Stocks put in a decent day Thursday, as did U.S. Treasuries. The yield on the 10 year note fell 2 basis points to 1.90%. So far this morning, the start of the last trading day of 2011, stocks and bonds are both flat, and remember, the bond market will close early today. The HSOA lock desk will close at 12 noon, Pacific Time.
We at Home Savings wish you, our partners, a Happy and Prosperous New Year!
Friday, December 30, 2011
Thursday, December 29, 2011
Market commentary
Concern about the solvency of several European banks and the continued high yields many European countries have to pay to refinance or issue new debt is again taking its toll on the markets. This was the driver pushing U.S. Treasury yields lower on Wednesday.
Today brings the last real economic data for the year, beginning with initial jobless claims for the week ending December 24 rising from 366,000 to 381,000. While the figures reflect a 15,000 jump in initial claims, 381,000 is still well below 400,000 and continues to point to an improving labor market.
In a sign American manufacturing is weathering the slowdown in Europe; the Institute for Supply Management-Chicago Inc. said today its business barometer decreased slightly to 62.5 from 62.6 in November. Most analysts had expected a more pronounced decline, and recall readings above 50 signal growth.
And finally, the number of Americans signing contracts to buy previously owned homes rose 7.3% in November, more than forecast as falling prices and low borrowing costs boosted demand. I think most of us agree now is a great time to buy a home, assuming one is secure in their job and source of income, and can produce the documentation to qualify for a loan!
Pricing for mortgages are flat from the close on Wednesday.
Today brings the last real economic data for the year, beginning with initial jobless claims for the week ending December 24 rising from 366,000 to 381,000. While the figures reflect a 15,000 jump in initial claims, 381,000 is still well below 400,000 and continues to point to an improving labor market.
In a sign American manufacturing is weathering the slowdown in Europe; the Institute for Supply Management-Chicago Inc. said today its business barometer decreased slightly to 62.5 from 62.6 in November. Most analysts had expected a more pronounced decline, and recall readings above 50 signal growth.
And finally, the number of Americans signing contracts to buy previously owned homes rose 7.3% in November, more than forecast as falling prices and low borrowing costs boosted demand. I think most of us agree now is a great time to buy a home, assuming one is secure in their job and source of income, and can produce the documentation to qualify for a loan!
Pricing for mortgages are flat from the close on Wednesday.
Wednesday, December 28, 2011
Market commentary
The week between Christmas and New Years Day is always quiet and with no economic data today, one would expect quiet trading. However, on relatively light volume we see U.S. Treasuries in rally mode pushing the yield on the 10 year note from 2.005 down to 1.935%. The good news for mortgage borrowers is that pricing has improved by .375% from Tuesday.
Remember, this is a holiday shortened week for the bond market with an early close on Friday.
Remember, this is a holiday shortened week for the bond market with an early close on Friday.
Tuesday, December 27, 2011
Market commentary
Housing prices fell in October according to the S&P CaseShiller report released this morning, bringing the year-over-year price decline to 3.40%. The only metropolitan area reporting an increase was Phoenix, with the biggest drops coming in Atlanta, Detroit, and Minneapolis.
The report noted that foreclosures had a significant impact on prices and that the supply of those homes remains pretty high in parts of the country. Clearly the sooner foreclosure inventories are absorbed; it will eventually lay a foundation for a more healthy housing market. One wonders if regulators and politicians realize this, as servicers struggle to clear the backlog of delinquent mortgages and properties in foreclosure.
On a more positive note, according to the Conference Board its index of consumer confidence increased to 64.5, the highest reading since April of this year. The boost in confidence is attributed to the positive trend reported in the unemployment numbers for the past two months.
After this morning’s data the stock and bond markets are trading relatively unchanged from the close on Friday. Mortgage prices, however, are worse by .25%.
The report noted that foreclosures had a significant impact on prices and that the supply of those homes remains pretty high in parts of the country. Clearly the sooner foreclosure inventories are absorbed; it will eventually lay a foundation for a more healthy housing market. One wonders if regulators and politicians realize this, as servicers struggle to clear the backlog of delinquent mortgages and properties in foreclosure.
On a more positive note, according to the Conference Board its index of consumer confidence increased to 64.5, the highest reading since April of this year. The boost in confidence is attributed to the positive trend reported in the unemployment numbers for the past two months.
After this morning’s data the stock and bond markets are trading relatively unchanged from the close on Friday. Mortgage prices, however, are worse by .25%.
Friday, December 23, 2011
Market commentary
Durable goods orders for the month of November rose 3.8%, well above the expected increase of 2.2%. However, most of the increase came from aircraft orders, so ex-transportation, orders for rose just 0.3%.
Personal income and spending both disappointed for the month of November. Both measures rose just 0.1%, which means when adjusted for inflation, income is declining. This highlights the inadequacy of the unemployment rate as an indicator of actual spending and is one of the reasons economic growth will be muted in 2012.
On a positive note, new home sales increased 1.6% in November to a seven month high. Bond prices had trailed off slightly prior to the housing data, but the unexpected jump pushed prices sharply lower. The yield on the 10 year note has risen above 2.00% to yield 2.03%, while mortgage prices are worse by .375%.
The bond market has an early close today and the HSOA lock desk will be closing at 12 noon, Pacific Time.
Personal income and spending both disappointed for the month of November. Both measures rose just 0.1%, which means when adjusted for inflation, income is declining. This highlights the inadequacy of the unemployment rate as an indicator of actual spending and is one of the reasons economic growth will be muted in 2012.
On a positive note, new home sales increased 1.6% in November to a seven month high. Bond prices had trailed off slightly prior to the housing data, but the unexpected jump pushed prices sharply lower. The yield on the 10 year note has risen above 2.00% to yield 2.03%, while mortgage prices are worse by .375%.
The bond market has an early close today and the HSOA lock desk will be closing at 12 noon, Pacific Time.
Thursday, December 22, 2011
Market commentary
Positive economic data across the board this morning began with initial jobless claims for the week ending December 17, which fell from 368,000 to 364,000. This is the lowest level for initial jobless claims since April 2008.
The Thomson Reuters/University of Michigan index of consumer confidence rose to 69.9 from 64.1 at the end of November. As a reference point, this index averaged 89 in the five years leading up to the recession that began in December 2007.
And finally, the Conference Board reported its index of Leading Indicators (LEI) rose 0.5% after a 0.9% October increase. The LEI index is an indication of how well the U.S. economy will perform over the next 3 to 6 months.
On this data U.S. stocks are trading slightly higher as are Treasuries. U.S. Treasuries had tough day on Wednesday, and are struggling to maintain this morning’s gains. Mortgage pricing is better by .125%.
The Thomson Reuters/University of Michigan index of consumer confidence rose to 69.9 from 64.1 at the end of November. As a reference point, this index averaged 89 in the five years leading up to the recession that began in December 2007.
And finally, the Conference Board reported its index of Leading Indicators (LEI) rose 0.5% after a 0.9% October increase. The LEI index is an indication of how well the U.S. economy will perform over the next 3 to 6 months.
On this data U.S. stocks are trading slightly higher as are Treasuries. U.S. Treasuries had tough day on Wednesday, and are struggling to maintain this morning’s gains. Mortgage pricing is better by .125%.
Wednesday, December 21, 2011
Market commentary
U.S. stocks had a stellar day Tuesday to the detriment of the bond market. Yields rose across the board with the 10 year rising 12 basis points to close at 1.92%---it is trading at 1.94% this morning.
Another report showing improvement in the housing sector came from the National Association of Realtors telling us existing home sales rose 4.0% in October. This on the heels of Tuesday’s increase in housing starts and building permits.
Europe is back in the news as the ECB offered banks 490 billion Euros in loans in continued efforts to provide liquidity and ease the fears of a credit crunch. This helped provide a short-lived stimulus to the markets; however, as of this writing U.S. stocks are in the process of giving back some of Tuesday’s gains while Treasuries have risen slightly. Mortgage prices are worse by .125%.
Another report showing improvement in the housing sector came from the National Association of Realtors telling us existing home sales rose 4.0% in October. This on the heels of Tuesday’s increase in housing starts and building permits.
Europe is back in the news as the ECB offered banks 490 billion Euros in loans in continued efforts to provide liquidity and ease the fears of a credit crunch. This helped provide a short-lived stimulus to the markets; however, as of this writing U.S. stocks are in the process of giving back some of Tuesday’s gains while Treasuries have risen slightly. Mortgage prices are worse by .125%.
Tuesday, December 20, 2011
Market commentary
Strong data today from the housing sector has U.S. stocks rocketing higher this morning. Housing starts jumped to 685,000 and building permits were up 5.7%, both exceeding forecasts. Multi family units were the majority of the improvement, which in time should ease the pressure on rents.
Dysfunction is again making headlines in Washington D.C. as lawmakers haggle over the extension of the payroll tax cut time (whether it should be extended temporarily for 2 months or for 18 months) and other issues. Again, a lack of leadership which could bring the government to a halt by the end of the year.
After a nice rally Monday bond prices are sharply lower pushing yields higher. After closing at 1.81% the 10 year note is trading at 1.90% this morning. Still on tap for today is a $24 billion auction of 7 year notes by the U.S. Treasury.
Dysfunction is again making headlines in Washington D.C. as lawmakers haggle over the extension of the payroll tax cut time (whether it should be extended temporarily for 2 months or for 18 months) and other issues. Again, a lack of leadership which could bring the government to a halt by the end of the year.
After a nice rally Monday bond prices are sharply lower pushing yields higher. After closing at 1.81% the 10 year note is trading at 1.90% this morning. Still on tap for today is a $24 billion auction of 7 year notes by the U.S. Treasury.
Monday, December 19, 2011
Maarket commentary
Monday morning and no economic data releases scheduled for today. The Asian stock markets were nervous overnight on the news of North Korea’s Kim Jong Il, and the markets are also digesting the credit downgrades of several European countries. U.S. Treasury prices are flat to Friday’s close as are mortgages. The yield on the 10 year note is trading at 1.85%, the previous low yield in the midst of the Euro crisis.
Friday, December 16, 2011
Market commentary
In today’s only economic release, consumer prices for the month of November were flat month over month, bringing the headline year-over-year rate of inflation down to 3.4%. At the core level, excluding food and energy, prices increased slightly more than expected, rising 0.2%. As the government measures it, inflation is slightly higher than policy makers prefer, however, the Fed still believes at current levels of inflation they will have the tools to continue economic stimulus.
There is still no solution in sight to the European financial crisis, and therefore, U.S. bond prices remain strong with the yield on the 10 year trading at 1.88%. Mortgage spreads have widened this morning so pricing remains flat from Thursday.
There is still no solution in sight to the European financial crisis, and therefore, U.S. bond prices remain strong with the yield on the 10 year trading at 1.88%. Mortgage spreads have widened this morning so pricing remains flat from Thursday.
Thursday, December 15, 2011
Market commentary
A full calendar on the economic front today begins with the Producer Price Index. The PPI came in slightly higher than expected, rising 0.3% month over month in November, and was driven mostly by higher food costs. The core PPI (excluding food and energy) rose only 0.1%.
The New York Fed manufacturing index rose much more than expected from 0.61 to 9.53 with the underlying employment and new orders indices both rose from negative to positive range.
Finally, initial jobless claims for the week ending December 10 dropped dramatically from 385,000 to 366,000, the lowest reading since 2008.
Bond prices have been on fire this week on more concern about Europe. The 10 year Treasury yield dropped to 1.86% overnight, however, after the morning’s positive economic releases, has risen back up to 1.94%. Mortgages are flat to a few basis points worse in price from Wednesday.
The New York Fed manufacturing index rose much more than expected from 0.61 to 9.53 with the underlying employment and new orders indices both rose from negative to positive range.
Finally, initial jobless claims for the week ending December 10 dropped dramatically from 385,000 to 366,000, the lowest reading since 2008.
Bond prices have been on fire this week on more concern about Europe. The 10 year Treasury yield dropped to 1.86% overnight, however, after the morning’s positive economic releases, has risen back up to 1.94%. Mortgages are flat to a few basis points worse in price from Wednesday.
Wednesday, December 14, 2011
Market commentary
Treasuries rallied Tuesday as the markets expressed displeasure with the results of EU financial summit. As investors moved to the safety of U.S. Treasuries there was strong demand for the 10 year note auction, pushing the yield down to 1.97%. In addition to the disappointment in the EU summit, the Fed announced it will continue to be in an accommodative position, likely keeping rates at near zero through mid-2013. Stocks turned negative after the statement was released as a handful of analysts were expecting the Fed to hint at a new round of quantitative easing.
This morning U.S. stocks are again trading in negative territory and Treasury prices are moving higher. The yield on the 10 year note has fallen to 1.925% and mortgage prices are better by .25%.
This morning U.S. stocks are again trading in negative territory and Treasury prices are moving higher. The yield on the 10 year note has fallen to 1.925% and mortgage prices are better by .25%.
Tuesday, December 13, 2011
Market commentary
The markets gave their opinion on the “grand bargain” from last Friday’s European Union Summit yesterday with stocks dropping and bond prices rising. All of the major European stock markets closed broadly lower, as did the U.S. markets.
This morning we saw a somewhat disappointing report on retail sales for the month of November, which were up 0.2%, while expectations were for an increase 0.6%. Inside the report we saw electronics sales were up 2.1%, but building material sales fell 0.3% and food/beverage sales were down 0.2%. It appears that consumers have shifted to holiday purchases and have shifted away from other categories of spending.
Today is day two of this week’s Treasury auctions with an offering of $21 billion of 10 year notes. Given the turmoil in Europe expectations are for demand to be fairly strong. Wednesday the Treasury will auction $13 billion of 30 year bonds.
The Fed’s final meeting of 2011 is today with an official Statement being released at 11:15 p.m. PT. It is expected the Fed will not change their policy positions at this meeting, with the tone of the economic assessment to be slightly improved.
Mortgages are following Treasuries lower today with pricing worse by .25% to .375%.
This morning we saw a somewhat disappointing report on retail sales for the month of November, which were up 0.2%, while expectations were for an increase 0.6%. Inside the report we saw electronics sales were up 2.1%, but building material sales fell 0.3% and food/beverage sales were down 0.2%. It appears that consumers have shifted to holiday purchases and have shifted away from other categories of spending.
Today is day two of this week’s Treasury auctions with an offering of $21 billion of 10 year notes. Given the turmoil in Europe expectations are for demand to be fairly strong. Wednesday the Treasury will auction $13 billion of 30 year bonds.
The Fed’s final meeting of 2011 is today with an official Statement being released at 11:15 p.m. PT. It is expected the Fed will not change their policy positions at this meeting, with the tone of the economic assessment to be slightly improved.
Mortgages are following Treasuries lower today with pricing worse by .25% to .375%.
Monday, December 12, 2011
Market commentary
U.S. stocks are sharply lower this morning on disappointment from Friday’s European Financial Summit. While the summit produced some positive headlines most of the difficult problems remain unaddressed, causing Moody’s to place all EU members on review for possible downgrade. U.S. Treasuries have won back most of Friday’s losses as investors again seek the perceived safety of U.S. debt. The yield on the 10 year note has fallen from 2.06% to 1.995%.
While there is no economic data on the calendar for today, this week is full with releases on inflation, industrial production, and manufacturing activity. The main event will be tomorrow’s Fed meeting with the accompanying rate decision and general statement on the economy.
In addition to the full economic calendar the U.S. Treasury will auction 3 year notes today, 10 year notes on Tuesday and 30 year bonds on Wednesday.
While there is no economic data on the calendar for today, this week is full with releases on inflation, industrial production, and manufacturing activity. The main event will be tomorrow’s Fed meeting with the accompanying rate decision and general statement on the economy.
In addition to the full economic calendar the U.S. Treasury will auction 3 year notes today, 10 year notes on Tuesday and 30 year bonds on Wednesday.
Thursday, December 8, 2011
The Labor Department reported jobless claims dropped by 23,000 to 381,000 in the week ended Dec. 3. This is the fewest since February, and it is too early to tell if this is a trend or the result of temporary hiring for the holiday season.
The European Central Bank lowered its target lending rate to 1% this morning and ECB president Mario Draghi said the ECB was pursuing more non-standard measures to fight the crisis, including unlimited three-year loans to banks and looser collateral criteria. The markets, however, were disappointed the ECB did not comment further on the possibility of buying debt. This keeps the EU Summit scheduled for Friday front and center on the minds of the global financial community.
Stock and bonds in the U.S. are relatively flat from the market close on Wednesday, as are prices on mortgages.
The European Central Bank lowered its target lending rate to 1% this morning and ECB president Mario Draghi said the ECB was pursuing more non-standard measures to fight the crisis, including unlimited three-year loans to banks and looser collateral criteria. The markets, however, were disappointed the ECB did not comment further on the possibility of buying debt. This keeps the EU Summit scheduled for Friday front and center on the minds of the global financial community.
Stock and bonds in the U.S. are relatively flat from the market close on Wednesday, as are prices on mortgages.
Wednesday, December 7, 2011
Market commentary
The economic calendar is light today with the only data coming from the mortgage sector. Mortgage applications for the week ending December 2 bounced back from the previous week’s decline, rising 12.8%. This was driven by a 15% increase in refinance applications and an 8% jump in purchase apps.
It is not an exaggeration to state that the entire global financial community is watching and waiting for the results of the European financial summit scheduled for Friday. U.S. Treasury Secretary Geithner is meeting with leaders this week to help facilitate negotiations and solutions. Any reasonable solution/agreement will certainly cause a selloff in U.S. Treasuries (meaning interest rates will move higher) as investors begin allocating resources to more risky investments. Assuming said agreement is reached I suggest locking prior to Friday.
It is not an exaggeration to state that the entire global financial community is watching and waiting for the results of the European financial summit scheduled for Friday. U.S. Treasury Secretary Geithner is meeting with leaders this week to help facilitate negotiations and solutions. Any reasonable solution/agreement will certainly cause a selloff in U.S. Treasuries (meaning interest rates will move higher) as investors begin allocating resources to more risky investments. Assuming said agreement is reached I suggest locking prior to Friday.
Tuesday, December 6, 2011
Market commentary
The fickleness of the markets was evident again yesterday as we saw stock rally early in the day with Treasuries in sell mode. Mid-day S&P announced they were putting 15 European countries on negative credit watch, which caused an immediate deterioration in stocks and a move higher in bond prices. After reaching a yield of 2.11% Monday, the 10 year note is trading at 2.06% this morning.
There is no U.S. economic data this morning and mortgage prices have improved by approximately .125%.
There is no U.S. economic data this morning and mortgage prices have improved by approximately .125%.
Monday, December 5, 2011
Market commentary
This week will be light on economic data but big on euro drama. The main event of the week will be the EU summit beginning on Friday. The expectation is that a cohesive and substantive agreement will be unveiled at this time, although most have lost confidence in the EU leaders’ willingness to deliver on these big agreements. Anything short of this will extend the global market turmoil.
This morning we saw the November ISM non-manufacturing index, which dropped from 52.9 to 52.0. This is weaker than was expected, although it still reflects a growing economy, but a very slow growth economy. The most concerning portion of this report was a substantial, and unexpected, drop in the employment sub-index. The employment measure dropped from 53.3 to 48.9, the second lowest reading since the economy was still emerging from recession back in the Spring of 2010. This is a big divergence from November’s nonfarm payroll service-sector figures.
The overall positive ISM report and hopefulness of this Friday’s EU meeting has stocks in rally mode again. As one would expect, the rally in stocks is pushing bond prices lower. Mortgage pricing is worse by .125% to .25%.
This morning we saw the November ISM non-manufacturing index, which dropped from 52.9 to 52.0. This is weaker than was expected, although it still reflects a growing economy, but a very slow growth economy. The most concerning portion of this report was a substantial, and unexpected, drop in the employment sub-index. The employment measure dropped from 53.3 to 48.9, the second lowest reading since the economy was still emerging from recession back in the Spring of 2010. This is a big divergence from November’s nonfarm payroll service-sector figures.
The overall positive ISM report and hopefulness of this Friday’s EU meeting has stocks in rally mode again. As one would expect, the rally in stocks is pushing bond prices lower. Mortgage pricing is worse by .125% to .25%.
Friday, December 2, 2011
Market commentary
This morning it is all about the November labor reports. Total nonfarm payrolls rose 120,000, slightly below expectations of +125,000 but well below the rumored 180,000 to 200,000. There were also 52,000 jobs added to the September report and 20,000 added to the October report. The public sector lost 20,000 while the private sector gained 140,000. Average weekly hours worked were flat at 34.3 but on the negative side, average hourly earnings fell from $23.20 to $23.18.
In the household report, the unemployment rate fell from 9.0% to 8.6%. Before getting too excited about the drop in the unemployment rate, the main reason this percentage fell is due to 315,000 folks dropping out of the labor force entirely.
Treasuries initially sold off on the seemingly strong jobs data, however, as the markets digested the details bond prices reversed and are now higher on the day. Mortgage pricing is better by approximately .125%.
In the household report, the unemployment rate fell from 9.0% to 8.6%. Before getting too excited about the drop in the unemployment rate, the main reason this percentage fell is due to 315,000 folks dropping out of the labor force entirely.
Treasuries initially sold off on the seemingly strong jobs data, however, as the markets digested the details bond prices reversed and are now higher on the day. Mortgage pricing is better by approximately .125%.
Thursday, December 1, 2011
Market commentary
Wednesday the Dow rose 490 points, blowing through 12,000, on a swing in market sentiment resulting from the coordinated efforts of major central banks around the world, and positive economic data in the U.S.
This morning initial jobless claims jumped back above 400,000 to 402,000 for the week ending November 26. This is the first time in five weeks that the measure has been above 400,000.
With some positive news, the November ISM Manufacturing Index rose more than expected 52.7 from 50.8. Expectations were for a small increase to 51.8. Overall this was a solid national report confirming that orders are still outpacing production.
Keeping with this week’s pattern, Treasury and mortgage bonds are opening weaker, with mortgage prices worse by .25%.
This morning initial jobless claims jumped back above 400,000 to 402,000 for the week ending November 26. This is the first time in five weeks that the measure has been above 400,000.
With some positive news, the November ISM Manufacturing Index rose more than expected 52.7 from 50.8. Expectations were for a small increase to 51.8. Overall this was a solid national report confirming that orders are still outpacing production.
Keeping with this week’s pattern, Treasury and mortgage bonds are opening weaker, with mortgage prices worse by .25%.
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