Daily Market Update 7/31/09

Rates inched lower following the release of preliminary second quarter GDP figures. The Commerce Department said the economy contracted 1.0% last quarter, beating forecast. However, first quarter data was revised lower to -6.4% from -5.5%, more than offsetting the better than expected second quarter results. Consumer Spending declined 1.2%, while core PCE, the Fed's preferred measure of inflation, rose at a tame 2% annual rate. Both readings helped mortgage-backed securities (MBS) markets. Yesterday's Treasury auction of 7-year notes was more successful than the two previous days' auctions. Next week may remain volatile for MBS markets, with the release of key economic data each day, including the closely watched Nonfarm Payrolls report due out Friday.

Daily Market Update 7/30/09

Rates moved slightly higher Thursday as concerns grew over poor demand for this week's Treasury auctions. Traders drove yields higher during Wednesday's auction of 5-year notes, raising worries over the burgeoning budget deficit. The government plans to issue $2 trillion in debt this year to finance the rescue and stimulus packages. The Treasury will auction 7-year notes today. In economic news, weekly Jobless Claims came in close to expectations. Stock prices rose. Preliminary second quarter GDP figures will be released tomorrow.

Daily Market Update 7/29/09

Mortgage rates inched lower Wednesday on weaker than expected economic data. June Durable Goods Orders declined 2.5%, well below the consensus forecast of -0.5%. Excluding the volatile transportation component, however, the data showed an increase of 1.1%. Stocks moved lower. Oil prices fell sharply on increased inventory. There will be a 5-year Treasury auction at 1:00, and release of the Fed's Beige Book at 2:00 et.

Daily Market Update 7/28/09

It has been a volatile day for mortgage-backed securities (MBS) markets, with rates improving early, then moving back into unchanged territory. MBS prices rose after Consumer Confidence fell more than forecast. However, this afternoon's Treasury auction of 2-year notes brought disappointing results, causing a reversal in MBS prices. The remainder of the week is likely to be more volatile than usual, with key economic data due out each day, in addition to two more days of large Treasury auctions.

Daily Market Update 7/27/09

Mortgage rates inched higher Monday as investors await this week's record auctions by the Treasury. Over $200 billion in short- and medium-term notes will be sold beginning tomorrow. In economic news, New Home Sales rose 11% in June to 384,000 units, beating the consensus forecast of 352,000. Prices fell 12% from June 2008. Stocks were mixed, the dollar lower. No other economic data will be released today.

Daily Market Update 7/24/09

Mortgage rates held steady Friday after rising nearly 1/4% Thursday. A large rally in the stock market took funds away from bond markets yesterday, hurting mortgage-backed securities (MBS) prices. Supply concerns are weighing down MBS markets this morning. The Treasury will auction $109 billion in 2-, 5-, and 7-year notes next week. In economic news, Consumer Sentiment fell for the first time in five months, but narrowly exceeded forecast. Next week may be volatile, with several key reports due to be released. New Home Sales will come out Monday, Consumer Confidence and Durable Goods Orders Tuesday, and advance second quarter GDP and the Chicago Purchasing Managers Index Friday. No other data will be released today.

Daily Market Update 7/22/09

Rates inched lower Wednesday following yesterday's rally in mortgage-backed securities markets, triggered by testimony from Fed Chief Ben Bernanke. Bernanke, who spoke before the House Financial Services Committee, said the Federal Reserve will keep rates low for an extended period but is prepared to take strong action against inflation once economic recovery takes hold. He also warned Congress and the Administration of the urgent need to reduce the federal budget deficit. Bernanke is scheduled for a second day of testimony today before the Senate Banking Committee, but it is unlikely that market moving comments will emerge. Stocks were mixed. No economic data will be released today.

Daily Market Update 7/21/09

Mortgage rates eased Tuesday following comments by Federal Reserve Chairman Ben Bernanke before the House Financial Services Committee. Bernanke indicated the economy is showing "tentative signs of stabilization" and that the Fed intends to maintain a "highly accommodative" monetary policy for an extended period. He also commented on record budget deficits, saying "Unless we demonstrate a strong commitment to fiscal sustainability, we risk having neither financial stability nor durable economic growth". Stocks moved modestly higher. No economic data will be released today.

Daily Market Update 7/20/09

Rates continued their recent upward trend Monday on new signs the recession may end later this year. Leading Indicators rose 0.7% in June, beating forecast, and marking the third consecutive monthly increase. Stocks moved higher. No other major economic data will be released until Thursday, but investors will be closely watching tomorrow's Congressional testimony by Fed Chairman Ben Bernanke. Analysts expect Bernanke to lay out his plans for exiting the largest monetary expansion in U.S. history.

Daily Market Update 7/17/09

Rates remained little changed Friday in the wake of better-than-expected housing data. June Housing Starts rose 4% to the highest level in seven months. Building Permits, a leading indicator, jumped 9%. Rates have now moved about 1/4% higher over the past week. Stocks turned marginally lower, oil prices higher. Next week will be relatively quiet in terms of new economic data. Existing Home Sales for June will be released Thursday.

Daily Market Update 7/16/09

Mortgage rates were little changed Thursday after mortgage-backed securities recovered losses sustained late Wednesday. Investors shrugged off lower-than-expected weekly Jobless Claims and focused on news that commercial lending giant CIT was nearing bankruptcy following failed negotiations for federal aid. China stepped up purchases of US Treasurys in a "flight to quality". The Philly Fed index, a survey of manufacturing activity in the region, came in below forecast. No other economic data will be released today.

Daily Market Update 7/15/09

Rates moved higher Wednesday as strength in stocks pushed mortgage-backed securities markets lower. The Consumer Price Index (CPI) rose 0.7% in June, in line with expectations. The core CPI, which excludes volatile food and energy components, rose 0.2% for the month. Industrial Production topped forecast, having declined 0.4% in June, as manufacturing began showing signs of stabilization. The FOMC minutes from the June 24 Fed meeting will be released at 2:00 PM et.

Daily Market Update 7/14/09

Mortgage rates inched higher this morning as the June Producer Price Index (PPI) rose more than expected. The closely-watched "core" rate rose 0.5% last month, well above the consensus forecast of 0.1%. The core PPI was 3.4% higher than one year ago. Retail Sales rose 0.5% in June, close to expectations. Stocks moved lower. The Consumer Price Index and minutes from last month's FOMC meeting will be released tomorrow.

Daily Market Update 7/13/09

Mortgage rates were little changed Monday as mortgage-backed securities held gains from last week. Stocks were mixed, oil prices slid below $60 per barrel. Investors are focusing on inflation data to be released over the next two days, beginning with the Producer Price Index on Tuesday, followed by the Consumer Price Index on Wednesday. In addition, minutes from the June 24 FOMC meeting of the Federal Reserve will be released Wednesday.

Daily Market Update 7/2/09

Mortgage rates inched lower Thursday in a shortened session ahead of the July 4th holiday. Non-farm Payrolls fell by 467,000 in June, far more than the consensus forecast of -363,000. The Unemployment Rate rose to 9.5%. Stocks and oil prices moved sharply lower. The European Central Bank (ECB) held rates steady at 1%, as expected. Mortgage-backed securities markets will close this afternoon at 2:00 PM.

Daily Market Update 7/1/09

Mortgage rates were little changed Wednesday as today's economic data came in close to expectations. Construction Spending fell 0.9% in May, a bit more than forecast, while Pending Home Sales rose 0.1%, beating forecast. The Mortgage Bankers Association weekly purchase activity index fell by 5%, while refinancing activity decreased by 30%. The closely-watched Non-farm Payrolls Report for June will be released tomorrow at 8:30 AM.