Daily Market Update 8/30/13

Mortgage rates held steady Friday in quiet trading ahead of the extended Labor Day weekend.  In economic news, July Core PCE price index, the Fed's preferred measure of inflation, rose 0.1%, a bit less than expected, and was a tame 1.2% higher than one year ago.  Personal Income increased by 0.1%, below the consensus forecast of 0.2%.  The Chicago Purchasing Managers Index, a survey of Midwest manufacturers, came in at 53.0, matching expectations.  Consumer Sentiment declined to 82.1, but was better than expected.  Financial markets will be closed on Monday.  No other key data will be released today.  Have a safe weekend!

Daily Market Update 8/29/13

Rates were little changed Thursday in volatile trading.  This morning, second quarter GDP estimates were revised higher to 2.5% annual growth, above the consensus forecast of 2.2%.  The unexpectedly large increase was mostly due to an upward revision to exports.  Mortgage-backed securities initially sold off after the report, but have since recovered their losses.  Weekly Jobless Claims declined to 331,000, close to expectations.  Stocks moved higher.  Results from today's 7-year Treasury auction will be released at 1:00 PM.

Daily Market Update 8/28/13

Rates moved higher Wednesday as mortgage-backed securities gave back yesterday's gains.  This morning, the National Association of Realtors reported that the July Pending Home Sales Index fell by 1.3%, a bit more than forecast.  The decline was attributed to increased mortgage rates in recent months.  Today's 5-year Treasury auction results were rated "poor", adding upward pressure to rates.  Oil prices jumped to $110 per barrel on concerns over Syria.  No other key data will be released today.

Daily Market Update 8/27/13

Rates inched lower Tuesday as concerns about possible US military involvement in Syria hurt stocks and boosted mortgage-backed securities.  In economic news, the June S&P Case-Shiller 20-city home price index rose 0.89% from May and was 12% higher than one year ago.  Consumer Confidence increased unexpectedly to 81.5 from 80.3.  A slight decrease had been forecast.  Results from today's 2-year Treasury auction will be released at 1:00 PM.

Daily Market Update 8/26/13

Rates held steady Monday in quiet trading.  This morning, July Durable Goods Orders fell 7.3%, below the consensus forecast of -4.0%.  Stocks inched higher on hopes that the weaker than expected economic data, along with Friday's sharp decline in New Home Sales, might cause the Fed to delay its planned tapering of bond purchases beyond September.  No other key data will be released today.

Daily Market Update 8/23/13

Rates inched lower Friday following the release of weaker than expected housing data.  July New Home Sales fell by 13.4% to 394,000 annual units, well below the consensus forecast of 490,000.  June sales figures were also revised sharply lower.  The recent spike in mortgage rates was cited as a likely culprit for the unexpected decline.  Stocks moved lower.  Next week's key economic data include Monday's release of Durable Goods Orders, revised second quarter GDP on Thursday, and the Core PCE price index on Friday.  No other data will be released today.

Daily Market Update 8/22/13

Mortgage rates inched higher Thursday reflecting market activity that occurred late yesterday following the release of Minutes from the July Fed meeting.  This morning, weekly Jobless Claims increased to 336,000, slightly above forecast.  Leading Indicators rose 0.6%, beating expectations.  The Federal Housing Finance Agency (FHFA) reported that average home prices increased nationally by 7.7% over the previous year ending June 30.  The report represents all homes financed through Fannie Mae and Freddie Mac.  No other key data will be released today.

Daily Market Update 8/21/13

Rates faced upward pressure Wednesday in volatile trading.  In economic news, the National Association of Realtors reported that July Existing Home Sales rose by 6.5% to 5.39 million annual units, beating expectations.  The data mostly reflects purchase contracts written in May and June, as mortgage rates began rising.  Minutes from last month's Fed meeting showed broad support among Federal Open Market Committee members for plans to begin tapering bond purchases, also known as "quantitative easing", in the near future.  Mortgage-backed securities sold off quickly following the report:




No other key economic data will be released today.

Daily Market Update 8/20/13

Rates were little changed Tuesday as mortgage-backed securities recovered from yesterday's losses.  No key economic data will be released today.

Daily Market Update 8/19/13

Mortgage rates inched higher Monday as investors continued focusing on Fed plans to taper bond purchases, perhaps as early as September.  The closely-watched 10-year Treasury bond reached its highest yield since July 2011.  Stocks were mixed.  No key economic data will be released today.

Daily Market Update 8/16/13

Mortgage rates were little changed Friday.  In economic news, July Housing Starts rose 6% to an annual rate of 896,000, a bit below forecast.  Building Permits, a leading indicator, increased by 3%.  Second quarter Productivity jumped 0.9%, beating expectations.  Consumer Sentiment fell unexpectedly to 80.0.  No other key data will be released today.

Daily Market Update 8/15/13

Rates moved higher Wednesday following the release of stronger than expected employment data.  This morning, weekly Jobless Claims fell to 320,000, the lowest level since October 2007.  Continued improvement in the employment picture reduces the likelihood that the Fed will delay the tapering of its "quantitative easing" program.  In other news, the July Consumer Price Index (CPI) rose 0.2%, in line with expectations, and was 2.0% higher than one year ago.  Core CPI, which excludes volatile food and energy components, also increased 0.2%.  Industrial Production was unchanged, a bit below forecast.  The Empire State Index and the Philly Fed Index, two separate surveys of manufacturers in their respective regions, both fell short of expectations.  Stocks moved sharply lower.  No other key data will be released today.

Daily Market Update 8/14/13

Rates held steady Wednesday in quiet trading as investors showed little reaction to lower than expected inflation data.  This morning, the July Producer Price Index (PPI) was unchanged, below the consensus forecast of 0.3%, and was 2.1% higher than one year ago.  Core PPI, which excludes volatile food and energy components, rose 0.1%, and was a tame 1.2% higher year-over-year.  The Mortgage Bankers Association weekly purchase activity index decreased by 5.4%, while the refinancing activity index declined by 4.4%.  Average reported conventional 30-year fixed rates fell slightly to 4.56%, not including fees.  No other key data will be released today.

Daily Market Update 8/13/13

Rates moved higher Tuesday as increased investor optimism about the pace of economic growth in Europe and Japan hurt mortgage-backed securities.  In the U.S., July Retail Sales increased 0.2%, in line with expectations.  Import Prices rose 0.2%, well below forecast.  Stocks moved lower.  No other key data will be released today.

Daily Market Update 8/12/13

Rates inched lower Monday in quiet trading as weakness in stock markets boosted mortgage-backed securities.  No key economic data will be released today.

Daily Market Update 8/9/13

Mortgage rates held steady Friday in quiet trading.  No key economic data will be released today.  Fixed rates improved by about .125% for the week.  Next week's data include Retail Sales on Tuesday, the Producer Price Index on Wednesday, and the Consumer Price Index on Thursday.

Daily Market Update 8/8/13

Rates inched lower Thursday, reflecting improvements in mortgage-backed securities markets yesterday afternoon.  This morning, weekly Jobless Claims rose to 333,000, close to expectations.  The 4-week average dropped to the lowest level since November 2007.  Stocks moved higher.  In a follow-up to yesterday's blog, Fannie Mae and Freddie Mac reported combined second quarter profits of $15 billion, which will be returned to the U.S. Treasury.  The two agencies will soon have paid back $147 billion of the $187 billion received in tax payer bailout funds.  At the current pace of repayment, the entire bailout cost will be recovered in early 2014.  Experts estimate that the elimination of Fannie and Freddie, as proposed by President Obama and being considered by Congress, will increase mortgage interest rates by 1/2% to 3/4%.  The agencies need to be reformed to minimize future risk to tax payers, but not eliminated.

Daily Market Update 8/7/13

Mortgage rates remained unchanged Wednesday in a third consecutive day of quiet trading.  In economic news, the Mortgage Bankers Association weekly purchase activity index rose by 0.7%, while the refinancing activity index fell by 0.1%.  Average reported conventional 30-year fixed rates increased to 4.61%, not including fees.  Yesterday, President Obama urged lawmakers to wind down mortgage giants Fannie Mae and Freddie Mac over the next several years.  The President's plan is similar to a bi-partisan proposal in the Senate, whereby the government would continue to provide a limited guarantee to investors in mortgage-backed securities.  Meanwhile, House Republicans propose eliminating Fannie and Freddie and limiting the Federal Housing Administration (FHA) to insuring only first-time and lower-income buyers.  We are concerned that both approaches will increase mortgage interest rates and reduce competition and the availability of credit.  After being placed into conservatorship by the government, Fannie and Freddie received $187 billion in bailout funds, but have since repaid $132 billion and are continuing to pay huge quarterly dividends to the Treasury.  All of the bailout funds received should be returned to the government by the end of next year.  We believe the two agencies should be merged to increase efficiency and be limited to purchasing only high-quality "Qualified Mortgages" that require full documentation, limited debt-to-income ratios, and have sensible minimum down payment requirements.  Done properly, the merged entity could be highly profitable, continue to provide a stable source of liquidity to the market, and minimize risk to tax payers.

Daily Market Update 8/6/13

Mortgage rates held steady Tuesday as stocks fell sharply.  The June Trade Deficit declined to $34.2 billion, far below the consensus forecast, to the lowest level since October 2009.  Results from today's 3-year Treasury auction will be released at 1:00 PM.

Daily Market Update 8/5/13

Mortgage rates were little changed Monday in quiet trading.  This morning, the Institute for Supply Management services index jumped to 56.0, beating expectations.  Readings above 50.0 indicate expansion in the services sector of the economy.  No other key data will be released today.

Daily Market Update 8/2/13

Rates inched lower Friday following disappointing economic data.  This morning, the Labor Department reported that the economy added 162,000 jobs in July, below the consensus forecast of 180,000.  Figures from prior months were also revised lower.  The Unemployment Rate, which is calculated differently and does not include workers who have exited the workforce, fell to 7.4%.  Average Hourly Earnings, a proxy for wage growth, fell short of expectations with its first decline since October 2012.  The Core PCE price deflator, the Fed's preferred measure of inflation, rose 0.2%, and was a tame 1.2% higher than one year ago.  Factory Orders increased 1.5%, a bit below forecast.  Stocks moved lower.  No other key data will be released today.

Daily Market Update 8/1/13

Rates were little changed Thursday as mortgage-backed securities gave back yesterday's late gains on stronger than expected economic data.  Weekly Jobless Claims fell to 326,000, well below the consensus forecast of 345,000, to the lowest level since January 2008.  The Institute for Supply Management Manufacturing Index jumped to 55.4, beating expectations.  Readings above 50.0 indicate expansion in the manufacturing sector.  Construction Spending fell by 0.6%.  An increase of 0.5% had been expected.  The European Central Bank (ECB) made no change in rates.  The ECB President suggested that rates would remain at very low levels for an extended period.  Stocks moved higher.  No other key data will be released today.  The closely-watched Employment Report for July will be released tomorrow at 8:30 AM.