Daily Market Update 3/31/11

Rates were little changed Thursday as economic data came in close to expectations. Weekly Jobless Claims fell to 388,000, slightly above forecast. The Chicago Purchasing Managers index fell to 70.6. A reading of 70.0 had been expected. Factory Orders declined by 0.1% in February, below the projected increase of 0.5%. Yesterday, U.S. District Judge Beryl Howell denied two motions for a temporary restraining order to delay implementation of the Fed's loan originator compensation rule scheduled to take effect April 1, while noting that the National Association of Mortgage Brokers (NAMB) had "sufficiently demonstrated that its members will likely be irreparably harmed by the implementation of the Board's Rule". Meanwhile, NAMB has filed an appeal and is moving forward with its lawsuit against the Fed.

Daily Market Update 3/29/11

Mortgage rates were mostly unchanged Wednesday in light trading. In economic news, payroll firm ADP forecast a net gain of 201,000 private sector jobs in March ahead of this Friday's Employment Report, a bit less than expected. The Mortgage Bankers Association weekly purchase activity index fell by 2%, while the refinancing activity index decreased by 10%. Average reported 30-year fixed rates rose to 4.92%, not including fees. Results from today's 7-year Treasury auction will be released at 1:00 PM.

Daily Market Update 3/29/11

Rates held steady Tuesday in quiet trading. In economic news, Consumer Confidence fell to a 3-month low in March to 63.4 from 72.0 in February. The FDIC is expected to released its proposed definition of a Qualified Residential Mortgage today. The announcement will clarify which mortgages will be subject to risk retention by lenders, and may affect pricing of certain high loan-to-value loans. The National Association of Mortgage Brokers (NAMB) is seeking a temporary restraining order to block implementation of the new Fed rule regarding loan originator compensation scheduled to take effect April 1. The rule is based on a three-year old study of phone interviews with 35 "hypothetical" borrowers by Fed staff, yet will change the entire mortgage delivery system, raising costs and limiting options for consumers. Our belief is that the rule is all about increasing market share of the "too big to fail" financial institutions. For more information, log on to http://www.namb.org/. Results of today's 5-year Treasury auction will be released at 1:00 PM.

Daily Market Update 3/28/11

Mortgage rates inched higher Monday on mixed economic data. The February Core PCE price index, the Fed's preferred measure of inflation, rose 0.2% from January, matching expectations. The trend in the annual rate is moving higher, however. Personal Income increased by 0.3%, slightly below forecast. The February Pending Home Sales index, a leading indicator, rose by 2.1%, beating the consensus estimate of +0.5%. Results from today's 2-year Treasury auction will be released at 1:00 PM.

Daily Market Update 3/25/11

Rates were little changed Friday, wrapping up one of the quietest weeks of the year in mortgage-backed securities markets. In economic news, fourth quarter 2010 GDP was revised higher to 3.1% from 2.8%, slightly above forecast. Consumer Sentiment came in close to expectations. The biggest economic event next week will be the Employment Report on Friday. Early estimates are for a net gain of 170,000 jobs in March. The FDIC is expected to release its definition of a Qualified Residential Mortgage (QRM) next week. The announcement will clarify which loans will be subject to risk retention rules, potentially raising the cost to consumers of certain high loan-to-value mortgages. No other data will be released today.

Daily Market Update 3/24/11

Mortgage rates were little changed in another day of quiet trading. In economic news, weekly Jobless Claims fell to 382,000, close to expectations. February Durable Goods Orders declined by 0.9%, well below the consensus forecast of +1.5%. Stocks moved higher. No other data will be released today.

Daily Market Update 3/23/11

Mortgage rates held steady Wednesday in quiet trading. February New Home Sales fell by 16.9% to an annual rate of 250,000 units, a new record low. Richard Fisher, President of the Federal Reserve Bank of Dallas and well-known inflation hawk, said the Fed is "going to have to be extremely wary" of inflationary pressures. He also warned that interest rates could rise if US lawmakers do not "get their act together" and map out a responsible fiscal plan. Congress has an "excessive addiction to debt spending and shoplifting our children's future", said Fisher. No other economic data will be released today.

Daily Market Update 3/22/11

Rates were little changed Tuesday in quiet trading. Stocks were mixed. No key economic data will be released today.

Daily Market Update 3/21/11

Mortgage rates moved higher Monday on supply concerns after the Treasury announced that it will begin selling its remaining $142 billion in agency-guaranteed mortgage-backed securities holdings. Beginning this month, the Treasury plans to sell up to $10 billion per month to wind down the emergency program put in place during the financial crisis. In economic news, the National Association of Realtors reported Existing Home Sales fell by 9.6% in February, much more than expected. The median sales price declined by 5.2% year-over-year to $156,100. No other key data will be released today.

Daily Market Update 3/18/11

Mortgage rates held steady Friday in the absence of any key economic data. Last night, the United Nations authorized the use of force against Libyan leader Gadhafi. As a result, Libya announced an end to all military actions, pushing stocks higher and pressuring mortgage-backed securities. Separately, the G7 nations intervened in currency markets to drive down the value of the yen to help boost the Japanese economy. Next week, Existing Home Sales will be released on Monday, New Home Sales on Wednesday, and Durable Goods Orders on Thursday.

Daily Market Update 3/17/11

Rates inched higher Thursday as a stock market rally pushed mortgage-backed securities lower. In economic news, weekly Jobless Claims decreased to 385,000. The February Consumer Price Index (CPI) rose 0.5%, slightly above forecast. Core CPI, which excludes food and energy, increased 0.2%, and was 1.1% higher than one year ago. Industrial Production fell by 0.1%. An increase of 0.6% had been expected. Leading Indicators rose 0.8%, close to expectations. No other key data will be released today.

Daily Market Update 3/16/11

Rates were little changed Wednesday as mortgage-backed securities held onto yesterday's gains. In economic news, February Housing Starts declined 23% from January to the lowest level in nearly two years. Building Permits, a leading indicator, fell 8% to a record low annual rate of 517,000 units. The Producer Price Index (PPI) jumped 1.6% in February, far above the consensus forecast. Core PPI, which excludes volatile food and energy components, rose a tame 0.2% from January and was 1.8% higher than one year ago. The Mortgage Bankers Association weekly purchase activity index declined by 4%, while the refinancing activity index rose by 1%. Average reported 30-year fixed rates fell to 4.79%, not including fees. No other data will be released today.

Daily Market Update 3/11/11

Mortgage rates were little changed Friday in volatile trading. Financial markets experienced wide swings as investors attempted to assess the impact of today's severe earthquake in Japan. In economic news, February Retail Sales rose by 1.0%, matching forecast. Consumer Sentiment fell to 68.2 from the previous reading of 77.5. Rising gas prices in recent weeks are being blamed for the sharp decline. Next week will be busy in terms of new data. The Federal Open Market Committee (FOMC) of the Fed meets on Tuesday, the Producer Price Index will be released on Wednesday, and the Consumer Price Index and Industrial Production will come out on Thursday. The Daily Market Update will be unavailable until Wednesday. I will be in Washington, DC on Monday and Tuesday meeting with our Congressional delegation regarding the Fed's loan originator compensation rule scheduled to take effect April 1. If you believe that increased competition drives down costs, improves service levels, and increases choices for consumers, join the fight. Please visit www.namb.org or www.naihp.org to learn more about what you can do to prevent the nation's largest financial institutions (those too big to fail) from taking over the mortgage industry.

Daily Market Update 3/10/11

Rates inched lower Thursday on weaker than expected economic data. Weekly Jobless Claims rose to 397,000, above the consensus forecast of 380,000. The Trade Deficit increased to $46.3 billion, well above expectations. Moody's downgraded Spain's sovereign debt rating, pushing global stock markets sharply lower. Results from today's 30-year Treasury auction will be released at 1:00 PM.

Daily Market Update 3/9/11

Mortgage rates were unchanged Wednesday in quiet trading. The Mortgage Bankers Association weekly purchase activity index rose by 13%, while the refinancing activity index increased by 17%. Average reported 30-year fixed rates for the past week rose to 4.93%, not including fees. Results from today's 10-year Treasury auction will be released at 1:00 PM. The National Association of Mortgage Brokers (NAMB) is expected to file suit today against the Fed in an effort to prevent onerous new loan officer compensation rules from going into effect April 1. The National Association of Independent Housing Professionals (NAIHP) filed suit on Monday. The Fed rule will benefit large financial institutions at the expense of small banks, mortgage brokers, loan officers, and consumers.

Daily Market Update 3/8/11

Mortgage rates were little changed Tuesday in volatile trading. Mortgage-backed securities began the session with gains, turned lower as stocks rallied, then recovered their losses following a successful 3-year Treasury auction. No economic data will be released today.

Daily Market Update 3/7/11

Mortgage rates held steady Monday in quiet trading. No economic data will be released today. The National Association of Independent Housing Professionals (NAIHP) filed a lawsuit today against the Federal Reserve over the Fed's loan originator compensation rule scheduled to go into effect April 1. The National Association of Mortgage Brokers (NAMB) is expected to join the suit within days. The Small Business Administration (SBA) has requested a one-year delay in implementation of the rule to allow for further clarification and to study its long-term impact on consumers and small businesses. We view the rule as poorly conceived and grossly anti-competitive. If the rule is allowed to go forward in its present form, consumers can expect to pay higher mortgage costs and receive lower levels of customer service. Meanwhile, profits will soar among the industry's largest players (those "too big to fail"). For more information, please visit www.namb.org.

Daily Market Update 3/4/11

Mortgage rates inched lower Friday in extremely volatile trading following today's Employment Report for February. The economy added 192,000 jobs last month, close to expectations. The Unemployment Rate fell to 8.9% against a consensus forecast of 9.1%. Average Hourly Earnings, a proxy for wage growth, remained unchanged from January. Factory Orders rose 3.1% last month. An increase of 2.1% had been expected. Next week will be relatively quiet in terms of new economic data with the exception of Friday's report on Retail Sales. The Treasury will hold auctions of 3-, 10-, and 30-year securities over three days, beginning Tuesday. No other key data will be released today.

Daily Market Update 3/3/11

Rates faced upward pressure Thursday following the release of stronger than expected economic data. Weekly Jobless Claims fell to 368,000, well below forecast, and to the lowest level since May 2008. Productivity rose 2.6%. An increase of 2.3% had been expected. The European Central Bank (ECB) held rates unchanged, but the head of the ECB surprised investors by suggesting the central bank may raise rates at their next meeting in April to fight inflation. The Institute for Supply Management services index rose to 59.7. Readings above 50.0 indicate expansion in the service sector of the economy. Investors now turn their focus to tomorrow's release of the most important data of the month, the Non-farm Payrolls Report. Consensus forecast calls for a net job increase of 180,000 in February, with the Unemployment Rate seen rising to 9.1%. Any significant deviation from these estimates may cause volatility in the mortgage-backed securities market. No other key data will be released today.

Daily Market Update 3/2/11

Rates were little changed Wednesday in quiet trading. This morning, payroll service provider ADP projected an increase of 217,000 private sector jobs in February, above the consensus forecast of 160,000. Federal Reserve Chairman Ben Bernanke will be delivering a second day of his semi-annual testimony to Congress. The Mortgage Bankers Association weekly purchase activity index fell by 6%, while the refinancing activity index decreased by 7%. Average reported 30-year fixed rates fell to 4.84%, not including fees. The Beige Book, a survey of economic activity by the Fed's 12 regional banks, will be released at 2:00 PM.

Daily Market Update 3/1/11

Rates were little changed Tuesday following testimony by Fed Chairman Ben Bernanke before the Senate Banking Committee. Bernanke offered no indication that he was considering ending the Fed's $600 billion bond purchase program. Regarding oil prices, Bernanke said "The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in US consumer price inflation." In economic news, the Institute for Supply Management manufacturing index rose to 61.4, beating forecast. Construction Spending fell 0.7% in January, a bit more than expected. No other key data will be released today.