Daily Market Update 6/30/09

Rates inched higher Tuesday as mortgage-backed securities (MBS) remained volatile, partly due to light trading volume during this holiday-shortened week. Consumer Confidence declined unexpectedly, hurting stocks and providing support to MBS markets. The Chicago Purchasing Managers Index came in close to forecast. No other economic data will be released today.

Daily Market Update 6/29/09

Mortgage rates held steady Monday and have now improved about 1/2% since June 11. This morning Chinese officials reported that China will not pull back from buying US Treasury securities. Investors have recently been concerned that foreign central banks would scale back their purchases, causing upward pressure on rates. No economic data will be released today.

Daily Market Update 6/26/09

Mortgage rates eased Friday as mortgage-backed securities (MBS) markets rallied late Thursday. In economic news, Personal Income grew 1.4% in May, well above expectations. Core PCE, the Fed's preferred measure of inflation, rose a tame 0.1%, matching forecast. Consumer Sentiment reached its highest reading since February 2008. Personal Savings came in at 6.9% last month, the highest level in 15 years. Several key economic reports are due out next week, beginning with the Chicago Purchasing Managers Index Tuesday, the Institute for Supply Management manufacturing index Wednesday, and Non-farm Payrolls Thursday. Markets will be closed Friday for the July 4th Holiday.

Daily Market Update 6/24/09

Mortgage rates inched lower Thursday as weekly Jobless Claims rose to 627,000, above forecast. Final first quarter GDP was revised down to -5.5% from -5.7%. This afternoon's Treasury auction of 7-year notes was met with strong demand, pushing mortgage-backed securities higher. Stocks rallied. Tomorrow's economic data includes Personal Income, the core PCE Index, and Consumer Sentiment.

Daily Market Update 6/24/09

Mortgage rates held steady Wednesday morning, but came under pressure following the Federal Open Market Committee (FOMC) meeting. The Fed indicated its plan for the purchase of Treasurys and mortgage-backed securities (MBS) would remain unchanged. Investors had hoped for an increase in Fed purchases of MBS's to drive down rates. The FOMC said it "expects that inflation will remain subdued for some time". In economic news, May Durable Goods Orders rose 1.8%, far above consensus forecast of -0.5%. New Home Sales fell 0.6%, below expectations. Stocks were mixed. The MBS market will likely remain volatile while investors digest the latest policy decisions by the Fed.

Daily Market Update 6/23/09

Mortgage rates were little changed Tuesday. Existing Home Sales rose 2.4% in May, but fell short of expectations. The Treasury will begin its $104 billion, three-day auction this afternoon at 1:00 PM et. No other economic data will be released today.

Daily Market Update 6/22/09

Rates moved lower Monday as the World Bank raised its forecast for global economic contraction for 2009 to 2.9% from 1.7%. Stocks fell sharply. This may be a volatile week for mortgage-backed securities (MBS) with large Treasury auctions each of the next three days and the Fed meeting Wednesday. Durable Goods Orders, an important indicator of overall economic activity, will be released Wednesday. The Core PCE index, the Fed's preferred measure of inflation, will come out on Friday. No economic data will be released today.

Daily Market Update 6/19/09

Rates were little changed Friday after having risen late Thursday. Treasurys and mortgage-backed securities (MBS) came under pressure following yesterday's announcement of a larger than expected, $107 billion auction of 2-, 5-, and 7-year Treasury notes slated for next week. Supply concerns and improved economic growth prospects have been the major factors behind the recent rise in mortgage rates. The MBS market is likely to remain volatile through next week given the size of the Treasury auction and Wednesday's FOMC meeting of the Federal Reserve. No economic data will be released today.

Daily Market Update 6/18/09

Mortgage rates inched higher Thursday on stronger than expected economic data. Leading Indicators rose 1.2% in May, following a 1.0% increase in April. Weekly Jobless Claims came in close to consensus, while continuing Jobless Claims declined for the first time in twenty weeks. It appears that the pace of job losses has stabilized, but growth in new job creation has been slow to develop. The Treasury will announce the size of next week's 2-, 5-, and 7-year note auctions later today.

Daily Market Update 6/17/09

Rates eased Wednesday following Consumer Price Index (CPI) data that indicated inflation is not a concern in the near-term. May CPI rose 0.1% from April, lower than the consensus forecast of 0.3%. Year-over-year, the CPI fell 1.3%, the largest annual decline since 1950. The core CPI, which excludes food and energy components, rose at a tame 1.8% annual rate. Investors are now looking ahead to next week's FOMC meeting of the Federal Reserve. While no rate change is expected, much emphasis will be placed on the Fed's statement regarding the timing of future rate moves and their plans for continued purchases of mortgage-backed securities.

Daily Market Update 6/16/09

Mortgage rates held steady Tuesday following the release of tame inflation data. The Producer Price Index rose 0.2% last month, while the more closely watched "core" rate, excluding volatile food and energy components, fell 0.1%. May Housing Starts rose 17.2% from April, exceeding expectations, but well below last year's levels. Industrial Production fell 1.1% in May, close to forecast. Stocks moved modestly higher. No other economic data will be released today.

Daily Market Update 6/12/09

Mortgage rates eased for the first time in several days Friday following strong demand for this week's Treasury auctions. Behind the recent rise in mortgage rates has been an improved economic outlook and concerns about the enormous supply of new debt needed to pay for government programs. This leaves the Fed in a difficult position. Fed officials would like to keep mortgage rates low, but to accomplish this, would have to increase purchases of mortgage-backed securities (MBS). Doing so would add even more debt, fueling inflation concerns. Most analysts believe the Fed is unlikely to expand its MBS purchase program.

The most significant economic data next week will be the monthly inflation reports. The Producer Price Index will come out on Tuesday, the Consumer Price Index on Wednesday. In addition, Housing Starts and Industrial Production will be released Tuesday.

Daily Market Update 6/11/09

Mortgage rates were little changed Thursday in the wake of better than expected economic data. Retail Sales rose 0.5% in May, the first increase in 3 months, beating consensus forecast. Weekly Jobless Claims fell by 20,000 to 601,000, indicating the pace of job losses may be slowing. Stocks moved higher. The Treasury will auction $11 billion of 30-year notes this afternoon. Mortgage rates have now risen by 1% in the past 3 weeks. Concerns over the growing budget deficit have raised fears of future inflation among investors and frustrated Fed efforts to hold down long-term interest rates.

Daily Market Update 6/10/09

Mortgage rates inched higher Wednesday ahead of this afternoon's $19 billion auction of 10-year Treasury notes. Russia announced plans to reduce their share of US debt in reserve holdings, pressuring longer-term yields. The Fed's Beige Book, a survey of economic conditions by the Federal Reserve's 12 regional banks, will be released at 2:00 PM. Oil prices rose above $70 per barrel. Stocks moved modestly lower. Retail Sales figures for May will be released tomorrow morning.

Daily Market Update 6/9/09

Mortgage rates held steady Tuesday following Monday's sell-off in mortgage-backed securities. Investor sentiment shifted in the wake of last Friday's stronger than expected Employment Report. Many investors now believe the Fed need to will raise rates later this year to begin curbing inflation. Treasury Secretary Timothy Geithner testifies today at a budget hearing on Capitol Hill. The Treasury will auction 3-year notes this afternoon at 1:00 PM et. No major economic data will be released today.

Daily Market Update 6/8/09

Mortgage rates inched higher Monday as inflation fears continued growing. The Chicago Board of Trade reported investors are now estimating a 36% chance the Fed will raise rates by September in an effort to curb inflation, up from 15% one week ago. This will be a relatively light week in terms of new economic data with the exception of Retail Sales figures on Thursday. Investors are likely to focus on the results of the 10- and 30-year Treasury auctions taking place Wednesday and Thursday. Stocks moved lower, the dollar higher.

Daily Market Update 6/5/09

Interest rates rose sharply Friday following the Non-farm Payrolls report for May. The U.S. economy lost 345,000 jobs for the month, far below consensus forecast of -525,000. The Unemployment Rate jumped to 9.4%, the highest level in 25 years. Mortgage rates have risen by about 3/4% in the past two weeks, largely due to debt supply concerns. Investors in Treasurys and mortgage-backed securities have become increasingly nervous about the massive budget deficits and apparent lack of fiscal discipline of the Federal government. Reports surfaced this week by analysts saying that China and other foreign investors are choosing to invest in shorter-term US bonds rather than longer-term bonds due to growing fears of future inflation stemming from current economic policies. The Treasury will auction $65 billion in 3-, 10-, and 30-year notes next week. Retail Sales figures for May will be released Thursday.

Daily Market Update 6/4/09

Mortgage rates inched higher Thursday as the number of people filing unemployment insurance declined for the first time in five months. Weekly Jobless Claims fell to 621,000, in line with expectations. First quarter Productivity was revised higher to +1.6%, above consensus forecast of +1.2%. Unit Labor Costs, a measure of inflation, rose 3.0% in the first quarter. The European Central Bank (ECB) and Bank of England (BOE) both held rates steady, as expected. Stocks moved modestly higher. Non-farm Payrolls and the Unemployment Rate for May will be released tomorrow at 8:30 AM et.

Daily Market Update 6/3/09

Mortgage rates held steady Wednesday. In economic news, Factory Orders rose 0.7% last month, exceeding forecast and reversing a 0.9% decline in April. The Institute for Supply Management services index contracted at a slower pace in May, but fell short of expectations. Federal Reserve Chairman Ben Bernanke testified on Capitol Hill this morning, saying, "In recent weeks, yields of longer-term Treasury securities and fixed-rate mortgages have risen. These increases appear to reflect concerns about large federal deficits but also other causes, including greater optimism about the economic outlook, a reversal of flight-to-quality flows and technical factors related to the hedging of mortgage holdings." On the matter of budget deficits, Bernanke said, "Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance." The Congressional Budget Office projects the deficit to reach $1.85 trillion this year, four times the previous high. Stocks moved lower. No other economic data will be released today.

Daily Market Update 6/2/09

Mortgage rates were little changed Tuesday following Monday's sell-off of Treasurys and mortgage-backed securities, although it has been a volatile session. The National Association of Realtors reported a 6.7% rise in Pending Home Sales in April, following a 3.2% gain in March. While nearly half of reported sales were "distressed" properties, many analysts view the results as evidence the housing market has reached bottom. Stocks moved modestly higher. No other economic data will be released today.

Daily Market Update 6/1/09

Interest rates rose again Monday as stocks rallied on fresh economic data indicating the economy has begun to stabilize. Personal Income rose 0.5% last month, beating consensus forecast of -0.2. Construction Spending increased 0.8% in April. A decline of 1.8% had been expected. The Institute for Supply Management reported the smallest contraction in U.S. manufacturing in 8 months. Mortgage-backed securities are likely to remain volatile throughout the week ahead of this Friday's Non-farm Payrolls report for May.