Market commentary

Mortgage applications for the week ending January 6 rose 4.5%, led by an 8.1% increase in purchase applications. Looking at the four-week moving average, purchase applications are marginally higher than their lowest point while refinance applications continue to trend higher.

At 10:00 a.m. PT, the Fed will release their Beige Book report, which is the Fed’s data and analysis of the U.S. economy and gives insight into their decision making process. Last but not least, the Treasury will be selling $21 billion in 10-year notes. Tuesday’s 3-year note auction went very well as demand from dealers and indirect bidders was strong.

This morning on CNBC Richmond Fed Bank President Lacker appeared stating the economy continues to face “serious headwinds” and he see slow progress on bringing down the unemployment rate.

Bond and mortgage prices are flat from the close on Tuesday, although MBS pricing rolled from January settlements to February.

Market commentary

Minimal economic data is scheduled for today and the remainder of the week will be light as well, particularly in comparison to last week. The main events on which the markets will focus are the release of the Fed’s Beige Book on Wednesday and Retail Sales on Thursday. We will also have numerous Fed speakers and increasing speculation the Fed my introduce QE3.

Of course no week would be complete without something of note from Europe, and this week it is today’s meeting between German Chancellor Merkel and French President Sarkozy. They are meeting to discuss the proposed treaty changes to tighten the fiscal union in the EU. Given the results of past meetings expectations for anything significant from this discussion are low.

Earnings season kicks off in the U.S. this afternoon with the report from Alco. Currently stocks are trading slightly lower and bond prices are trending higher. Mortgage prices have improved by .25%.

Market commentary

The headline numbers for jobs report was much stronger than expected with nonfarm payrolls for the month of December growing 200,000. The previous two months were revised lower by only 3,000. Private payrolls grew a healthy 212,000 in December while the previous two months were revised lower by 20,000.

In the Household survey, the unemployment rate fell from 8.66% to 8.51% as the number of employed persons rose 176,000, and the number of persons reporting as "not employed" dropped 226,000.

Overall this was a positive report reflecting job growth moving in the right direction. It seems the sock and bond markets were disappointed in the results, however, as bond prices are slightly higher, meaning interest rates have fallen a few basis points, while stocks are trading lower on the day. Mortgage prices are .125% to .25% better than the close on Thursday.

Market commentary

This morning is about the job market and of course, Europe. Initial jobless claims for the week ending December 31 fell from 387,000 to 372,000. After being stuck above 400k for the better part of the year, initial claims have now come in below 400,000 for eight of the past nine releases. This does show the labor market is moving in the right direction, albeit at a snail’s pace.

The shocker came from this morning’s ADP report on private payroll growth. The report was huge, estimating that 325,000 private payrolls were created in December. The largest increase was the 273,000 of service sector jobs. We will wait to see if this figure is validated by an equally positive nonfarm payroll report tomorrow, with current estimates at 150,000 new jobs. If the data is on the high side, as was ADP’s, this will be a game changer, and we could see a significant selloff in bonds. Stay tuned.

Despite the positive jobs data received this morning, U.S. stock markets are focused on escalating financial woes in the European banking sector. So we have stocks lower on the day and a slight improvement in bonds. Prices for mortgages are flat to where we ended Wednesday.

Market commentary

As one would expect, mortgage applications for the week ending December 30 dropped 4.1%, primarily from a decrease in purchase activity. Even with the downtick in interest rates last week, the holiday season and cold weather took the focus off of buying a home.

In a follow-up to Tuesday’s stronger than expected ISM manufacturing report, the Commerce Department reported this morning that factory orders in November rose 1.8%, led by demand for aircraft and autos.

This morning’s economic data is being overshadowed again by the financial woes in Europe and higher oil prices driven by threats from Iran to block oil shipments from the Middle East as it faces additional sanctions. U.S. stocks are slightly lower and Treasury yields slightly higher, with the yield on the 10 year note back to 1.97%. Mortgage prices, however, have improved by approximately .25%

Market commentary

The first week of 2012 is a busy one for economic data, so let’s get right too it.
Construction Spending surged in November by 1.2%, however, October was drastically revised down to -0.2% from +0.8%. so no real gains here.

The Institute for Supply Management’s manufacturing index rose to 53.9 from 52.7, a stronger number than what was expected. The employment component rose to 55.1 from 51.8 while new orders rose to 56.6 from 56.7. These are two “forward-looking” components that are reflecting a continuation of moderate growth in manufacturing.

The last trading day of 2011 saw “risk-off” trade into U.S. Treasuries on light, holiday volume. Today that trade is reversed with stocks rocketing higher and bonds taking it on the chin. Given the so-so economic data the market reaction seems overdone. Mortgage prices are worse by .375%.

Market commentary

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!