Daily Market Update 1/29/10

Mortgage rates were little changed Friday in spite of much stronger than expected economic data. Fourth quarter preliminary Gross Domestic Product (GDP) grew by 5.7%, well above the consensus forecast of 4.6%. The Chicago Purchasing Managers Index rose to 61.5. A reading above 50.0 indicates expansion in the manufacturing sector. Consumer Sentiment reached a 2-year high at 74.4, beating expectations. The big news next week will be Friday's Employment Report for January. No other data will be released today.

Daily Market Update 1/28/10

Rates inched higher Thursday in spite of weaker than expected economic data. December Durable Goods Orders increased 0.2%, well below the consensus forecast of +2.0%. Weakness in volatile aircraft orders was responsible for the shortfall. Weekly Jobless Claims declined to 470,000, but was above expectations. The Senate appears ready to vote today on the confirmation of Fed Chairman Ben Bernanke to a second 4-year term. There will be a 7-year Treasury auction at 1:00 PM. Preliminary fourth quarter Gross Domestic Product (GDP) figures will be released tomorrow.

Daily Market Update 1/27/10

Mortgage rates held steady Wednesday morning. The Fed wraps up a two day FOMC meeting this afternoon at 2:15. No change in rates is expected, but investors will be watching closely for clues about when the Fed will begin to tighten monetary policy and end its mortgage-backed securities purchase program. Some analysts are concerned that Fed policy will be affected by Chairman Ben Bernanke's on-going reconfirmation hearings in the Senate. The Federal Reserve is designed to be independent and immune from political pressure. In economic news, New Home Sales fell unexpectedly to a 9-month low. Sales for all of 2009 declined 23% to the lowest level since records began in 1963. There will be a 5-year Treasury auction at 1:00 PM.

Daily Market Update 1/26/10

Rates moved lower Tuesday in quiet trading ahead of this week's Fed meeting, Treasury auctions, and key economic data. Consumer Confidence rose for the third straight month in January according to the Conference Board. The reading came in at 55.9, beating expectations. The rest of the week may prove volatile for mortgage-backed securities with tomorrow's FOMC meeting, Friday's preliminary fourth quarter Gross Domestic Product figures, and large Treasury auctions of 2-, 5-, and 7-year notes beginning this afternoon. No other data will be released today.

Daily Market Update 1/25/10

Mortgage rates inched higher Monday ahead of Wednesday's FOMC meeting. Existing Home Sales fell 17% December, much more than forecast. The figures may have been distorted by the first-time homebuyer tax credits that had been schedule to expire November 30, but have since been extended. Federal Reserve Chairman Ben Bernanke now appears to have enough Congressional support to be reconfirmed to another term. No other economic data will be released today.

Daily Market Update 1/22/10

Mortgage rates were little changed Friday, but improved by about 1/8% over the past week. Yesterday, President Obama proposed new restrictions on the activities of financial institutions. Today, Rep. Barney Frank (D-Ma.), Chairman of the House Financial Services Committee said, "This Committee will be recommending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance..." The government took control of the two agencies to avoid their collapse last fall. Next week may be volatile for interest rates. The big story next week will be Wednesday's FOMC meeting of the Fed. No change in rates is expected, but investors will be closely watching the Fed statement issued following the meeting. Existing Home Sales will be released on Monday, New Home Sales and Durable Goods Orders on Wednesday, and preliminary fourth quarter Gross Domestic Product (GDP) on Friday.

Daily Market Update 1/21/10

Rates held steady Thursday following the release of mixed economic data. Weekly Jobless Claims rose unexpectedly to 482,000, well above forecast. Leading Indicators rose a solid 1.1%. The Philly Fed Index, a survey of manufacturers in the region, came in at 15.2, showing growth in the sector, but falling short of expectations. Stocks moved sharply lower. No other data will be released today.

Daily Market Update 1/20/10

Rates moved lower Wednesday as weakness in the stock market lifted mortgage-backed securities. The December Producer Price Index (PPI) rose 0.2%. The more closely watched "Core PPI", which excludes food and energy, was unchanged from November, and increased just 0.9% from one year ago. Housing Starts fell 4% to 557,000 annual units, below the consensus forecast of 575,000. In contrast, Building Permits, a leading indicator, increased 11% to the highest level since October 2008. In other news, the Federal Housing Administration (FHA) announced it will raise mortgage insurance premiums to build capital and lower seller contribution limits to reduce risk. The changes are expected to take place in the spring. No other economic data will be released today.

Daily Market Update 1/18/10

Mortgage rates were little changed Tuesday ahead of tomorrow's release of the Producer Price Index (PPI) for December. Stocks moved modestly higher, oil prices lower. No economic data will be released today.

Daily Market Update 1/15/10

Rates inched lower Friday as mortgage-backed securities were boosted by tame inflation data. The December Consumer Price Index (CPI) rose 0.1% from November and was up 2.7% from one year ago. Core CPI, which excludes volatile food and energy components, rose just 1.8% over the past year. Consumer Sentiment increased last month, but fell short of expectations. Industrial Production matched consensus with an increase of 0.6%. Next week will be relatively light in terms of new economic data. Housing Starts and the Producer Price Index will be released on Wednesday, Leading Indicators on Thursday. The market will be closed Monday in observance of Martin Luther King, Jr. Day.

Daily Market Update 1/14/10

Rates were mostly unchanged Thursday as mortgage-backed securities markets showed little reaction to weaker than expected economic data. December Retail Sales fell 0.3%, below the consensus forecast of +0.5%. Weekly Jobless Claims rose slightly. The European Central Bank (ECB) made no change in rates, as expected. There will be a 30-year Treasury auction at 1:00 PM.

Daily Market Update 1/13/10

Mortgage rates held steady Wednesday ahead of this afternoon's 10-year Treasury auction. The Mortgage Bankers Association weekly purchase activity index rose 1%, while the refinancing activity index rose 22%. Average reported 30-year fixed rates fell to 5.13% with 0.7 points last week. The Beige Book, a survey of economic activity conducted by the Fed's 12 regional banks, will be released at 2:00 PM. Several key economic reports, including Retail Sales and the Consumer Price Index, will come out in the next two days.

Daily Market Update 1/12/10

Rates inched lower Tuesday as weak earnings news has helped bond markets and hurt stock markets. The November Trade Deficit came in a bit higher than expected. The Treasury will hold a 3-year note auction this afternoon. Retail Sales data for December will be released Thursday.

Daily Market Update 1/11/10

Rates were little changed Monday. No key economic data will be released until Wednesday, although large Treasury auctions will take place through Thursday. The results may impact daily pricing.

Daily Market Update 1/9/10

Rates inched lower early Friday following the December Employment Report showing a net loss of 85,000 jobs last month, much more than forecast. The November report was revised higher, showing a net gain of 4,000 jobs, the first increase since December 2007. Overall, the data was weaker than expected, which helped mortgage-backed securities (MBS) markets. However, it has been an extremely volatile morning, and MBS markets have backed off from earlier highs. Concerns by investors over the impact of continued high unemployment on the record budget deficit may be a factor. Unfavorable repricing is a risk. Key economic reports due out next week include Retail Sales on Thursday and Industrial Production on Friday. No other data will be released today.

Daily Market Update 1/6/10

Rates inched lower early Wednesday but came under upward pressure by late morning. The Institute for Supply Management services index rose to 50.1 last month, falling short of expectations. A reading above 50.0 indicates expansion in the services sector of the economy. Private payroll firm ADP estimated net job losses of 84,000 last month, far less than originally forecast. Friday's Employment Report for December will be closely watched by investors. This afternoon the Fed releases minutes from the December FOMC meeting.

Daily Market Update 1/5/10

Mortgage rates were little changed Tuesday following the release of mixed economic data. Factory Orders rose 1.1% in December, better than the consensus forecast of +0.5%. The National Association of Realtors reported Pending Home Sales fell 16% in November, following 9 consecutive monthly increases. A decrease of 2% had been expected. The extension of the $8,000 first-time homebuyer tax credit deadline may have been a contributing factor in the sharp reduction in sales. Buyers, who had been rushing to close by the original expiration date of November 30, were given a 5 month reprieve. No other data will be released today.

Daily Market Update 1/4/10

Rates held steady Monday in spite of a surge in stocks and oil prices. Interest rates often rise as capital flows from fixed income securities, such as Treasuries and mortgage-backed securities, into stocks and commodities. In economic news, the Institute for Supply Management manufacturing index rose a bit more than expected in December to 55.9 from 53.6 the previous month. A reading above 50 indicates expansion. Construction Spending fell -0.6%, slightly above forecast. The most closely watched data for the month, the Nonfarm Payrolls Report, will be released Friday.