Daily Market Update 9/30/10

Mortgage rates inched higher Thursday on stronger than expected economic data. Weekly Jobless Claims fell to 453,000, below the consensus forecast of 460,000. Final second quarter GDP figures were revised higher to +1.7% from +1.6%. The Chicago PMI national manufacturing index rose to 60.4, well above expectations. Freddie Mac reported average weekly 30-year fixed rates of 4.32% with 0.8 points last week, a new record. No other data will be released today.

Daily Market Update 9/29/10

Rates were little changed Wednesday with no key economic data scheduled for release. The Mortgage Bankers Association weekly purchase activity index rose by 2.4%, while the refinancing activity index fell by 1.6%, despite lower interest rates. The average reported 30-year fixed rate for the week ending 9/27 fell to 4.38%, excluding fees. Results of today's 7-year Treasury auction will be released at 1:00 PM.

Daily Market Update 9/28/10

Mortgage rates improved slightly Tuesday on weaker than expected economic data. Consumer Confidence fell to a reading of 48.5, the lowest level since February. Separately, the Case-Shiller 20-city seasonally adjusted home price index declined 0.1% in July, in line with expectations. The Wall Street Journal reported that Fed officials are considering a plan to make smaller-scale purchases of Treasury securities with an open-ended time frame. This approach would give the Fed more flexibility to make adjustments. It would also make Fed actions harder to predict, which could increase volatility in mortgage-backed securities markets. Stocks were little changed. Results of today's 5-year Treasury auction will be released at 1:00 PM.

Daily Market Update 9/24/10

Rates inched higher Friday as gains in stocks hurt mortgage-backed securities. This morning, August Durable Goods Orders fell 1.3%, which was close to forecast. Excluding the volatile transportation component, however, orders rose 2.0%, more than expected. New Home Sales were unchanged in August at an annualized rate of 288,000, close to expectations. Next week, two key manufacturing reports will be released. The Chicago Purchasing Managers Index will come out on Thursday and the Institute for Supply Management manufacturing index on Friday. The Treasury will hold large auctions of 2-, 5-, and 7-year notes over three days beginning Tuesday. No other data will be released today.

Daily Market Update 9/23/10

Mortgage rates were little changed Thursday on mixed economic news. Weekly Jobless Claims rose to 465,000, above the consensus forecast of 450,000. Existing Home Sales for August increased by 7.6% from July's record low, beating expectations, but remaining sluggish. Leading Indicators rose 0.3%. An increase of 0.1% had been expected. No other data will be released today.

Daily Market Update 9/22/10

Mortgage rates held steady Wednesday after moving lower late Tuesday. Yesterday, Fed officials said they are "prepared to provide additional accommodation if needed to support the economic recovery." Investors interpreted this to mean that additional bond purchases by the Fed could take place in the coming months if the recovery falters. This morning, the Federal Housing Finance Agency reported that home prices fell 0.5% in July from June, and 3.3% year-over-year. The Mortgage Bankers Association reported average 30-year fixed rates of 4.44% for the week ending 9/20. No key economic data will be released today.

Daily Market Update 9/21/10

Mortgage rates improved slightly Tuesday as members of the Federal Open Market Committee (FOMC) of the Fed met to discuss monetary policy. A statement will be issued following the meeting at around 2:15 PM et. While no rate changes are expected, investors are waiting to see what other steps, such as the purchase of Treasurys and mortgage-backed securities, the Fed might be considering to stimulate the economy. Recent comments indicate the Fed will only take further stimulative action if the economy deteriorates significantly. This morning, August Housing Starts rose 10.5%, beating expectations. No other data will be released today.

Daily Market Update 9/20/10

Mortgage rates inched higher Monday in quiet trading ahead of tomorrow's Fed meeting. Rising stock prices hurt Treasurys and mortgage-backed securities. No economic data will be released today.

Daily Market Update 9/17/10

Mortgage rates were little changed Friday in quiet trading. The August Consumer Price Index (CPI) increased 0.3%, matching forecast. The more closely watched "Core" CPI, which excludes food and energy components, rose at a lower than expected 0.9% annual rate, easing inflationary concerns in the near term. Consumer Sentiment fell to 66.6 this month, the lowest level since August 2009. A reading of 70.0 had been expected. Next week's big event will be Tuesday's FOMC meeting of the Fed. While no rate changes are expected, investors will be watching closely for clues on the future direction of monetary policy. No other data will be released today.

Daily Market Update 9/16/10

Rates inched higher Thursday on stronger than expected jobs data. Weekly Jobless Claims fell to 450,000, the lowest level in two months. Separately, the Producer Price Index (PPI) for August increased 0.4% from July, which was more than forecast. Core PPI, which excludes volatile food and energy components, rose at a low 1.3% annual rate. The Philadelphia Fed index, a monthly survey of manufacturers in Pennsylvania, New Jersey, and Delaware, came in at -0.7. Readings below zero indicate contraction in the manufacturing sector. Stocks moved lower. No other data will be released today.

Daily Market Update 9/15/10

Rates held steady Wednesday on mixed economic data. Mortgage-backed securities (MBS) initially fell as August Import Prices, excluding oil, rose 0.3%, raising inflationary concerns. MBS prices soon recovered as Industrial Production for August reportedly increased by 0.2%, less than expected. The Empire State regional manufacturing index declined to 4.1 from 7.1, well below forecast. The Mortgage Bankers Association weekly purchase activity index fell by 0.4%, while the refinancing activity index dropped by 10.8%. Average reported 30-year fixed rates for the week ending 9/13 fell to 4.47%, not including fees. No other data will be released today.

Daily Market Update 9/14/10

Mortgage rates inched lower Tuesday despite stronger than expected economic data. August Retail Sales rose 0.4%. An increase of 0.3% had been forecast, but the positive news was partially offset by a downward revision of Retail Sales figures for July. Stocks moved lower. No other data will be released today.

Daily Market Update 9/13/10

Rates were little changed Monday, with no key economic data being released today. Stocks moved higher. The remainder of the week will be busy, beginning with tomorrow's release of Retail Sales figures for August.

Daily Market Update 9/10/10

Mortgage rates rose Friday following yesterday's weak 30-year Treasury auction, hitting their highest levels since August 6. In economic news, July Wholesale Inventories rose by 1.3%, the most in two years, easily beating the consensus forecast of +0.4%. Next week will be busy in terms of key economic data, beginning with the release of Retail Sales figures on Tuesday, followed by Industrial Production on Wednesday, the Producer Price Index on Thursday, and the Consumer Price Index on Friday. Rates are likely to remain volatile throughout the week. No other data will be released today.

Daily Market Update 9/9/10

Rates inched higher Thursday on stronger than expected economic data. Weekly Jobless Claims fell to 451,000, below the consensus forecast of 470,000. The July Trade Deficit was -42.8 billion, beating expectations. Stocks moved higher. Results from today's 30-year Treasury auction will be released at 1:00 PM. Yesterday, FDIC Chairman Shelia Bair called for a new set of "common sense" mortgage lending rules to reduce the risk of government guaranteed loans. "Going forward, the standard as we emerge from this crisis should be very robust income documentation, ability to repay standards, and some significant down payment", Bair said. While we agree in principle with the need for common sense lending standards, we feel the crisis resulted from risk layering. Borrowers with excellent credit histories, stable incomes, and low debt-to-income ratios are likely to make their mortgage payments, even with little or no money down. Likewise, borrowers with large down payments, good cash reserves and excellent credit histories will likely make their payments even with relatively high debt-to-income ratios. The risk level becomes unacceptable when multiple adverse factors are combined. Too much tightening of mortgage credit standards is not helpful.

Daily Market Update 9/8/10

Mortgage rates were little changed Wednesday in light trading. The Mortgage Bankers Association weekly purchase activity index rose 6.3% for the week ending 9/3, while the refinancing activity index fell 3.1%. Results of today's 10-year Treasury auction will be released at 1:00 PM. The Fed's Beige Book, a survey of economic activity by its 12 regional banks, will be released at 2:00.

Daily Market Update 9/7/10

Rates eased Tuesday as weakness in the stock market boosted mortgage-backed securities. Concerns about the stability of European banks produced a flight to safety, lifting global bond markets. Results of today's 3-year Treasury auction will be released at 1:00 PM.

Daily Market Update 9/2/10

Mortgage rates inched higher Friday as stronger than expected employment data boosted stocks and pushed mortgage-backed securities (MBS) lower. The economy lost 54,000 jobs in August, less than forecast. The June and July employment figures were revised upward as well. The Unemployment Rate rose to 9.6%, in line with expectations. Average Hourly Earnings, a proxy for wage growth, rose 0.3%, beating the consensus forecast of 0.1%. MBS prices recovered somewhat after the Institute for Supply Management services index reading came in lower than expected, at 51.5. Readings above 50.0 indicate expansion in the services sector of the economy. Next week will be relatively light in terms of new data. Investors are likely to focus on the three large Treasury auctions of 3-, 10-, and 30-year securities next Tuesday, Wednesday, and Thursday. Also on Thursday, the Fed's Beige Book will be released, a survey of economic activity by its twelve regional banks. No other key data will be released today.

Daily Market Update 9/2/10

Rates faced upward pressure Thursday on mixed economic data. Weekly Jobless Claims fell to 472,000, close to expectations. Second quarter Productivity was revised lower to -1.8%, a bit below forecast. Pending Home Sales rose unexpectedly by 5.2% in July, indicating the housing market may be stabilizing following the expiration of home buyer tax credits April 30. Factory Orders rose by 0.1%. An increase of 0.3% had been expected. Investors will be closely watching tomorrow's Employment Report for August which is scheduled for release at 8:30 AM.

Daily Market Update 9/1/10

Rates held steady early Wednesday, although mortgage-backed securities came under pressure following the release of stronger than expected economic data. The Institute for Supply Management manufacturing index rose to 56.3 in August from 55.5 in July. A reading of 53.0 had been forecast. Readings above 50.0 indicate expansion in the manufacturing sector. Construction Spending declined by 1.0%, close to expectations. The Mortgage Bankers Association weekly purchase activity index rose 2%, while the refinancing activity index rose 3% to the highest level since May 2009. Average reported rates for 30-year fixed mortgages fell to 4.43% last week, excluding fees. No other data will be released today.