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!

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.

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.

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%.

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.

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%.

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%.

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.

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.

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.

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.

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%.

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%.

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.