Market commentary

If the ADP employment report is to be a reasonable indicator, Friday’s payroll report could be encouraging. The ADP report projects that 206,000 private payrolls were created in November, well above expectations. The majority of the increases are coming from smaller businesses as those with 1 to 49 employees accounted for over half of the jobs.

Mortgage applications fell 11.7% for the week ending November 25 as applications for refinance dropped over 15%, despite lower mortgage rates. The four week moving average for the refinance index has fallen 16% over the past six weeks while mortgage rates have fallen 10 to 20 basis points.

As a result of the inability of Europe to solve their financial crisis, the world’s major central banks acted jointly Wednesday to provide dollar liquidity to major European banks that have been facing credit and liquidity problems as investors and depositors pull funds from those troubled banks. Global stock markets rallied sharply on the news, including the U.S., where the DOW is trading higher by 400 points. The risk-on trade is driving U.S. Treasury prices lower/yields higher. As a result, mortgage pricing is worse by .125% to .250%.

Market commentary

Treasury yields pushed higher Monday morning with the 10 year reaching 2.08% before rebounding late in the day. U.S. stock markets were giddy from reports of strong Thanksgiving holiday retail sales and investors pushed the DOW up 292 points.

This morning we were told housing prices for the month of September fell more than expected according to the latest S&P CaseShiller home price report. Prices fell 0.57% month-over-month to bring year over year prices to -3.59%.

On the positive side, consumer confidence for the month of November lurched higher, rising from 40.9 to 56.0, according to the Conference Board. Partial credit for this increase was given to the bounce in the equity markets during the month of October. Keep in mind since the survey was taken in mid November, the DJIA has dropped 479 points, new euro zone fears emerged, the deficit super-committee proved futile, and Fitch cut the U.S. long-term debt outlook to negative.

In reaction to the data and no negative news from Europe, U.S. stock markets are posting solid gains again this morning while Treasuries give back most of Monday afternoon’s improvement. Mortgage prices are flat to slightly worse from Monday’s late day price improvement.

Market commentary

Strong retail sales over the Thanksgiving weekend and semi-positive news on developments in Europe that may ease the financial crisis are fueling a stock market rally this morning. As one would expect with investors stepping into riskier assets bond prices are falling, sending yields higher. The price of the 10 year note is lower by .625%, pushing the yield back to 2.035%.

This is a data heavy week beginning with the Commerce Department reporting new home sales increased 1.3% in October, which was slightly lower than expectations. Later in the week ADP will release its forecast for new job creation, and on Friday, the Labor Department will share its version of new job creation for the month of November. Currently, expectations are for an increase of 116,000 new jobs created with the unemployment rate remaining at 9.0%

The decline in the Treasury market is pulling down mortgages as well. Pricing is worse by .125% to .375%.

Market commentary

After a day of rest and thanksgiving, U.S. markets open to reports of strong “Black Friday” sales and a worsening financial crisis in Europe. U.S. stock markets are trading higher while the Treasury market trends lower. The yield on the 10 year note closed at 1.92% Wednesday and is currently trading at 1.965%.

The news from Europe is worse by the day. Investors required a yield of 6.5% to absorb 6 month debt in an Italian note offering today, and yields on Italy’s 2 year notes hit a record 8%. Borrowing costs across Europe are soaring, which will make the debt and deficit problems even worse as more of a country’s budget will be required for higher interest payments. U.S. leaders and politicians should take note; there is a limit to what the markets will bear.

The U.S. bond market closes early today, so the HSOA lock desk will close at 12 noon, PT.

Market commentary

This morning we received a number of economic reports. Initial jobless claims last week rose 2,000 to 393,000. Durable goods orders were a mixed bag with November’s better than expected performance being offset by downward revisions to September. Personal income was up slightly while personal spending was softer than expected. The U.S. savings rate continues to steadily decline from its 2010 and 2011 highs, which is contributing to the increase in spending.

Germany received a wake up call today on a failed debt auction in which the German debt agency had to retain almost half of a 6 billion euro offering due to a shortage of bids. While the failed auction pushed 10 year yields in Germany to just slightly over 2%, well below its European brethren, it is a clear sign investors are shying away from Europe. European leaders have strongly opposing views on how to resolve the financial crisis, which for now tells investors there is no resolution.

In the U.S., stock markets are under pressure and broadly lower with yields on Treasuries flat from Tuesday’s close. Mortgage prices are worse by a few basis points.

Market commentary

Stocks were pummeled Monday as investors reacted to the failure of the U.S. deficit reduction panel to reach an agreement and to the growing financial crisis in Europe. The Dow dropped 249 points while the S&P 500 ended the day at 1,182, its lowest close in over six weeks. Treasuries rallied early and managed to hold their gains with the 10-year closing at 1.95%. The turmoil in European debt markets created stellar demand for the U.S. Treasury’s two year note auction, so we will see if that carries over to today’s auction of $35 billion in 5 year notes.

Economic data this morning consists of the first revision to the third quarter GDP, which was revised lower from 2.5% to 2.0%. Later today we will get the FOMC Minutes.

U.S. stock and bond markets are trading flat after digesting Monday’s volatility and will most likely quiet down as folks wind down towards the Thanksgiving Day holiday. Prices on mortgages have improved slightly.

Market commentary

The debt crisis in Europe appears to have no solution and is causing investors to push interest rates for many countries to unsustainable levels. The demand for higher yield will hurt these countries as they attempt to issue new debt or roll over existing debt.

Stocks around the world are down this morning, including in the U.S. The DOW traded lower by over 300 points and is currently hovering near that mark. U.S. Treasury prices have improved; however, even U.S. debt is coming under scrutiny. Investors in U.S. debt are losing confidence in the country’s political system as the U.S. deficit panel failed to reach agreement on reining in the ballooning U.S. debt. The yield on the 10 year note hit a low yield of 1.95% early this morning and is currently at 1.97%. Mortgage prices are slightly improved from Friday.

Market commentary

The bond market improved Thursday and U.S. stocks fell sharply as the “euro fear” trade that we have seen for several weeks once again came to the fore. The yield on the 10 year Treasury yield fell to 1.93% intraday but is back up to 2.02% this morning. There were reports yesterday that the European Financial Stability Fund may not backstop Italy, in addition to growing concern about the liquidity in European markets.

Economic data in the U.S. economic data has looked incrementally better this week, including today’s report. The index of U.S. leading indicators rose .09% in October, more than forecast, after posting an increase of 0.1% in September. The Leading Indicators Index (LEI) is an outlook on the U.S. economy for the next 3 to 6 months. Nine of the ten components contributed to October’s increase, led by the increase in building permits, the drop in initial jobless claims and a longer factory workweek.

Partially ignoring the financial and fiscal drama in Europe, U.S. stock markets are trading higher this morning as Treasury prices decline. Prices on mortgages are slightly worse.

Market commentary

Producer prices eased month over month 0.3%, driven by lower oil prices, and excluding food and energy, prices were flat month over month. Retail sales for October rose 0.5%, beating estimates of a 0.3% increase. Excluding auto sales, retail sales rose 0.6%. Sales of electronic goods were up 3.7%.

Over all this morning’s reports were positive for the U.S. economy. However, Europe remains the focus of the global markets and resolution of the financial woes in those economies is far down the road. U.S. Treasuries have improved slightly with the yield on the 10 year note at 2.02%.

Market commentary

Excluding today, this week’s calendar is full of economic data. Tuesday we will get an inflation reading from the Producer Price Index and a status on the consumer in the form of Retail Sales data. Late in the week we will have the Consumer Price Index, Industrial Production, Housing Starts and Leading Indicators.

All of this data’s effect on the U.S. markets is nil as the focus continues to be on Europe and the financial crisis that appears to be spreading relatively unchecked. EU policy makers seem unwilling to make the tough decisions; however, the longer they wait the more likely it is the markets will make the decisions for them.

For today, U.S. stock markets are trading slightly lower with Treasury prices flat from the close last Thursday. Mortgage prices are worse by approximately .125%.

Market commentary

The yield on the 10 year note fell to as low as 1.93% Wednesday as the turmoil in Europe drove investors out of risk assets and into the perceived safety of U.S. Treasuries. However, given the over borrowing of and spending of governments around the globe, even the flight to safety into U.S. Treasuries did not help yesterday’s 10 year note auction which had a weak bid to cover ratio. This does not bode well for today’s auction of $16 billion of 30 year bonds.

In this morning’s economic data, initial jobless claims dropped from 400,000 to 390,000 for the week ending November 5. Import prices in October fell more-than-expected, dropping 0.6% with energy and food prices leading the declines.

U.S. stock markets are rebounding this morning after Wednesday’s thrashing and bonds are trading lower. The yield on the 10 year note is back to 2.05% and mortgage prices are worse by .25%.

Market commentary

Mortgage applications rose 10.3% for the week ending November 4, led by an increase of 12.1% in refinance applications and a 4.8% increase in purchase applications. Later today the U.S. Treasury is scheduled to auction $24 billion in 10 year notes today, following a fairly successful 3 year note auction on Tuesday.

Of course, Italy and Greece remain in the forefront of financial news and continue to drive market volatility. Borrowing costs for these countries have skyrocketed and the European Union is not taking decisive action to stem investor fears. As a result, U.S. stock markets are selling off sharply U.S. Treasuries are benefiting from a flight to safety bid. The yield on the 10 year note has fallen to 1.96% and mortgage prices have improved by approximately .25% to .375%.

How do we know for certain our government has run amuck and is completely clueless? This week the U.S. national debt will cross the $15 trillion mark and today the Obama administration’s Agriculture Department announced a 15 cent tax on Christmas trees that will fund a Christmas Tree Promotion Board which will “provide maximum benefits to the Christmas tree industry”, and “will improve the image and marketing of Christmas trees”. You just can’t make this stuff up!

Market commentary

U.S. stock and Treasury markets are trading flat this morning; undecided on which way to move as they await the outcome of a crucial vote in Italy. The indecision surrounding the Greek and Italian financial woes, along with the financial problems in other European countries continues to grab headlines and drive volatility in the markets. The bad news is there does not appear to be a resolution in sight.

Mortgage prices are slightly improved from the close on Monday.

Market commentary

This is a shortened, quiet week in terms of U.S. economic data with the bond market closed on Friday in honor of Veteran’s Day. Last Friday Greek Prime Minister Papandreou survived the confidence vote, so in theory his government will now approve the bail-out package offered by the EU.

The focus now has turned to Italy with rumors that its Prime Minister may resign after a vote on an austerity package. With no U.S. economic data the markets remain focused on the European financial crisis. The major U.S. stock indices are trading lower this morning while treasury yields are falling/improving. Mortgage prices are unchanged to slightly better than Friday.

Market commentary

Nonfarm payrolls for the month of October rose 80,000, including a gain of 104,000 in private payrolls and a loss of 24,000 in government jobs. Recall that expectations were for a 95,000 gain in total payrolls. There was some positive underlying data in the report with sizeable revisions to the last two months’ data, raising the August and September numbers 102,000.

In the household report, the unemployment rate dropped to 9.0% as 277,000 more persons reported as being employed, with the number of long term unemployed falling 366,000 to 5.9 million. Even with the positive pieces of the report this is still indicative of a weak pace of job growth.

Bond prices fell slightly on the after the release of the jobs report, but have since rebounded, and the markets remain focused on events in Europe and what will eventually happen in Greece. As of this writing U.S. stocks are down sharply pushing bonds into positive territory. Mortgage prices are worse by .125% and .25%.

Market commentary

Economic reports this morning included the ISM Non-Manufacturing Index and the weekly jobless claims data. For October the ISM index slipped to 52.9 from 53.0; expectations were for an increase to 53.5. One positive note in the report was the employment index which jumped to 53.3 from 48.7 the previous month.
Initial jobless claims for the week ending October 29 dropped to 397,000 form 406,000 the previous week. This makes just the third week of the past 29 that claims came in below 400,000. In a separate report unit labor costs fell 2.4% in Q3 as part of a 3.1% gain in productivity. This data reflects businesses are seeking to do more with the employees they have versus hiring new workers. For those of us in the mortgage space this is an obvious conclusion!

Again today the markets have generally ignored the economic data and remain focused on the European financial crisis and the results of the Greek referendum. It seems the EU is resigned that the union may be minus one member in the near future.

U.S. Treasury prices are tumbling this morning pushing the yield on the 10 year note to 2.04% Mortgage prices are worse by .25%.

Market commentary

Bond prices rallied sharply on Tuesday as the confidence in the Greek rescue plan continued to erode following an announcement by Prime Minister Papandreou that he would put the plan to a referendum vote. The move caught all EU leaders by surprise and rattled the markets, increasing the risk of contagion and an unraveling of the plan and the EU itself.

This morning, the ADP reported that private payrolls increased 110,000 for October versus expectations of +100,000. Friday’s government jobs report is expected to be similar with current projections for an increase of 95,000.
The big news today will be the conclusion of the Fed’s two day meeting. The markets will be looking for the Fed’s update of their economic forecast and more importantly, the possibility of QE3. The announcement will be followed by a press conference by Fed Chairman Bernanke.

Bond prices are giving back some of the gains from Tuesday with the yield on the 10 year note pushing back above 2.00% to 2.02%. Mortgage prices are worse between .125% and .255.

Market commentary

Just when it seems safe for financial markets to take their eyes off of Europe for a few minutes…comments late Monday from Greek Prime Minister Papandreou calling for a referendum on the proposed bailout package threw the markets and the other European countries a curve ball. This confluence of events seems to be leading the country into default, which is clearly shaking up the global stock and bond markets.

In the U.S. the October ISM Manufacturing Report showed a slight drop with the index falling from 51.6 to 50.8. However, the underlying reports on employment and new orders suggest the manufacturing sector is still treading water and staying afloat.

The markets paid no attention to the U.S. data and are clearly focused on what is happening in Europe. The yield on the 10 year note has fallen to 1.98% and mortgage prices have improved approximately .50%.