Daily Market Update 1/30/09

Rates were little changed Friday following the release of preliminary fourth quarter Gross Domestic Product (GDP) figures. The data showed the economy contracted at a 3.8% pace last quarter, the worst performance since 1982, but better than expected. Stocks moved lower. Investors continue to focus on the proposed stimulus package and the Fed's plans to purchase Treasuries and mortgage-backed securities. Our offices remain closed due to massive power outages throughout the north-central Kentucky region as a result of the ice storm. We apologize for any inconvenience and hope to resume normal operations Monday.

Daily Market Update 1/29/09

Interest rates moved higher Thursday following yesterday's Federal Open Market Committee (FOMC) meeting. The Fed indicated a willingness to purchase long-term Treasuries if necessary to keep rates low, but investors had hoped for more clarity. Our offices remain closed today due to this week's severe ice storm in Louisville. We apologize for any inconvenience and will reopen as soon as power is restored to our building.

Daily Market Update 1/27/09

Mortgage-backed securities and Treasury rates moved modestly lower Tuesday as the Conference Board reported Consumer Confidence fell more than expected in January. The decline was attributed to the worsening labor market. Stocks edged higher on growing prospects for a new government economic stimulus package. The remainder of the week may be extremely volatile with several key announcements scheduled. Tomorrow the Fed wraps up their periodic Federal Open Market Committee meeting to determine monetary policy, Durable Goods Orders will be released Thursday, and fourth quarter Gross Domestic Product and the Chicago Purchasing Manager's Index are due out Friday.

Daily Market Update 1/26/09

Mortgage rates held steady Monday ahead of a spate of economic data due out this week. The National Association of Realtors reported an unexpected 6.5% increase in Existing Home Sales in December. The median home price nationally fell 15% from a year earlier. Leading Indicators rose 0.3% last month, exceeding forecast and registering the first increase in six months. Stocks moved higher on the reports. The Federal Open Market Committee (FOMC) of the Federal Reserve begins a two day meeting tomorrow. Policy makers are considering options for holding down long-term interest rates, including the purchase of longer-maturity Treasury securities. Some analysts have warned that such a move might distort the Treasury market and undermine the dollar, discouraging foreign central banks and sovereign wealth funds from buying Treasuries. Traders will be following the meeting closely even though short-term interest rate policy is expected to remain unchanged.

Daily Market Update 1/23/09

Mortgage rates were little changed Friday as stocks plummeted on weak earnings reports. No economic data will be released today. The dollar moved higher against the euro, oil prices fell. Mortgage-backed securities (MBS) and Treasury markets have been hurt all week by investor concerns about the large quantity of debt which will be issued to fund government programs. The Fed purchased $19 billion of MBS during the week, about the same as last week. They intend to purchase up to $500 billion of MBS directly from Fannie Mae and Freddie Mac during the first 6 months of 2009. The Federal Open Market Committee (FOMC) of the Federal Reserve will meet next Wednesday to discuss interest rate and monetary policy. No change is expected. Durable Goods Orders will be released Thursday. The first estimate for 4th quarter Gross Domestic Product (GDP) is due out Friday.

Daily Market Update 1/22/09

Mortgage rates continued their upward trend Thursday following a late sell-off of mortgage-backed securities (MBS) Wednesday. Treasuries and MBS's have been hard hit in recent days as traders have become wary of growing government debt obligations. In economic news, Housing Starts fell more than expected in December. Weekly Jobless Claims spiked to 589,000, more than forecast. Stocks moved sharply lower on the data. Freddie Mac reported refinance activity accounted for 89% of all conventional mortgage applications during the first three weeks of 2009. Lenders continue to struggle with capacity issues and have had to buffer pricing to limit application volume.

Daily Market Update 1/21/09

Mortgage rates inched higher Wednesday as concerns about the added supply of debt needed to fund all the government programs continued weighing on mortgage-backed securities and Treasury markets. Stocks were little changed following yesterday's sharp sell-off. Treasury Secretary-designate Tim Geithner called for "aggressive action to address the housing crisis and to get credit flowing again" in his Senate confirmation hearing. He also recommended tightening the terms for those companies receiving federal help. In other news, retail mortgage rates remain unusually high relative to the Fannie Mae required net yield (60 days), now at 4.55%. December Housing Starts and Weekly Jobless Claims will be released Thursday.

Daily Market Update 1/20/09

Interest rates crept higher Tuesday on increased estimates of the supply of debt that will be issued this year to provide economic stimulus and battle the recession. Treasury issues were hardest hit, but mortgage-backed securities' prices also fell. Weakness in financial stocks dragged stock indexes lower. Several fund managers have advised selling Treasuries in recent days due to inflationary concerns, although the pace of consumer price inflation remains low. Some traders are betting the Federal Reserve will buy Treasury debt, along with mortgage-backed securities, to prevent borrowing costs from rising. No economic data will be released today.

Daily Market Update 1/19/09

Financial markets are closed today in observance of Martin Luther King Jr. Day. This will be an extremely light week for new economic data. The only reports scheduled are Housing Starts and Weekly Jobless Claims, to be released Thursday. Tomorrow's inauguration of President-elect Obama may have a psychological impact on investors.

Daily Market Update 1/16/09

Mortgage rates inched higher Friday in light trading. Mortgage-backed securities (MBS) markets will close today at 2:00 PM et. and remain closed until Tuesday in observance of Martin Luther King Jr. Day. In economic news, the Consumer Price Index fell 0.7% in December. The closely watched "core" rate, excluding food and energy costs, was unchanged. Industrial Production fell 2.0% last month, more than forecast. Consumer Sentiment rose unexpectedly. Stocks moved modestly higher. No major economic data is scheduled for release next week. Rates will continue to be affected by mortgage industry processing capacity and flight to quality concerns among traders of stocks, Treasurys, and MBS's. Consumer rates remain artificially high relative to MBS yields due to current refinance volume.

Daily Market Update 1/15/09

Rates were little changed Thursday following the release of December's Producer Price Index (PPI) and the latest weekly Jobless Claims data. The PPI fell 1.9% last month, in line with expectations. The more closely watched "core rate", excluding volatile food and energy components, rose 0.2%, above consensus. Weekly Jobless Claims rose to 524,000, up from 467K the previous week. House Democrats proposed an $825 billion stimulus package that included $550 billion additional spending and tax cuts of $275 billion. Although the proposal is a first step and remains a long way from passage, the announcement appeared to weigh heavily on mortgage-backed securities markets due to concerns over the growing budget deficit. In other news, Freddie Mac said average mortgage rates hit 4.96% last week with 0.7 "points", the lowest level since tracking began in 1971.

Daily Market Update 1/14/09

Mortgage rates inched lower Wednesday following December's Retail Sales data showing a larger than expected monthly decline of 2.7%. Stocks fell sharply. Treasurys rallied on a flight to quality by investors, but mortgage-backed securities' (MBS) prices did not improve as dramatically. Retail rates to consumers are being affected more by the industry's capacity to manage their current application pipelines than by underlying MBS prices. If MBS yields maintain present levels, rates will improve as lenders gain control of their pipelines.

Daily Market Update 1/13/09

Mortgage rates were little changed Tuesday ahead of tomorrow's Retail Sales report for December. In a much-anticipated speech at the London School of Economics, Fed Chairman Ben Bernanke appeared to endorse the purchase of troubled assets with the remaining $350 billion TARP funds, as originally intended. In economic news, November's Trade Deficit fell more than expected on declining oil prices. Stocks were mixed.

Daily Market Update 1/12/09

Mortgage rates inched higher Monday as lenders continued to struggle with capacity concerns. Consumer rates should be lower based on current mortgage-backed securities' prices but lenders are unable to process additional volume without risking late delivery penalties. This problem will likely subside in the coming weeks causing rates to gradually move lower. Several key economic reports are due out later in the week, beginning Wednesday. Stocks and oil prices declined, the dollar was slightly higher.

Daily Market Update 1/9/09

Mortgage rates were little changed Friday following the Non-farm Payrolls report for December. The US economy lost 524,000 jobs last month, higher than forecast. The Unemployment Rate also exceeded expectations, having risen to 7.2% from 6.7% in November. Stock and oil prices moved lower. Several key economic reports due out next week include Wednesday's release of Retail Sales data, Thursday's Producer Price Index (PPI), and Friday's Consumer Price Index (CPI) and Industrial Production.

Daily Market Update 1/8/09

Rates were little changed Thursday as investors await details of President-elect Obama's planned stimulus package and tomorrow's release of Non-farm Payrolls data for December. In economic news, Weekly Jobless Claims fell unexpectedly to 467,000, far below consensus of 550,000. The Bank of England cut its benchmark rate to 1.5%, the lowest level since the bank was founded in 1694. The 30-year Fannie Mae net required yield hit a new low of 4.26%. Retail mortgage rates remain well above this level, indicating lenders are maintaining artificially high margins to limit volume due to capacity concerns. Rates to consumers may improve as swollen application pipelines are brought under control.

Daily Market Update 1/7/09

Mortgage rates held steady Wednesday after two days of solid price gains in mortgage-backed securities. The conventional 30-year fixed rate is again approaching 5%, a level not seen since the early 1960's. Yesterday's release of minutes from the December 16 FOMC meeting showed broad support for the Federal Funds rate cut to 0.00% to 0.25% last month. Fed officials expressed concern about the risk that the current economic slowdown will be deeper and last longer than originally forecast. This morning, the ADP estimate for Friday's Employment Report predicted larger than expected job losses in December. Stocks moved lower.

Daily Market Update 1/6/09

Mortgage rates moved lower Tuesday as the yield spread between mortgage-backed securities and Treasurys narrowed for the second consecutive day. Mortgage rates have been unusually high relative to Treasury rates for several months, but the purchase of mortgage-backed securities by the Fed from Fannie Mae and Freddie Mac which began yesterday seems to be having a positive impact. In economic news, Pending Home Sales and Factory Orders for November fell more than forecast, while the Institute for Supply Management Services Index rose unexpectedly. The minutes from last month's Federal Open Market Committee meeting will be released today at 2:00 PM et. Stocks were little changed, the dollar higher.

Daily Market Update 1/5/09

Mortgage rates were little changed Monday as trading volume returned to normal levels following the holidays. The Fed began purchasing mortgage-backed securities (MBS) today in an effort to push rates lower. They have announced plans to purchase up to $500 billion in MBS's from Fannie Mae and Freddie Mac over the next six months. In economic news, Construction Spending fell 0.6%, less than forecast. Stocks were modestly lower. The dollar rose on speculation over the large stimulus package being considered by the Obama Administration.

Daily Market Update 1/2/09

Rates were little changed Friday in light trading. Mortgage-backed securities (MBS) markets will close at 2:00 PM et today. In economic news, the Institute for Supply Management Manufacturing Index fell more than forecast to its lowest reading since 1980. Stocks moved higher. MBS markets will resume a normal trading schedule next week. Closely watched reports due out include the minutes from last month's Federal Open Market Committee meeting on Tuesday and Friday's release of Non-farm Payrolls for December. Earlier this week the Fed announced plans to begin buying MBS's directly from Fannie Mae and Freddie Mac in January in a move designed to lower mortgage interest rates and stimulate the housing market.