Daily Market Update 2/26/10

Mortgage rates inched lower Friday on mixed economic data. The Chicago Purchasing Managers Index rose to 62.6, above forecast, while the first revision to fourth quarter GDP showed a small increase to 5.9%. January Existing Home Sales fell sharply to a 5.05 million annual rate, well below expectations. February Consumer Sentiment declined. Stocks moved modestly higher. Non-Farm Payrolls, the most closely watched report of the month, will be released next Friday. No other data will come out today.

Daily Market Update 2/25/10

I am glad to be back in Louisville after a three-day hiatus in Washington, DC to attend the NAMB Legislative Conference. Mortgage rates dipped Thursday as weekly Jobless Claims rose unexpectedly to 496,000. Durable Goods Orders were mixed. Total orders rose 3.0%, beating forecast, but excluding aircraft, orders fell -0.6%, well below expectations. Federal Reserve Chairman Ben Bernanke testifies before the Senate Banking Committee today. Yesterday, speaking to the House Financial Services Committee, Bernanke suggested that holding the Fed's portfolio of mortgage-backed securities (MBS) would be enough to support the mortgage markets, and he doesn't anticipate any MBS sales by the Fed in the near term. Investors will be watching to see what happens to interest rates when the Fed concludes its MBS purchase program at the end of March. The Treasury will hold an auction of 7-year notes this afternoon at 1:00 PM. No other data will be released today.

Daily Market Update 2/22/10

Mortgage rates inched lower Monday in quiet trading. No economic data will be released today.

Daily Market Update 2/19/10

Mortgage rates rose Friday as mortgage-backed securities (MBS) markets remained volatile following Fed comments Wednesday. Late yesterday, the Fed announced an increase in the Discount Rate, the rate the Fed charges member banks for overnight direct loans. While the move was largely symbolic, the timing was a surprise, and many investors see it as an indication the Fed will begin tightening monetary policy later this year. In economic news, the January Consumer Price Index (CPI) increased 0.2% from December. "Core" CPI, excluding food and energy, rose at a tame 1.6% annual rate. Both figures were lower than expected. Next week will be relatively quiet in terms of new economic data, with the exception of Durable Goods Orders on Thursday, and the Chicago Purchasing Managers Index on Friday. No other data will be released today.

Daily Market Update 2/18/10

Mortgage rates inched higher Thursday as the January Producer Price Index rose 1.4%, much more than expected. The closely watched "core" rate, which excludes volatile food and energy components, rose a more moderate 0.3% last month and 1.0% from one year ago. Weekly Jobless Claims jumped to 473,000, well above forecast. Yesterday, Philadelphia Fed President Charles Plosser suggested that the Fed should begin selling its mortgage-backed securities (MBS) portfolio "sooner rather than later". Also, detailed minutes from the January 27 Fed meeting revealed that several Fed officials favored starting the sale of the Fed's MBS portfolio "in the near future". Analysts expect mortgage rates to move higher when the Fed begins selling, rather than buying, mortgage-backed securities.

Daily Market Update 2/17/10

Mortgage rates were little changed Wednesday on mixed economic data. January Housing Starts increased 3% to an annual rate of 591,000 units, the highest level in six months, beating forecast. Meanwhile, Building Permits, a leading indicator, fell 5%. Industrial Production rose 0.9%, in line with expectations. The minutes from last month's FOMC meeting will be released at 2:00 PM.

Daily Market Update 2/16/10

Mortgage rates were little changed Tuesday. In economic news, the Empire State manufacturing index rose more than forecast. Stocks moved sharply higher. Foreign holdings of US Treasury Securities fell by $53 billion in December. Higher interest rates will be needed to attract investors of government debt if the trend continues. No other data will be released today.

Daily Market Update 2/15/10

The mortgage-backed securities market is closed today in observance of President's Day. Our office is currently open, but may close early due to the weather.

Daily Market Update 2/12/10

Rates moved lower Friday following a surprise announcement that China raised reserve requirements for banks in an effort to slow economic growth. This likely means that China will buy fewer exports from other countries, causing a ripple effect globally. In economic news, January Retail Sales rose 0.5%, in line with expectations. Consumer Sentiment unexpectedly declined last month. Stocks moved sharply lower. Next week, Industrial Production and minutes from last month's FOMC meeting will be released on Wednesday, the Producer Price Index (PPI) on Thursday, and the Consumer Price Index (CPI) on Friday. No other data will be released today.

Daily Market Update 2/11/10

Mortgage rates moved higher Thursday. A brief sell-off of mortgage-backed securities (MBS) occurred late Wednesday as investors continued analyzing Fed plans to begin tightening monetary policy. The Fed will focus primarily on the interest rate paid to banks on excess reserves held at the Federal Reserve. The MBS market has been volatile this morning. Weekly Jobless Claims fell to 440,000, well below forecast. No more economic data will be released today, but there will be a 30-year Treasury auction at 1:00 PM.

Daily Market Update 2/10/10

Rates held steady Wednesday as Federal Reserve Chairman Ben Bernanke released details of Fed monetary policy tightening plans. Bernanke had been scheduled to speak before the House Financial Services Committee, but he could not deliver the speech or answer questions due to snow in Washington. The Federal Reserve may raise the Discount Rate, the interest rate charged to member banks on overnight loans from the Fed, "before long", in an effort to normalize monetary policy. Bernanke said he does not expect the Fed to begin selling the $1.43 trillion of mortgage-backed securities it has purchased "at least until after policy tightening has gotten under way and the economy is clearly in a sustainable recovery." Stocks moved sharply lower on the announcement. In economic news, the December Trade Deficit was larger than expected. No other data will be released today.

Daily Market Update 2/9/10

Mortgage rates inched higher Tuesday as improvement in the economic situation in Greece lifted the stock market and hurt mortgage-backed securities. No economic data will be released today. There will be a 3-year Treasury auction at 1:00 PM.

Daily Market Update 2/8/10

Rates were little changed Monday, with no major economic data due out until Thursday. Results of the three large Treasury auctions to be held this week, beginning tomorrow, will likely have the greatest impact on mortgage-backed securities markets in the coming days.

Daily Market Update 2/5/10

Rates inched lower Friday following the January Employment Report. While the Unemployment Rate fell unexpectedly to 9.7% from 10.0%, job losses continued. Against a forecast for a gain of 15,000 jobs, the economy lost 20,000. The Unemployment Rate does not take into consideration those workers who have stopped looking for work, a figure estimated to be in excess of 1 million. The economy has now lost 8.4 million jobs since the start of the recession in December 2007. Average hourly earnings, a proxy for wage growth, increased more than expected. Stocks moved lower. The key report due out next week will be Thursday's Retail Sales. Treasury auctions of 3-, 10-, and 30-year securities will likely have the greatest impact on mortgage rates.

Daily Market Update 2/4/10

Rates moved lower Thursday as weekly Jobless Claims rose to 480,000, above forecast. This was the fourth increase in the last five weeks. Fourth quarter Productivity was revised lower to +6.2%, close to expectations. Factory Orders rose 1% in January. Freddie Mac reported average 30-year fixed rates of 5.01% with 0.7 points last week. Stocks moved sharply lower, the dollar higher. The closely-watched Employment Report for January will be released tomorrow at 8:30 AM.

Daily Market Update 2/3/10

Interest rates rose slightly Wednesday. This morning, ADP Employer Services estimated the economy lost 22,000 jobs in January, close to forecast, and the lowest level in two years. The Treasury announced that it will auction $81 billion in 3-, 10-, and 30-year securities next week. The Institute for Supply Management services index came in at 50.5, below expectations. No other data will be released today.

Daily Market Update 2/2/10

Rates were little changed Tuesday. Pending Home Sales rose 1.0% last month, in line with expectations. Stocks moved modestly higher. No other data will be released today.

Daily Market Update 2/1/10

Rates held steady Monday on mixed economic data. Personal Income rose 0.4% in December, in line with forecast. The personal savings rate for 2009 was 4.6%, the highest level since 1998. Core PCE, the Fed's preferred measure of inflation, rose at a tame 1.5% annual rate. The Institute for Supply Management manufacturing index came in at 58.4, above expectations. Construction Spending fell 1.2%, more than forecast. The Obama Administration sent Congress a $3.8 trillion budget that includes a record $1.56 trillion deficit. Investors are becoming increasingly concerned over the volume of government-issued debt, which may cause upward pressure on interest rates.