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