Daily Market Update 11/28/08

Mortgage rates were little changed Friday in a shortened session. The mortgage-backed securities market will close at 2:00 PM et. Stocks were mixed. No major economic reports are due out today.

Daily Market Update 11/26/08

Mortgage rates improved slightly Wednesday after having risen Tuesday afternoon. Rates improved dramatically yesterday morning following the Fed's announcement of plans to purchase mortgage-backed securities directly from Fannie Mae and Freddie Mac. Durable Goods Orders plummeted 6.2% in October, far greater than expected. President-elect Obama tapped former Fed Chief Paul Volcker to head a special economic advisory board. Volcker is highly regarded in the financial markets and by both major political parties. Bond markets will close at 2:00 PM today for the Thanksgiving Holiday.

Daily Market Update 11/25/08

Mortgage rates fell sharply Tuesday as the Fed and Treasury announced a new program to purchase up to $500 billion in mortgage-backed securities from Fannie Mae and Freddie Mac. This was the original proposal for the $700 billion TARP rescue, but the uses of the funds shifted before any mortgages were purchased. The goal of the new program is to lower mortgage interest rates. In other economic news, today's downward Gross Domestic Product revision matched consensus and had little impact. Stocks moved higher.

Daily Market Update 11/24/08

Mortgage rates were little changed Monday while Treasury rates moved higher. Stock markets have reacted favorably to the selection of several key positions within President-elect Obama's economic team, among them Timothy Geithner as Treasury Secretary, Lawrence Summers to head the National Economic Council, and Bill Richardson as Commerce Secretary. The government announced plans yesterday to guarantee $306 billion of troubled assets held by Citigroup, one of the world's largest financial institutions. The National Association of Realtors reported sales of existing homes fell 3.1% last month, more than expected. The median price fell 11.3% from the same period last year reflecting a large number of foreclosures and distressed sales. Key economic reports due out this week include tomorrow's release of revised third quarter GDP figures and Wednesday's Durable Goods Orders.

Daily Market Update 11/21/08

Mortgage rates inched higher Friday as stocks attempted to recover from steep losses earlier in the week. Treasury markets continued to out-perform mortgages, with yesterday's yield on the 10-year Treasury hitting 2.99%, the lowest level since 1962. The unusually wide spread between Treasury and mortgage rates is resulting from uncertainty among traders over the government's plan for Fannie Mae and Freddie Mac. Fannie and Freddie both announced yesterday they would suspend certain foreclosures until 1/9/09 in an effort to restructure borrowers' payments. Rates are likely to remain volatile next week, with several key economic reports due out before the Thanksgiving Holiday.

Daily Market Update 11/20/08

Mortgage rates eased Thursday as Initial Jobless Claims reached a 16-year high. Stocks continued their descent after closing below 8,000 yesterday for the first time since 2003. Oil prices fell to $50 per barrel, a whopping 66% decline since July. Congress failed to reach an agreement on a proposed $25 billion bailout for the Big Three domestic automobile manufacturers as debate continues over the appropriate source of funding for the plan.

Daily Market Update 11/19/08

Mortgage rates remained little changed following this morning's Consumer Price Index (CPI) report for October. Consumer Prices declined 1.0% last month due to falling energy prices. The more closely watched core rate, which excludes food and energy components, fell 0.1%, exceeding consensus. Minutes from the October Federal Open Market Committee meeting will be released today at 2:00 PM et.

Daily Market Update 11/18/08

Mortgage rates held steady Tuesday following the release of October's Producer Price Index (PPI). Producer Prices fell 2.8% in October from September, largely due to falling energy prices. The more closely watched core rate, which excludes food and energy, rose 0.4%, far more than expected. The economic slowdown is expected to lead to lower future readings in the core PPI. Treasury data released this morning showed that China and other foreign countries remained big buyers of US bonds in September. If the trend continues, it would be good news for mortgage-backed securities markets, perhaps leading to lower rates. Stocks were generally higher.

Daily Market Update

Mortgage rates were little changed Monday, as Treasurys continued to out-perform mortgage-backed securities. Industrial Production rose 1.3% for October, reflecting a resumption of production by oil refineries following Hurricanes Gustav and Ike. Fannie Mae announced plans to raise $2 billion this afternoon to refinance long-term debt. This is the first such sale since the government announced plans to rescue the mortgage giant and traders will be watching the auction results closely. Stocks moved lower.

Daily Market Update 11/14/08

Mortgage rates were little changed Friday morning while Treasury rates declined. Retail Sales fell by 2.8% in October, more than expected. Stocks moved sharply lower on the report. Freddie Mac posted a $25 billion loss in the third quarter and began tapping taxpayer funds. The Treasury provided $13.8 billion in exchange for preferred shares of the mortgage giant. Fannie Mae posted a $28 billion third quarter loss four days earlier. The Treasury has committed up to $100 billion rescue funds for each of the two entities.

Daily Market Update 11/13/08

Rates were little changed Thursday ahead of a flurry of economic data scheduled for release in the coming week. Key reports due out over the next four business days include Retail Sales, Industrial Production, the Producer Price Index, the Consumer Price Index, and the minutes from last month's FOMC meeting of the Federal Reserve. Mortgage-backed securities markets are likely to remain volatile throughout the period. Initial Jobless Claims for the week came in at 517,000, the highest level since 2001. Stocks were mixed. In other news, Treasury Secretary Paulson announced yesterday he will not use the $700 billion TARP funds to purchase toxic mortgages, as originally planned. Instead he intends to continue purchasing bank stocks and extend fund access to a wide range of financial service providers, including issuers of auto loans, credit cards, and student loans. Meanwhile, President-elect Obama endorsed a $50 billion rescue package for domestic automobile manufacturers.

Daily Market Update 11/12/08

Mortgage rates inched lower Wednesday as stocks fell sharply. Yesterday the Treasury and Federal Housing Finance Agency (FHFA) announced a plan to modify mortgage loans held by Fannie Mae and Freddie Mac in an effort to reduce foreclosures. Certain loans in excess of 90 days past due would qualify for lower interest rates and extended terms to trim payments to 38% of borrowers' gross monthly income. Sheila Bair, Chairman of the FDIC, objected on the basis the plan doesn't go far enough to stem the tide of foreclosures. She has called for a full government takeover of Fannie Mae and Freddie Mac and a reduction of the principal balance on many troubled mortgages. Other analysts fear the plan may encourage struggling homeowners to allow their payments to become 90 days delinquent in order to qualify for assistance. We agree on both counts, and consider the plan to be ill-conceived. In other economic news, oil prices slid below $58 pb and the Bank of England appeared poised for another rate cut. Retail Sales data for October will be released Friday.

Daily Market Update 11/11/08

Interest rates were unchanged, as mortgage-backed securities and Treasury markets are closed today in observance of Veteran's Day. Stock prices fell on lower earnings expectations. Crude oil prices continued their descent, reaching $60 pb, a 59% decline since peaking in July. The dollar moved slightly higher against most foreign currencies.

Daily Market Update 11/10/08

Mortgage rates remained little changed Monday as mortgage-backed securities markets will close at 2:00 PM and not reopen until Wednesday in observation of Veteran's Day. World stock markets rose following China's announcement of a $600 billion economic stimulus plan. Fannie Mae posted a $29 billion loss last quarter and may need to begin tapping into government rescue funds by year end. This will be a relatively light week in terms of economic data, with the exception of Friday's report on Retail Sales.

Daily Market Update 11/7/08

Mortgage rates were little changed Friday following a larger than expected jump in the Unemployment Rate to 6.5%. The Employment Report for October showed a net loss of 240,000 jobs in the US last month. While such gloomy data would normally tend to push rates lower, traders are concerned about the increased likelihood of another government stimulus package and the associated costs. The government will need to issue even more debt, adding to the $1 trillion deficit projected for next year. Surprisingly, stocks moved modestly higher. No other data is scheduled for release today.

Daily Market Update 11/6/08

Mortgage rates returned to yesterday's levels after having risen in early trading. Third quarter Productivity increased at a 1.1% annual rate, in line with expectations. The European Central Bank (ECB) and Bank of England (BOE) cut rates today, the ECB by .5% and the BOE by an unusually large 1.5%. The dollar rose against the euro and pound. Oil prices sank to 20 month lows as retail gas prices fell below $2 per gallon in some areas. Stocks moved sharply lower. Traders will be closely watching tomorrow's Employment Report for October, scheduled for release at 8:30 et. No other economic data will be released today.

Daily Market Update 11/5/08

Mortgage rates improved late Tuesday and early Wednesday as uncertainty over the election ended. Conventional 30-year fixed rates have now fallen 3/4% since last Thursday. Investors have turned their attention to weakness in the economy. The Institute for Supply Management's Services Index showed service industries contracted more than expected in October as a result of lower consumer spending. Traders are anxiously awaiting Friday's release of the Employment Report for October. Analysts are projecting a net loss of 200,000 jobs for the month. Stocks and oil prices moved modestly lower.

Daily Market Update 11/4/08

Mortgage rates inched lower in light trading as investors await the outcome of today's elections. Stocks moved sharply higher. The euro gained against the dollar on a decline in money market rates, as frozen credit markets continue to show signs of thawing. Oil and other commodity prices surged on the weaker dollar.

Daily Market Update 11/3/08

Rates were little changed Monday ahead of tomorrow's election. In economic news, the Institute for Supply Management's Manufacturing Index fell to its lowest reading in 26 years last month as factory orders declined sharply in the wake of the deepening credit crisis. Stocks were mixed. Friday's Unemployment Report will be closely watched by investors, but the main focus of the week will be the results of the Presidential election and various Senate races. Although the market is anticipating an Obama victory, a 60 vote majority by Democrats in the Senate is less clear and would shift power dramatically to the left. The financial markets typically prefer divided government. Regardless of the outcome, many traders will be glad to see an end to the uncertainty that has resulted from the lead up to the election.