The Mortgage Update

points
from Yesterday
Treasuries were up again yesterday as investors must
have realized that every asset class cannot go down at
the same time. MBS appeared to be settling down
yesterday, finding a fairly stable level all day long.
However, today is quarter end so that may add to the
volatility to the market. Chicago PMI and Consumer
Sentiment will cap off this week’s economic news at
9:55 today.

Have a great weekend and cya Monday

The Mortgage Update

Treasuries rose yesterday when the President of the
Federal Reserve Bank claimed the central bank isn’t
close to decreasing its balance sheet as officials have
speculated. Personal spending rose .3 percent in May,
the biggest increase in three months, while
unemployment benefits fell by 9,000. Economists
predict consumer-price inflation increased 1.1 percent
in May and personal consumption price index is flat to
April. Both reports are due out this morning. If forecasts
are correct, both of these numbers could mean good
news for the bond market today.

The Mortgage Update

Home prices rose faster from March to April than they ever have in the history of the index. The composite index of 20 metropolitan areas gained 2.6 percent—which included Detroit. Treasuries gained overnight as they appear to be consolidating after the recent sell off, but sentiment remains fragile. The U.S. will sell $35 billion in five year notes today to start this week’s auction cycle and GDP is due out at 8:30.

The Mortgage Update

The only thing we know for certain is that investors still don’t know how to react to the Fed’s press conference last week. The market opened down significantly from where we priced, but we were able to make up most of the loss over the course of the day. But something strange is happening this morning…there is a rally in the bond market. Investors sought safer assets amid speculation a credit squeeze in China will slow growth in the world’s second-largest economy.

The Mortgage Update

Bonds slumped globally over the weekend. Benchmark notes dropped for a 6th straight day as Ben Bernanke claimed QE may begin to tapper bond purchases this year and end it in mid-2014. Volatility remains the name of the game this week. The Bond Market still lacks confidence and any piece of news or data has the potential to move the market. The first big piece of economic news is Tuesday with Durable Goods Orders and Consumer Confidence. It was another wild night with the market significantly from where we priced on Friday. It’s going to be a wild ride today, buckle up…

The Mortgage Update

All should be quiet on the home front with no economic data scheduled to be released. It will be an opportunity to reevaluate what has happened over this past week. Most economists believe the market has over reacted to the Fed’s announcement. However, this could add volatility to the market over the next few weeks as investors return to the MBS market. We could enjoy a stable day today, so let’s take advantage of it.

The Mortgage Update

Annihilated. The Fed has spoken and it wasn’t pretty. Bonds and Treasuries tumbled around the world following Big Ben’s press conference. The MBS market was sent into a tailspin losing over a point causing multiple re-prices late into the evening. The 30-year MBS best execution rate has risen to 4.25%, a rate not seen since 2011. We could rebound today or tumble more. Policy makers expect the jobless rate has fallen to 7.2 percent, down .1 percent from March. Hold on to your hats this could get exciting.