Daily Market Update 5/29/09

Mortgage rates were little changed Friday, although 30-year fixed rates rose about 1/2% for the week. Investors shrugged off new economic data and focused instead on the rising budget deficit and increased borrowing needs of the Federal Government. The risk of higher inflation in coming years threatens to limit the Fed's ability to hold down long term interest rates to stimulate the economy. In economic news, the Chicago Purchasing Managers Index fell unexpectedly last month, showing a continued decline in business activity. First quarter GDP was revised to -5.7%, a bit worse than forecast. Consumer Sentiment increased slightly. Crude oil prices hit a six month high at $66 per barrel. The closely watched Non-farm Payrolls report for May will be released next Friday. Mortgage-backed securities may remain volatile through the week.

Daily Market Update 5/28/09

Mortgage rates spiked higher yesterday afternoon as investors became increasingly concerned that the government's approach to stimulating the economy would lead to inflation. The U.S. government will need to sell nearly $2 trillion in Treasury bonds this year to fund the massive Federal budget deficit. Rates reached their highest levels since November, complicating efforts by the Fed to revive the real estate market by keeping borrowing costs low. In economic news, New Home Sales rose 0.3% in April, less than expected. Durable Goods Orders increased 1.9% last month, beating forecast. Weekly Jobless Claims came in close to expectations. The mortgage-backed securities market showed little immediate reaction to the data. Stocks moved lower. Today's session is likely to remain highly volatile.

Daily Market Update 5/27/09

Mortgage rates moved higher Wednesday as investors sold mortgage-backed securities ahead of today's Treasury auction of 5-year notes and tomorrow's auction of 7-year notes. In economic news, Existing Home Sales rose 2.9% in April, beating forecast. The national median price fell 15.4% from a year earlier, as distressed properties accounted for 45% of all sales. Stocks were mixed. Durable Goods Orders and New Home Sales data will be released Thursday.

Daily Market Update 5/26/09

Mortgage rates were little changed Tuesday as Consumer Confidence rose to its highest level in nine months. Several key economic reports are due out this week including New and Existing Home Sales, Durable Goods Orders, Chicago Purchasing Managers Index and the ISM manufacturing index. In addition, the Treasury will auction $101 billion of 2-, 5-, and 7-year notes over the next three days. The mortgage-backed securities market may be volatile through the week.

Daily Market Update 5/22/09

Interest rates rose Friday following a late sell-off in Treasurys and mortgage-backed securities (MBS) Thursday. Treasurys have been hit especially hard this week, with the yield on the 10-year note reaching 3.4% this morning, the highest level since November 19. Yesterday the Treasury announced plans to auction $101 billion in 2-, 5-, and 7-year notes next week, in addition to $61 billion in 6-week and 3-month notes. The extraordinarily large auctions are needed to finance this year's projected federal budget deficit of $1.84 trillion. Rates have risen as investors have become increasingly concerned about the high level of government debt. MBS markets have out-performed Treasurys, but mortgage rates inched higher for the week. The dollar fell against most major currencies. Stocks were mixed. The market will close today at 2:00 PM and will not reopen until Tuesday.

Daily Market Update 5/21/09

Mortgage rates were little changed Thursday as stocks fell sharply. Weekly Jobless Claims were reported at 631,000, close to consensus forecast. Leading Indicators rose 1.0% last month, beating expectations. Freddie Mac reported average conventional 30-year fixed rates of 4.82% with 0.6 points for the past week. The mortgage-backed securities market will close tomorrow at 2:00 PM for the Memorial Day Holiday.

Daily Market Update 5/20/09

Mortgage rates held steady Wednesday as stocks rallied. In spite of lackluster data, investors have become increasingly optimistic about the overall direction of the economy in recent weeks. Oil prices rose above $60 per barrel, the dollar fell against the euro. The Fed will release minutes from last month's FOMC meeting today at 2:00 PM et. No surprises are expected.

Daily Market Update 5/19/09

Mortgage rates inched higher Tuesday following yesterday's stock market rally. In economic news, Housing Starts fell 13% in April, driven by weakness in construction of condominiums and apartment buildings. Financing of these properties has become more restrictive in recent months. Construction of single family units rose 2.8% in April, the second consecutive monthly increase, fueling optimism that the housing market may be stabilizing. No other economic data will be released today.

Daily Market Update 5/18/09

Mortgage rates were little changed Monday as no new economic data is due out today. Stocks are higher. The Fed will release minutes from last month's FOMC meeting Wednesday. The market will close early Friday for the Memorial Day Holiday.

Daily Market Update 5/15/09

Mortgage rates were little changed Friday as April's Consumer Price Index (CPI) was unchanged from March. The CPI fell on an annualized basis -0.7% from last April. The more closely watched core rate, excluding food and energy, rose 0.3%, a bit more than expected. Industrial Production fell -0.5% in April, close to consensus forecast. Consumer Sentiment rose to its highest reading since last September, providing evidence the economy has begun to stabilize. No major economic reports are due out next week. Investors are likely to turn their focus to events in Washington and securities purchases by the Fed.

Daily Market Update 5/14/09

Mortgage rates held steady Thursday as today's economic data caused little reaction in mortgage-backed securities markets. The April Producer Price Index rose 0.3%, while the more closely watched "core" rate, excluding food and energy components, rose 0.1%, in line with expectations. Weekly Jobless Claims jumped to 637,000, higher than forecast. Stocks moved modestly higher. No other economic data will be released today.

Daily Market Update 5/13/09

Mortgage rates were little changed Wednesday, as Treasuries outperformed mortgage-backed securities following weaker than expected Retail Sales data. Stocks fell sharply. April Retail Sales declined -0.4%, below the consensus forecast of -0.1%. Consumers have reduced spending due to uncertainty about the economy and rising unemployment. Separately, Import Prices excluding oil declined -0.4%, easing inflation fears. The Producer Price Index will be released tomorrow.

Daily Market Update 5/12/09

Mortgage rates inched lower Tuesday following a rally in Treasury and mortgage-backed securities prices Monday. In economic news, the National Association of Realtors reported a 14% decline in the median price of U.S. homes in the first quarter of 2009 compared to a year earlier, driven by high levels of "distressed" sales. On a positive note, the inventory of homes listed for sale fell slightly in March. The Trade Deficit rose last month, but remained below estimates. Retail Sales figures for April will be reported tomorrow.

Daily Market Update 5/11/09

Mortgage rates eased Monday following last week's brief run-up. The recent rise in yields has led several of the world's largest investors to conclude the Fed will increase purchases of Treasuries and mortgage-backed securities (MBS) to keep long-term rates low. Treasuries have been hit harder than MBS, with the 10-year yield having risen 83 basis points, from 2.46% on March 19 to 3.29% last Friday. MBS yields have increased 33 basis points over the same period. No economic data will be released today.

Daily Market Update 5/8/09

Mortgage rates moved higher Friday, triggered by yesterday's poor results of the 30 year Treasury auction. Rates are now at their highest levels since March 25. Investors are becoming increasingly concerned about the long-term prospects for interest rates as the economy continues showing signs of stabilization. Mortgage-backed securities had little reaction to today's Non-farm Payrolls report that showed the U.S. economy lost 539,000 jobs in April, less than forecast. The Unemployment Rate rose to 8.9%, as expected. Average Hourly Earnings, a proxy for wage growth, rose a slim 0.1%. Stocks moved higher, the dollar fell. Several key economic reports are due out next week, including Retail Sales on Wednesday, the Producer Price Index Thursday, and the Consumer Price Index and Industrial Production Friday.

Daily Market Update 5/7/09

Rates inched higher Thursday as mortgage-backed securities markets were hurt by signs of stronger global economic growth. Weekly Jobless Claims fell to 601,000, the lowest level since January. First quarter Productivity rose 0.8%, a bit more than expected. Unit Labor Costs, a measure of wage inflation, climbed 3.3%. Results of the government's stress tests for 19 large financial institutions are scheduled to be released at 5:00 PM et. Stocks and the dollar moved lower, oil prices higher. Non-farm Payrolls for April will be released tomorrow morning.

Daily Market Update 5/6/09

Mortgage rates were little changed Wednesday after the ADP private payrolls firm estimated fewer job losses in April than expected. Stocks and oil prices rallied. Consensus is growing among investors that the recession is easing. The Mortgage Bankers Association reported a 5% increase in weekly purchase activity. Average rates for last week rose to 4.79% with 0.7 points. Freddie Mac estimated that first quarter refinances saved homeowners an aggregate $2.5 billion annually in monthly mortgage payments. No other key economic data will be released today.

Daily Market Update 5/5/09

Mortgage rates inched lower Tuesday, outperforming Treasurys. The Institute for Supply Management services index rose in April to its highest level since October, beating forecast. Fed Chairman Bernanke, in testimony on Capitol Hill, expressed cautious optimism about the economy, saying, "We continue to expect economic activity to bottom out, then to turn up later this year." He also warned of dangers to the economic recovery if the financial system suffers a relapse. Stocks moved generally lower. The Treasury will auction a total of $71 billion of 3-, 10-, and 30-year notes over the next three days. Supply concerns continue to weigh heavily on the Treasury market.

Daily Market Update 5/4/09

Mortgage rates held steady Monday in spite of new data suggesting the housing market may be nearing bottom. Construction Spending rose last month for the first time in six months. Also, the National Association of Realtors reported Pending Home Sales increased 3.2% in March. Both reports beat consensus forecast. Stocks moved sharply higher. The results of the government "stress test" for 19 large financial institutions will be released Thursday. Non-farm Payrolls for April will be reported Friday.

Daily Market Update 5/1/09

Interest rates continued their upward trend Friday following the release of stronger than expected economic data. Consumer Sentiment rose to its highest level since September 2008. The Institute for Supply Management manufacturing index increased to a reading of 40.1, up from last month's 36.3, and above consensus forecast. Factory Orders declined -0.9% in March. Stocks moved modestly lower. A more optimistic economic outlook and lack of new Fed actions to hold down yields pushed Treasury and mortgage rates higher for the week. The 10-year Treasury yield is now at the highest level since November. Investors will be closely watching next Friday's Non-farm Payrolls report for April.