Daily Market Update 11/20/08

Mortgage rates eased Thursday as Initial Jobless Claims reached a 16-year high. Stocks continued their descent after closing below 8,000 yesterday for the first time since 2003. Oil prices fell to $50 per barrel, a whopping 66% decline since July. Congress failed to reach an agreement on a proposed $25 billion bailout for the Big Three domestic automobile manufacturers as debate continues over the appropriate source of funding for the plan.

Daily Market Update 11/19/08

Mortgage rates remained little changed following this morning's Consumer Price Index (CPI) report for October. Consumer Prices declined 1.0% last month due to falling energy prices. The more closely watched core rate, which excludes food and energy components, fell 0.1%, exceeding consensus. Minutes from the October Federal Open Market Committee meeting will be released today at 2:00 PM et.

Daily Market Update 11/18/08

Mortgage rates held steady Tuesday following the release of October's Producer Price Index (PPI). Producer Prices fell 2.8% in October from September, largely due to falling energy prices. The more closely watched core rate, which excludes food and energy, rose 0.4%, far more than expected. The economic slowdown is expected to lead to lower future readings in the core PPI. Treasury data released this morning showed that China and other foreign countries remained big buyers of US bonds in September. If the trend continues, it would be good news for mortgage-backed securities markets, perhaps leading to lower rates. Stocks were generally higher.

Daily Market Update

Mortgage rates were little changed Monday, as Treasurys continued to out-perform mortgage-backed securities. Industrial Production rose 1.3% for October, reflecting a resumption of production by oil refineries following Hurricanes Gustav and Ike. Fannie Mae announced plans to raise $2 billion this afternoon to refinance long-term debt. This is the first such sale since the government announced plans to rescue the mortgage giant and traders will be watching the auction results closely. Stocks moved lower.

Daily Market Update 11/14/08

Mortgage rates were little changed Friday morning while Treasury rates declined. Retail Sales fell by 2.8% in October, more than expected. Stocks moved sharply lower on the report. Freddie Mac posted a $25 billion loss in the third quarter and began tapping taxpayer funds. The Treasury provided $13.8 billion in exchange for preferred shares of the mortgage giant. Fannie Mae posted a $28 billion third quarter loss four days earlier. The Treasury has committed up to $100 billion rescue funds for each of the two entities.

Daily Market Update 11/13/08

Rates were little changed Thursday ahead of a flurry of economic data scheduled for release in the coming week. Key reports due out over the next four business days include Retail Sales, Industrial Production, the Producer Price Index, the Consumer Price Index, and the minutes from last month's FOMC meeting of the Federal Reserve. Mortgage-backed securities markets are likely to remain volatile throughout the period. Initial Jobless Claims for the week came in at 517,000, the highest level since 2001. Stocks were mixed. In other news, Treasury Secretary Paulson announced yesterday he will not use the $700 billion TARP funds to purchase toxic mortgages, as originally planned. Instead he intends to continue purchasing bank stocks and extend fund access to a wide range of financial service providers, including issuers of auto loans, credit cards, and student loans. Meanwhile, President-elect Obama endorsed a $50 billion rescue package for domestic automobile manufacturers.

Daily Market Update 11/12/08

Mortgage rates inched lower Wednesday as stocks fell sharply. Yesterday the Treasury and Federal Housing Finance Agency (FHFA) announced a plan to modify mortgage loans held by Fannie Mae and Freddie Mac in an effort to reduce foreclosures. Certain loans in excess of 90 days past due would qualify for lower interest rates and extended terms to trim payments to 38% of borrowers' gross monthly income. Sheila Bair, Chairman of the FDIC, objected on the basis the plan doesn't go far enough to stem the tide of foreclosures. She has called for a full government takeover of Fannie Mae and Freddie Mac and a reduction of the principal balance on many troubled mortgages. Other analysts fear the plan may encourage struggling homeowners to allow their payments to become 90 days delinquent in order to qualify for assistance. We agree on both counts, and consider the plan to be ill-conceived. In other economic news, oil prices slid below $58 pb and the Bank of England appeared poised for another rate cut. Retail Sales data for October will be released Friday.