Daily Market Update 9/28/12

Rates stabilized Friday as mortgage-backed securities recovered most of yesterday's losses.  Investors remain primarily focused on events in Europe.  In economic news, the August Core PCE price index, the Fed's preferred measure of inflation, rose 0.1%, matching expectations.  Personal Income increased 0.1%, in line with forecast.  The Chicago Purchasing Managers Index fell unexpectedly to 49.7.  Readings below 50.0 indicate contraction in the manufacturing sector.  Consumer Sentiment came in at 78.3, slightly below forecast.  Next week's key data include Monday's release of the Institute for Supply Management manufacturing index, minutes from the September Fed meeting on Thursday, and the two most closely watched reports of the month, Non-farm Payrolls and the Unemployment Rate, on Friday.  No other key data will be released today.

Daily Market Update 9/27/12

Rates faced upward pressure Thursday following news that the European Central Bank may announce additional aid for Spain and China may soon launch new stimulus measures.  In economic news, weekly Jobless Claims fell to 359,000, below forecast, to the lowest level since July.  August Durable Goods Orders sank 13.2%, mostly due to volatile aircraft orders.  Final second quarter GDP unexpectedly dropped sharply to 1.3% from 1.7%.  Pending Home Sales fell by 2.6% in August.  An increase of 1.0% had been expected.  Freddie Mac reported average 30-year fixed rates of 3.40% with 0.6 "points" last week, the lowest on record.  Results from today's 7-year Treasury auction will be released at 1:00 PM.

Daily Market Update 9/26/12

Mortgage rates were stable, to slightly lower Wednesday as concerns about Europe boosted mortgage-backed securities again today.  Protests in Spain and Greece have raised questions about the willingness of troubled countries to enact austerity measures.  In economic news, New Home Sales slipped 0.3% to 373,000 annual units, a bit below forecast.  The Mortgage Bankers Association weekly purchase activity index rose by 2.8%, while the refinancing activity index increased by 3.3%.  Average reported 30-year fixed rates fell 9 basis points to 3.63% (not including fees), a new record low.  Results from today's 5-year Treasury auction will be released at 1:00 PM.

Daily Market Update 9/25/12

Rates inched lower Tuesday as increased concerns about Europe boosted mortgage-backed securities.  Political opposition in Germany to aid programs for weaker EU countries, a weak Spanish bond auction, and questions about Greek reforms overshadowed better than expected economic data in the U.S.  This morning, the July Case-Shiller 20-city home price index rose 0.4% from June, and was 1.2% higher than one year ago.  Consumer Confidence jumped to 70.3, well above the consensus forecast of 63.0.  Results from today's 2-year Treasury auction will be released at 1:00 PM.

Daily Market Update 9/24/12

Mortgage rates held steady Monday in quiet trading.  No key economic data will be released today.

Daily Market Update 9/20/12

Rates inched lower Thursday on weaker than expected economic data, particularly in China.  In the U.S., weekly Jobless Claims came in at 382,000, slightly above forecast.  The Philly Fed manufacturing index fell 1.9%, beating expectations.  Leading Indicators declined by 0.1%, matching forecast.  Stocks moved lower.  No other key data will be released today.

Daily Market Update 9/19/12

Rates held steady Wednesday in volatile trading.  This morning, the Bank of Japan announced it will increase its level of monetary stimulus, following similar moves by the Federal Reserve and European Central Bank.  In the U.S., August Housing Starts rose 2% to an annual rate of 750,000 units, below the consensus forecast of 775,000.  Existing Home Sales jumped 7.8% to 4.82 million annual units, to the highest level in two years, beating expectations.  No other data will be released today.

Daily Market Update 9/18/12

Mortgage rates were little changed Tuesday.  Mortgage-backed securities drifted lower late yesterday, but have recovered those losses this morning.  No key economic data will be released today.

Daily Market Update 9/17/12

Rates held steady Monday as mortgage-backed securities (MBS) markets appeared to be settling down following two days of extreme volatility.  After a huge rally on Thursday, MBS gave back about half of their gains on Friday.  In economic news, the Empire State manufacturing index declined to -10.4, well below the consensus forecast of -3.0, to the lowest level since April 2009.  Readings below zero indicate contraction in the manufacturing sector.  No other data will be released today.

Daily Market Update 9/14/12

Mortgage rates inched lower Friday following yesterday's FOMC meeting.  The Fed announced it will implement "QE3" by purchasing up to $40 billion of mortgage-backed securities (MBS) monthly until labor markets improve.  The Fed also indicated it expects to maintain extremely low short-term rates until at least 2015.  The announcement produced a strong rally in MBS markets Thursday afternoon, although some of those gains have been given back this morning.  In economic news, the August Consumer Price Index (CPI) rose 0.6%, in line with expectations.  Core CPI, which excludes volatile food and energy components, increased 0.1%, a bit less than expected.  Retail Sales jumped 0.9%, slightly better than forecast, while Industrial Production fell 1.2%.  Consumer Sentiment reached its highest level in four months at 79.2, beating expectations.  Stocks moved modestly higher.  No other key data will be released today.

Daily Market Update 9/13/12

Rates were little changed Thursday ahead of this afternoon's Fed announcement, which may contain details of additional easing measures by the Federal Reserve.  In economic news, weekly Jobless Claims rose to 382,000, above expectations.  The August Producer Price Index (PPI) jumped 1.7% from July and was 2.0% higher than one year ago.  Higher gas prices accounted for much of the increase.  Core PPI, which excludes food and energy components, increased 0.2% in August.  The highly anticipated Fed announcement will be released at 12:30 PM.  Fed Chairman Ben Bernanke will hold a press conference at 2:15 PM.

Daily Market Update 9/12/12

Mortgage rates faced upward pressure Wednesday after a German court ruled in favor of a European Central Bank (ECB) aid program, allowing it to move forward.  Global stocks rallied, pushing mortgage-backed securities lower.  In economic news, August Import Prices rose 0.7%, below the consensus forecast of 1.5%.  The Mortgage Bankers Association weekly purchase activity index rose 8.1%, while the refinancing activity index jumped 11.9%.  Average reported 30-year fixed rates fell to 3.75%, not including fees.  Results from today's 10-year Treasury auction will be released at 1:00 PM.

Daily Market Update 9/11/12

Mortgage rates held steady Tuesday in quiet trading.  The July Trade Deficit came in at $42.0 billion, slightly below forecast.  Stocks moved higher in anticipation of tomorrow's two-day FOMC meeting of the Fed.  An important German court decision on the legality of ECB programs is expected tomorrow.  Results from today's 3-year Treasury auction will be released at 1:00 PM.

Daily Market Update 9/10/12

Rates were little changed Monday.  No economic data will be released today in the U.S., so investors are focusing on events in Europe.  There have been reports this morning that inspectors have rejected some of the Greek government's austerity measures, which means that Greek leaders will need to agree on new measures to receive additional aid.  The Federal Open Market Committee (FOMC) of the Federal Reserve will be meeting on Wednesday and Thursday to discuss monetary policy.  Investors are expecting the Fed to announce new economic stimulus measures in the form of a third round of "quantitative easing" (QE3), whereby the Fed purchases long-term bonds and/or mortgage-backed securities (MBS) in an effort to keep rates low.  Also this week, the Producer Price Index will be released on Thursday,  the Consumer Price Index, Retail Sales, and Industrial Production will come out on Friday.  MBS markets may be volatile toward week's end.

Daily Market Update 9/7/12

Mortgage-backed securities rallied Friday morning following the release of disappointing job numbers.  The economy added just 96,000 jobs in August, far below forecast.  In addition, the data from prior months was revised lower.  The Unemployment Rate fell unexpectedly to 8.1%, but this was largely due to a decline in the labor force rather than an increase in employment.  Labor force participation fell to its lowest level since 1981.  Average Hourly Earnings, a proxy for wage growth, was unchanged from July.  As a result, investors raised their expectations that the Fed will take further measures to boost the economy.  Stocks were mixed.  No other key data will be released today.

Daily Market Update 9/6/12

Rates faced upward pressure Thursday on stronger than expected economic data and news of a plan by the European Central Bank (ECB) to purchase short-term debt from troubled European nations.  The new program, labeled "Monetary Outright Transactions" or MOT, will be "unlimited" in size, but will have conditions attached for countries that receive aid.  In economic news, payrolls firm ADP estimated an increase of 201,000 private sector jobs in August, well above forecast.  Weekly Jobless Claims fell to 365,000, a little lower than expected.  Stocks moved higher.  No other key data will be released today.

Daily Market Update 9/5/12

Mortgage rates were essentially unchanged Wednesday ahead of tomorrow's ECB meeting and Friday's Employment Report.  This morning, second quarter Productivity was revised higher to 2.2%, above the consensus forecast of 1.8%.  Last Friday the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, announced it will raise guarantee fees by an average of 10 basis points on November 1 for loans sold to the two agencies.  This is the third such increase, designed to shore up the finances of Fan and Fred, while bringing Agency rates more in line with "the level one might expect to see if mortgage credit risk was borne solely by private capital", according to FHFA Director Edward DeMarco.  Bottom line:  All else being equal, mortgage rates will increase November 1.  If you haven't already refinanced because you're waiting for rates to move lower, you may want to rethink that strategy.  No other key data will be released today.

Daily Market Update 9/4/12

Mortgage rates were little changed Tuesday following the release of weaker than expected economic data.  Construction Spending fell unexpectedly by 0.9% in July.  An increase of 0.5% had been forecast.  The Institute for Supply Management manufacturing index experienced its sharpest drop in three years last month to 49.6.  Readings below 50.0 indicate contraction in the manufacturing sector.  Stocks moved lower.  Rates may become increasingly volatile later this week, as the European Central Bank meets on Thursday to discuss additional aid measures to troubled European nations, and the most important economic data of the month, the Employment Report for August, will be released on Friday.  No other key data will be released today.