will delay plans to begin tapering. Today data should show monthly improvements in import price and housing cost indices. The market volatility index is the lowest it has been since May; let’s see if we can maintain yesterday’s gains in the market

The Mortgage Update 10/22/2013

Not much change yesterday in the MBS markets as volume remained light. Investors focus has been on the Jobs Report that will be released today at 8:30 AM. This report was due to be released on October 4th but was pushed back due to the government shutdown. The report is on the September employment situation and was almost ready for release when the government shutdown started. This report will receive special attention because of the lack of economic data that has come out recently. The report fell well below expectations and this has caused a MBS market rally. This will also be the first and hopefully only time that this report will not be released on a Friday so gear up for Jobs Tuesday!

The Mortgage Update 10/21/213

Friday was a quiet day for the Bond Market with no Fed speakers or economic news released. Overnight Treasuries snapped a 3 day gain before the delayed Jobs Report is released tomorrow. Economists predict the report will show U.S. employers added the most jobs since April last month and durable goods orders climbed. Yields rose from their lowest levels since July amid signs the economy is finally gathering momentum. Today Existing Home Sales Report is due at 10 AM, sales fell in September. With the government back in action we will finally get some meaningful economic data and that could mean more volatility for the market.

The Mortgage Update 10/18/2013

Yesterday the market rallied yet again with the government finally reaching a short term deal to end the shutdown. Short term lending rates quickly improved, causing a sustained spike in the MBS market as well. Three FOMC speakers took the stage yesterday claiming the Fed should hold off on tapering bond purchases until economic conditions improve. There is no economic news released today. The next big report will be the Employment Situation Report which is rescheduled to be released on Tuesday.

The Mortgage Update 10/17/203

It’s over…for now. President Obama signed a deal late last night to end the partial government shutdown. The market recovered all morning losses causing a re-price for the better. Investors flooded back to the market bringing trading levels back to normal. Adding to the rally were comments in the Fed’s Beige Book that stated, “the economy grew at a modest to moderate pace.” This suggests tapering will be delayed until the first quarter of 2014. Initial Jobless Claims will be out at 8:30, which is expected to show a decline from the previous month. 10 AM the October Philly Fed and Freddie Mac’s weekly mortgage rate survey will be released.

The Mortgage Update 10 16 2013

Mortgage rates increased slightly yesterday as hesitant investors wait for news regarding the government shutdown. Trading volumes are 75% of the 30-day moving average showing the direct impact the political uncertainty has on the MBS market. Mortgage applications remain flat week over week while home purchases dip a report will state today. The Debt Ceiling deadline is now just hours away while we all sit and watch the showdown unfold. Today the MBA reports on Mortgage Applications, multiple Fed speakers will take the stage today and the Beige Book will be released at 2 PM.

The Mortgage Update 10/14/2013

Mortgage rates remained flat to worse Friday. The market saw more volatility than the previous week, however any potential long term moves hinge on the government reopening for business. Investors are eager to see the employment report compiled prior to the shut down, however it still has not been released. Ben Bernanke is scheduled to speak at 8 PM today while no other economic news scheduled. Thursday is the big news days with Jobless Claims and Philadelphia Fed Survey still scheduled to be released.

The Mortgage Update 10/11/2013

It was a rough start in the morning yesterday but a rally in the afternoon helped turn us in the right direction. The turnaround was caused by a better than expected 30 yr treasury auction as well as public comments by multiple Fed. officials stating they did not expect any taper of the QE program before the end of the year. This momentum has carried through this morning with a strong opening in the MBS market. If this holds through the day then we should have favorable pricing through the weekend.

The Mortgage Update 10/9/2013

The big news late yesterday was that President Obama is expected to officially nominate Janet Yellen today to succeed Bernanke as head of the Federal Reserve after he steps down in January. It is expected that her appointment would mean that the Fed would continue to keep rates low in the short-run. The FOMC minutes from September will be released today at 2PM EST, which will provide further details about the direction the Fed is heading with its current bond buying program.

The Mortgage Update 10/8/2013

It was a volatile day yesterday in the MBS markets as
we rallied in the morning before selling off in the
afternoon. The morning rally was the result of investors
pulling money out of the equity market and bonds were
the benefactor, however those gains were erased by an
afternoon sell off. This was believed to be caused by an
article released that suggested President Obama may
be leaning towards selecting Donald Kohn as the next
Federal Reserve Chairman. Donald Kohn is perceived
to be more hawkish and therefore more likely to scale
back the Fed’s bond buying program than the
perceived frontrunner Janet Yellen. No immediate
decision is expected by Mr. Obama but investors will be
paying close attention to any indication about what
direction he may be leaning.

The Mortgage Update 10/7/2013

Bonds are poised to open up this morning as the US government is moving into the second week of a shutdown with no end in sight. Although concerns over the budget and debt ceiling continue to weigh on sentiment, the drop in both yields and volatility in Treasuries is a sign that investor confidence in a resolution is outweighing worry over the current situation. With many of the economic releases delayed, the key event of the week will be the release of the September's FOMC minutes where the Fed surprised most everyone by not tapering.

The Mortgage Update 10/4/2013

It appears the markets are more interested in the Employment Situation Report than the government shutdown. Too bad, the Employment Report will not be released today, due to the shutdown. That put more emphasis on ISM Data that had both stocks and bonds moving lower. In the afternoon the Dow broke through a technical trading level, below 1500 causing investors to run to the bond market. What will happen today is anyone’s guess…

The Mortgage Update 10/3/2013

The bond market began the day close to Tuesday’s latest levels, but rally slightly after the ADP Employment Report was released. The report missed forecast by over 20K jobs, due to a decrease in service industries in September; however it was not enough to sustain the positive momentum. Overnight, Washington failed to come to an agreement prolonging the government shut down with no end in sight. Initial Jobless claims increased by 10,000 last week according to the Bloomberg report, we will see if that is enough to move the market in our favor today.

The Mortgage Update 9/30/2013

The potential government shut down dominates the headlines this morning. Congress must pass a stop gap by midnight to avoid a shutdown. Stocks are hurting as the deadline nears, however the bond market is benefiting from investors demand for safer assets. Chicago PMI is the only relevant data today and likely overshadowed by headlines and month/quarter end trading today. The jobs report is due out this Friday, however it might be delayed if the government can’t come to an agreement soon.

The Mortgage Update 9/27/2013

Bond markets lost a little ground yesterday with stronger than expected Jobless Claims figures and GDP failed to make a significant statement. Today is light on economic news with Personal Income and Outlays and Consumer Sentiment this morning. The market is up in the pre-trading hours on concern over the Senate vote today on a stopgap spending bill. There is no clear end to the debt ceiling debate and it should remain the forefront of investors’ minds for the weeks to come.

The Mortgage Update 9/26/2013

Mortgage rates continued to improve yesterday, making it the 11th straight day where rates have held steady of moved lower. Data came in as expected yesterday with Durable Goods performing to forecast and lackluster long term stats for New Home Sales creating no reason for the bond market to move. However, dear over a possible government shut down drew investors back to the bond market later in the day. In other mortgage news mortgage applications rose last week, refinancing activity index rose nearly 18 percent, and the FHFA continues their new campaign to educate HARP eligible homeowners about refinancing opportunities.

The Mortgage Update 9/25/2013

Yesterday the MBS market saw slow and steady gains all day. The boost began in the overnight trading hours with weaker than expected economic data out of Germany and the ECB promising ongoing support for the struggling portion of the Eurozone. Consumer Confidence declined according to an afternoon report and light volume in the 10 year Treasuries forced traders to the MBS market late afternoon; pushing the market to new highs. This morning amid speculation the U.S. budget talks are risking a government shutdown has boosted demand for safer assets. New Home Sales will be released at 10 AM today, but the debt ceiling debate is front and center today…

The Mortgage Update 9/24/2013

Today it’s all about confidence, Consumer Confidence. Economists predict confidence fell last month according to a survey. The Case Shiller index of home prices rose 12.4 percent in July from a year earlier. The market for U.S. government debt has yet to react to any potential issues over raising the debt ceiling. That could change today if the government cannot come to an agreement. If the House and Congress don’t agree on something by September 30th the government could shut some of its operations. We will end the day with a 2-year Treasury auction.

The Mortgage Update 9-23-2013

The bond market appeared to settle down late last week after the Fed announced they will not begin tapering this month. Treasuries declined overnight as the U.S. prepares to sell $97 billion of debt over the next three days. Atlanta, New York, and Dallas Fed Presidents will all deliver speeches today. Debate over the federal budget and the debt ceiling resume today on Washington. This week’s economic news has moderate potential to move the market; many investors are waiting for next week NFP numbers to give any indication of the Fed’s next monetary move.

The Mortgage Update 9/20/2013

After one of the largest rallies MBS has seen this year, yesterday mortgage rates moved slightly higher due to low trading volume. Today Fed Bank of St. Louis President James Bullard will speak on economic and monetary policy. Kansas City President Esther George will also take the stage at an Open Market Committee meeting. Investors are looking for any hint of future plans to reduce asset purchases. No other economic news on the calendar today...Let’s just hope Ben keeps buying our bonds today so we can ease into the weekend.

The Mortgage Update 9/19/2013

I didn’t see that one coming. In an unexpected turn of events, Ben Bernanke announced yesterday that he will not be tapering bond purchases this month as expected. The Fed stated job growth is not where they would like it to be as the reason for the decision. Bonds rallied on the news, causing a rare re-price for the better. Purchases of previously owned homes fell 2.6 percent in August according to a report due out at 10 AM today. We will see if anyone notices.

This is a chart of what happened yesterday when the FED announced they are not going to TAPER.  What does this mean?  They will continue to buy Mortgage Backed Securities (MBS) in an effort to keep Mortgage Rates at or near a Historic Low.  This chart is the PRICE of the MBS.  When the price goes "UP" rates come "DOWN" and the opposite is true.  So as you see by the chart, we had a very impressive run up in "price" bringing "rates" down.   For those not familiar with the trend.  This is a BIG move.  So today should be a very good day if you haven't taken the opportunity to take advantage of this opportunity the FED has given you.