Daily Market Update 2/27/09

Interest rates remained little changed Friday in spite of weaker than expected economic data. Fourth quarter GDP was revised down to -6.2%, well below forecast. The Chicago Purchasing Managers Index came in close to consensus but reflected continued contraction in the manufacturing sector. Investors concerned about growing government debt levels found no comfort in yesterday's budget proposal by the Obama Administration. Although Congress is likely to make significant revisions, the plan calls for record deficit spending for the next ten years, even factoring in highly optimistic economic growth projections. Stocks and oil prices declined, the dollar strengthened against the euro. Next week's economic data include Monday's release of the Institute for Supply Management's manufacturing index and Friday's closely watched Non-farm Payrolls report for February.

Daily Market Update 2/26/09

Mortgage rates moved higher Thursday, pressured by concerns over the supply of new debt to fund government rescue programs. The Obama Administration announced a projected $1.75 trillion budget deficit this year, 12% of GDP, the highest level since World War II. The plan included an additional $750 billion in financial industry aid. Treasury yields increased, stocks moved modestly higher. In economic news, January Durable Goods Orders fell 5.2%, more than doubling forecast. New Home Sales plummeted 10% to the lowest level since tracking began in 1963. One contributing factor may have been delayed purchases as buyers awaited details of the $8,000 first time home buyer tax credit included in the recent stimulus package. Fourth quarter GDP and the Chicago Purchasing Managers Index will be released tomorrow.

Daily Market Update 2/25/09

Mortgage rates inched higher Wednesday following the release of weaker than expected housing data. Existing Home Sales fell 5.3% in January, exceeding forecast. The rate spread between Treasuries and mortgage-backed securities widened on the report. "Distressed" properties accounted for 45% of all sales activity last month. Stocks fell sharply. The data reflects conditions prior to the passage of the $787 billion economic stimulus plan. Durable Goods Orders will be released tomorrow.

Daily Market Update 2/20/09

Rates inched lower Friday in a flight to quality move by investors. Traders sold stocks and purchased Treasuries and mortgage-backed securities (MBS) on growing global economic fears. The Consumer Price Index (CPI) rose 0.3% in January but was unchanged on an annual basis for the first time since 1955. The closely watched "core" rate increased 0.2%, a bit more than forecast. MBS markets showed little reaction to the CPI data. Several key economic reports are due out next week beginning Tuesday, including New- and Existing Home Sales, fourth quarter GDP, Durable Goods Orders, and the Chicago Purchasing Manager's Index. I will be attending the National Association of Mortgage Brokers Legislative Conference in Washington, DC through Tuesday, but can be reached by email at: don@mortgagenetwork.net. Daily market updates will resume Wednesday.

Daily Market Update 2/19/09

Interest rates inched higher Thursday as Producer Prices and Leading Indicators rose more than forecast. The Producer Price Index for January rose 0.8% from December. The more closely watched "core" rate, excluding volatile food and energy prices, rose 0.4%. Analysts had been expecting an increase of 0.1%. The Conference Board's Index of Leading Indicators rose 0.4% in January, the second consecutive increase. Although the economy remains mired in recession, the reading implies the intensity of the downturn may begin to ease in coming months. First time Jobless Claims came in at 627,000, in line with expectations. Stocks were little changed. The Consumer Price Index for January will be released tomorrow.

Daily Market Update 2/18/09

Mortgage rates were little changed Wednesday morning. President Obama intends to unveil a comprehensive $275 billion plan to help prevent foreclosures later today. $200 billion will be used to purchase additional preferred stock in Fannie Mae and Freddie Mac, the balance to assist troubled homeowners in lowering their monthly payments. Industrial Production fell by 1.8% last month, a bit more than forecast. January Housing Starts fell more than expected. The Fed will release minutes from last month's Federal Open Market Committee meeting at 2:00 PM. The Producer Price Index, a key measure of inflation, will be released tomorrow.

Daily Market Update 2/17/09

Interest rates moved lower Tuesday as global stock markets plummeted on deepening recession fears. Treasury yields fell sharply, while mortgage rates declined more modestly. The dollar gained against most foreign currencies, oil prices fell below $36 per barrel. February's Empire State Index came in lower than forecast. No other economic data will be released today.

Daily Market Update 2/16/09

The mortgage-backed securities market is closed today in observance of Presidents Day. Congress passed the $787 billion economic stimulus plan Friday with little support from Republicans. President Obama is scheduled to sign the bill tomorrow. Later in the week he is expected to announce details of a $50 billion plan to assist troubled homeowners. No economic data will be released today.

Daily Market Update 2/13/09

Mortgage rates moved higher Friday as the House and Senate prepared to vote on the economic stimulus plan. Passage is expected. Details of the Home Buyer Credit emerged. First-time buyers may qualify for a maximum tax credit of $8,000 on purchases taking place between 1/1/2009 and 12/1/2009. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 for married couples filing jointly). Recapture of the credit is required if the home is sold within three years of purchase. Consumer Confidence fell more than forecast on fears of a deeper recession. Stocks were mixed. Mortgage-backed securities markets will close at 2:00 PM et in observance of Presidents Day and will not reopen until Tuesday. An abundance of economic data will be released late next week beginning with Industrial Production on Wednesday, the Producer Price Index Thursday, and the Consumer Price Index Friday.

Daily Market Update 2/12/09

Mortgage rates eased slightly Thursday as stocks tumbled. Retail Sales for January grew unexpectedly by 1.0%, ending a six month slide. First time Jobless Claims came in at 623,000, a bit higher than forecast. Crude oil prices fell to near $34 per barrel. The House and Senate agreed on a compromise $789 billion fiscal stimulus package yesterday evening. The plan is expected to pass by the end of the week. Unfortunately, the proposed $15,000 homebuyer tax credit was dropped in the final version. Instead, the current $7,500 first time homebuyer tax credit will no longer contain a repayment provision.

Daily Market Update 2/11/09

Mortgage rates were little changed Wednesday as the House and Senate began reconciling their differences in the proposed stimulus bill. Prospective buyers may be interested in the debate over a Homebuyer Credit provision. The Senate bill calls for a maximum $15,000 tax credit for purchases of all homes being used as primary residences, with no income limitations or payback requirements. The House eliminated the payback provision from its version of the Homebuyer Credit, but limits the benefit to $7,500 and contains maximum income restrictions. In economic news, stocks were mixed after yesterday's drubbing. Crude oil prices fell to around $37 per barrel, the dollar was higher. Retail Sales figures for January will be released Thursday.

Daily Market Update 2/10/09

Mortgage rates inched lower Tuesday as stocks plummeted on news of the Treasury plan to assist banks and boost lending. Treasury Secretary Timothy Geithner detailed a plan to create a Public-Private Investment Fund with $500 billion seed money to buy distressed securities. The Treasury will also work with the Federal Reserve to provide up to $1 trillion in new consumer and business loans. Markets remained volatile as investors attempted to analyze the plans. Meanwhile, the Senate resumed debate over the proposed $800 billion stimulus package. Concerns over the growing cost of the various government-funded programs pushed Treasury yields higher.

Daily Market Update 2/9/09

Mortgage rates were little changed Monday as debate continued in the Senate over the proposed stimulus package. The measure is widely expected to pass, but with little Republican support. Congress wants to have a bill ready for the President's signature by next Monday, although differences remain between the House and Senate versions. President Obama will hold a prime time news conference this evening to promote the bill. Treasury Secretary Timothy Geithner will announce details tomorrow of a plan to relieve banks of their troubled assets. Traders of mortgage-backed securities will be watching closely, and market volatility is likely. No economic data will be released today.

Daily Market Update 2/6/09

Mortgage rates held steady Friday following the Non-farm Payrolls report for January. Net job losses totalled 598,000 last month causing the Unemployment Rate to rise to 7.6%. Both figures exceeded forecast. Paradoxically, stocks rose and Treasuries fell on the report. Negative economic news would normally cause the opposite reaction, but in this case traders bet the employment data would increase the odds of quick passage of a large government stimulus package. Such a measure would likely benefit stocks but pressure interest rates due to the large volume of new government debt needed to fund the plan. News of the Senate's fiscal stimulus proposal and the Treasury's financial institution cleanup plan may be the biggest drivers of mortgage rates next week. The most significant economic data will be Thursday's release of January Retail Sales. The market will close early Friday in observance of President's Day

Daily Market Update 2/5/09

Rates inched lower Thursday as Weekly Jobless Claims soared to a 26-year high of 626,000. Factory Orders fell 3.9% last month, more than forecast. Productivity rose unexpectedly. The Bank of England cut its benchmark rate to 1% today, the lowest level since the Bank's founding in 1694. The Senate plans to temporarily double the maximum tax "credit" for home buyers to $15,000 as part of the proposed economic stimulus package. The credit is actually an interest-free loan requiring repayment over 10 years. Investors are now focusing on tomorrow's Non-farm Payrolls report. Economists project net job losses of 500,000 for January, with the Unemployment Rate rising to 7.5%. Higher figures could push mortgage rates lower.

Daily Market Update 2/4/09

Mortgage rates were little changed Wednesday after having risen late Tuesday to their highest level since December 10. Mortgage-backed securities and Treasuries came under pressure yesterday as investors grew concerned over the increased supply of government debt needed to fund the various stimulus plans. In economic news, the Institute for Supply Management Services Index rose unexpectedly last month, although the measure showed continued weakness in the services sector. Stocks were mostly higher.

Daily Market Update 2/3/09

Mortgage rates were little changed Tuesday as Pending Homes Sales rebounded unexpectedly in December following three consecutive monthly declines. Lower home prices and interest rates fueled the sales increase. Bargain hunters appear to be entering the market, which may be an early indication of much-needed stabilization. Stocks moved modestly higher. Debate continues in the Senate over the fate of the stimulus package, the cost of which has grown to nearly $900 billion. Minority Leader Mitch McConnell (R-Kentucky) proposed government-backed 4% mortgages as part of the plan, but the cost would likely be prohibitive and implementation problematic.

Daily Market Update 2/2/09

Our office is finally open following last week's devastating ice storm across Kentucky. We appreciate your patience and understanding during this difficult time and hope you all are safe and warm. Mortgage rates inched lower Monday after having risen the past three sessions. In economic news, the Institute for Supply Management's (ISM) Manufacturing Index rose unexpectedly in January, although activity remained weak. Construction Spending fell 1.4%, a bit more than forecast. Personal Incomes fell 0.2% last month, beating consensus. This will be a busy week for the release of economic data, including Pending Home Sales Tuesday, the ISM Services Index Wednesday, Productivity and Factory Orders Thursday, and Non-farm Payrolls Friday. Combined government spending for the proposed $819 billion stimulus plan, the TARP program, the Fed purchase of mortgage-backed securities, and a proposed bank cleanup is applying upward pressure on interest rates. One positive note is that foreign investors continue to show strong demand for US bonds.