Daily Market Update 10/30/09

Mortgage rates dipped Friday following weaker than expected economic news. Consumer Spending fell in September for the first time in 5 months and Consumer Sentiment dropped below forecast. Personal Income was flat, as expected. The September Core PCE price index, the Fed's preferred measure of inflation, rose 0.1% from August and increased at a tame 1.3% annual rate, providing further evidence that inflation is not a concern in the short term. Stocks moved lower. Next week is likely to remain volatile for mortgage-backed securities, with the release of key economic data Monday and Friday, and the Fed's FOMC meeting Wednesday. The Institute for Supply Management Index, measuring manufacturing activity, will be announced Monday, and the Nonfarm Payrolls report, which includes the Unemployment Rate for October, will come out Friday.

Daily Market Update 10/29/09

Mortgage rates were little changed Thursday as mortgage-backed securities (MBS) outperformed Treasuries. In economic news, preliminary third quarter Gross Domestic Product (GDP) figures showed the economy grew at an annual rate of 3.5% in July through September, beating the consensus forecast of +3.2%. Weekly Jobless Claims came in at 530,000, a bit higher than expected. Stocks rallied. The Treasury wraps up its 3-day auction this afternoon at 1:00 PM with the sale of 7-year notes. No other data will be released today.

Daily Market Update 10/28/09

Rates inched lower Wednesday as New Home Sales unexpectedly fell by 3.6% last month. September Durable Goods Orders rose 1.0%, matching forecast. The Mortgage Bankers Association reported the weekly purchase activity index fell by 5%, while the refinancing activity index declined by 16%. The Senate moved closer to passing a modified extension of the first time homebuyer tax credit. Preliminary third quarter GDP figures will be released tomorrow at 8:30 AM.

Daily Market Update 10/26/09

Rates faced upward pressure Monday ahead of a record Treasury auction and spate of key economic reports due out later this week. Mortgage-backed securities markets may remain volatile for the next several days. No economic data will be released today.

Daily Market Update 10/23/09

Mortgage rates faced upward pressure Friday as Existing Home Sales rose 9.4% last month according the the National Association of Realtors. Much of the increase was credited to a rush of first time homebuyers taking advantage of the $8,000 tax credit due to expire November 30. The inventory of unsold homes fell to 7.8 months, the lowest level since March 2007. Mortgage-backed securities markets may be volatile next week, with a slew of key economic data scheduled for release. Durable Goods Orders will come out Tuesday, New Home Sales Wednesday, third quarter GDP Thursday, and the Chicago Purchasing Managers Index Friday. In addition, the Treasury will hold a 3 day auction of $116 billion in 2-, 5-, and 7-year notes beginning Tuesday. No other economic data will be released today.

Daily Market Update 10/22/09

Mortgage rates were little changed Thursday. Weekly Jobless Claims rose to 531,000, above forecast. Continuing Jobless Claims fell, but this was partly due to the expiration of benefits rather than new hiring. Leading Indicators rose 1.0%, close to expectations. The Treasury will announce the size of upcoming auctions at 11:00 AM.

Daily Market Update 10/21/09

Rates rose Wednesday as comments from central bankers around the world about future policy tightening moves hurt mortgage-backed securities markets. Oil prices surged above $80 per barrel, the dollar weakened against the Euro. The Fed's Beige Book, a survey of economic activity by Fed regional banks, will be released at 2:00 PM.

Daily Market Update 10/20/09

Rates inched lower following today's weak economic data. The September Producer Price Index (PPI) fell 0.6%, far below forecast. The more closely watched "core" PPI declined 0.1%, also lower than expected. Housing Starts increased slightly, but fell short of expectations. Building Permits, a leading indicator, dropped 1%. Stocks moved lower. No other data will be released today.

Daily Market Update 10/19/09

Rates held steady Monday in light trading. Fed Chairman Ben Bernanke will be speaking at 11:00 AM. No economic data will be released today.

Daily Market Update 10/16/09

Mortgage rates were little changed Friday on mixed economic news. Industrial Production rose 0.7% last month, beating the consensus forecast of +0.1%, but Consumer Sentiment fell unexpectedly to a reading of 69.4 from 73.5. Stocks moved sharply lower. The most significant economic report due out next week will be Tuesday's release of the Producer Price Index for September. No other data will be released today.

Daily Market Update 10/15/09

Rates moved higher Thursday following the release of stronger than expected economic data. Weekly Jobless Claims fell to 514,000, the lowest level since January. The Empire State regional manufacturing index jumped to 34.6, far above the consensus forecast of 17.0, and the highest level since May 2004. The September Consumer Price Index (CPI) rose 0.2%, matching estimates. The CPI was 1.3% lower than one year ago. Mortgage-backed securities prices later improved following the Philadelphia Fed manufacturing index, which dropped more than expected. Favorable repricing may occur.

Daily Market Update 10/14/09

Rates inched higher following stronger than expected Retail Sales data. September Retail Sales fell 1.5%, beating the consensus forecast of negative 2.0%. Stocks initially rallied, but have since turned lower, helping mortgage-backed securities (MBS) markets. Further improvement may result in favorable repricing of mortgage rates. The Fed will release minutes from last month's FOMC meeting this afternoon at 2:00 PM.

Daily Market Update 10/13/09

Rates dipped Tuesday on the latest comments from Fed officials suggesting that rate hikes are still a long way off. Federal Reserve Bank of St. Louis President James Bullard stated that the unemployment rate needs to decline before the Fed begins raising rates. No economic data will be released today.

Daily Market Update 10/12/09

I have returned after a much needed week-long vacation to a mortgage-backed securities (MBS) market that is closed in observance of Columbus Day. Mortgage rates finished last week slightly higher following weak demand for Thursday's 30-year Treasury auction and mixed signals from Fed officials regarding the timing of future rate increases. MBS markets were also hurt by solid gains in stock prices. The most significant economic data this week will be Wednesday's report on September Retail Sales and Thursday's Consumer Price Index (CPI). Retail Sales account for about 70% of economic activity and the CPI is the most closely watched monthly inflation report. Minutes from the last FOMC meeting will come out on Wednesday.

Daily Market Update 10/2/09

Rates inched lower Friday following September's Nonfarm Payrolls Report. The economy lost 263,000 jobs last month, well above consensus forecast. The Unemployment Rate matched expectations at 9.8%, the highest level since June 1983. The Fannie Mae 30-year fixed rate is now at its lowest level since May 21. Next week will be relatively quiet in terms of economic data. Investors will likely turn their focus to the Treasury auctions of 10-year notes on Wednesday and 30-year bonds on Thursday. No other data will be released today.

Daily Market Update 10/1/09

Mortgage rates eased Thursday, driven by a sharp sell off in stocks. Economic news was mixed. Weekly Jobless Claims rose to 551,000, above forecast. The Institute for Supply Management (ISM) manufacturing index reading of 52.6 indicated slight growth in manufacturing, but fell short of expectations. Pending Home Sales rose a strong 6.4%, the seventh consecutive monthly increase. Analysts attribute part of the increase to delayed closings and extended loan processing times resulting from a large number of short sales and cumbersome new appraisal regulations. The Treasury will announce the size of upcoming auctions today at 11:00 AM. Investors will be closely watching tomorrow's Nonfarm Payrolls report for September.