Good news for us in mortgage land today as we see bond prices, including mortgage bonds, improving. Economic data has driven some of the improvement in bonds, as first quarter GDP was reported at 3.2%, lower than expectations. In addition, the consumer sentiment index, a monthly measurement by the University of Michigan, declined from the March reading.
The SEC investigation and now, the criminal probe of Goldman Sachs, as well as the seemingly endless turmoil in the European debt markets remain as the main headlines. It has been reported again today the EU and IMF should reach an accord on a bailout of Greece this weekend, although, we have heard this for the past several weeks.
Mortgage interest rates remain at sub 5% levels and the home buying season is here. The combination of low interest rates and low home prices should motivate folks as the economy slowly recovers.
Have a great weekend!
Friday, April 30, 2010
Thursday, April 29, 2010
Market commentary
The potential for contagion in the Euro zone remains a headline today as the EU continues to develop a resolution to the debt issues of Greece, Portugal, possibly Spain, and a few other countries.
The main event on Wednesday was the fed announcement reassuring the markets that interest rates would remain low for an extended period of time. Bond prices declined on the news, however the U.S. bond market is steady this morning with mortgage prices about .125% better.
The last scheduled item of the day that could be market moving is the $30+ billion of 7 year notes will be auctioned by the U.S. Treasury today, the last leg of this week’s auctions.
The main event on Wednesday was the fed announcement reassuring the markets that interest rates would remain low for an extended period of time. Bond prices declined on the news, however the U.S. bond market is steady this morning with mortgage prices about .125% better.
The last scheduled item of the day that could be market moving is the $30+ billion of 7 year notes will be auctioned by the U.S. Treasury today, the last leg of this week’s auctions.
Wednesday, April 28, 2010
Market commentary
Flight to quality was the theme of Tuesday, as investment downgrades of Greece and Portugal caused investors to dump those bonds in favor of U.S. treasuries. The rally in the U.S. bond market peaked mid-day Tuesday, with treasury and mortgage bond prices ending the day well of the highs. The decline in bond prices is continuing this morning which will translate into worse pricing---.375% to .50% worse than Tuesday’s mid-day improvement.
Two important items remaining on today’s calendar---the U.S. Treasury auctions $42 billion of 5 year notes, and the end of the Fed’s two day meeting, with the policy announcement scheduled for approximately 11:15 AM, PT.
Two important items remaining on today’s calendar---the U.S. Treasury auctions $42 billion of 5 year notes, and the end of the Fed’s two day meeting, with the policy announcement scheduled for approximately 11:15 AM, PT.
Tuesday, April 27, 2010
Market commentary
Wow! Great day for the U.S. treasury market has the Senate hammers Goldman Sachs executives. The Senate panel actually had the audacity to say Goldman inflated the housing bubble. Clearly these senators have forgotten the Federal Reserve sets interest rate policy and Congress themselves forced Fannie Mae and Freddie Mac to make loans to borrowers who were, well, let’s just say they were subprime borrowers.
In addition to this, Standard and Poor’s downgraded Greek debt to junk status, and lowered the rating on debt issued by Portugal. These downgrades have caused a decline across the board in European bonds.
The rally in U.S. bonds will likely help with today’s $44 billion of 2 year treasury notes. These results will be announced at approximately 10:00 AM, PT.
For now, take advantage of the rally in mortgages, which are well over .50% in price better from Monday’s bond market close.
In addition to this, Standard and Poor’s downgraded Greek debt to junk status, and lowered the rating on debt issued by Portugal. These downgrades have caused a decline across the board in European bonds.
The rally in U.S. bonds will likely help with today’s $44 billion of 2 year treasury notes. These results will be announced at approximately 10:00 AM, PT.
For now, take advantage of the rally in mortgages, which are well over .50% in price better from Monday’s bond market close.
Monday, April 26, 2010
Market commentary
This morning’s improvement in bond prices is directly attributable once again to the uncertainty of an EU/IMF bailout of Greece. That potential crisis as well as the much anticipated testimony of Goldman Sachs executives to congress will capture today’s headlines.
Don’t forget the U.S. Treasury is auctioning a record amount of debt this week, beginning today with $11 billion of 5 yr TIPS, followed by $44 billion of 2 yr notes on Tuesday, $42 billion of 5 year notes on Wednesday, and $32 billion of 7 year notes on Thursday.
The Federal Open Market Committee (FOMC) will begin a two day meeting tomorrow to discuss interest rate policy and economic activity. CNBC reported Friday there may be at least six FOMC members interested in selling assets as well as eliminating the “extended period” language, which references how long the Fed will keep the Fed funds rate at .25%. The Fed’s policy statement will be delivered at the close of the meeting on Wednesday, usually at 2:00 PM, ET.
Given the opposing forces pushing on interest rates you can expect increase volatility this week. A resolution to the Greek debt crisis and any significant policy change by the Fed will have a negative affect on interest rates—especially given the new supply coming to market.
Don’t forget the U.S. Treasury is auctioning a record amount of debt this week, beginning today with $11 billion of 5 yr TIPS, followed by $44 billion of 2 yr notes on Tuesday, $42 billion of 5 year notes on Wednesday, and $32 billion of 7 year notes on Thursday.
The Federal Open Market Committee (FOMC) will begin a two day meeting tomorrow to discuss interest rate policy and economic activity. CNBC reported Friday there may be at least six FOMC members interested in selling assets as well as eliminating the “extended period” language, which references how long the Fed will keep the Fed funds rate at .25%. The Fed’s policy statement will be delivered at the close of the meeting on Wednesday, usually at 2:00 PM, ET.
Given the opposing forces pushing on interest rates you can expect increase volatility this week. A resolution to the Greek debt crisis and any significant policy change by the Fed will have a negative affect on interest rates—especially given the new supply coming to market.
Friday, April 23, 2010
Market commentary
The U.S. Treasury’s announcement of the details of next week’s debt auctions brought on a swift reaction in the bond market Thursday afternoon. The auction schedule is comprised of $11 billion of 5 yr TIPS, $44 billion of 2 yr notes, $42 billion of 5 year notes, and $32 billion of 7 year notes, to run on consecutive days beginning Monday, April 26, 2010. The result of the announcement was an immediate decline in treasury and mortgage bond prices, causing many lenders to worsen prices mid-day. The decline in prices continues this morning, with mortgage bonds worse by another .25%.
Next week the Federal Open Market Committee (FOMC) will meet for two days to discuss interest rate policy and economic activity. CNBC reported this morning there may be at least six FOMC members interested in selling assets as well as eliminating the “extended period” language, which references how long the Fed will keep interest rates---the Fed funds rate---at .25%.
Neither of the above topics bodes well for lower interest rates---next week could be quite volatile.
Next week the Federal Open Market Committee (FOMC) will meet for two days to discuss interest rate policy and economic activity. CNBC reported this morning there may be at least six FOMC members interested in selling assets as well as eliminating the “extended period” language, which references how long the Fed will keep interest rates---the Fed funds rate---at .25%.
Neither of the above topics bodes well for lower interest rates---next week could be quite volatile.
Thursday, April 22, 2010
Market commentary
Two key pieces of key data released this morning have had little effect on the markets. Existing home sales rose 6.8% in March as buyers rush to take advantage of the home buyer tax credit that expires at the end of April. And, the Producer Price Index rose 0.7% on higher energy and food prices, although excluding these items the index was higher by only 0.1%.
The key factor affecting bond and stock markets today is the deepening financial crisis in Greece, which if not resolved, will have significant impact on European financial institutions. U.S. stock markets are declining in tandem with the European markets; however, this has been somewhat positive for U.S. treasuries. Mortgage bonds are slightly improved from Wednesday’s market close, but by only a few basis points.
Next week the U.S. Treasury will auction a record amount of 2yr, 5yr and 7yr notes, and the Federal Reserve begins a two day policy meeting on Tuesday, with a rate decision and policy statement coming Wednesday afternoon. The looming crisis in Greece, the huge supply of new U.S. debt coming to market, and some uncertainty surrounding the Fed policy statement could cause significant volatility in the markets, and it is difficult to determine if that will be positive or negative for mortgage prices.
The key factor affecting bond and stock markets today is the deepening financial crisis in Greece, which if not resolved, will have significant impact on European financial institutions. U.S. stock markets are declining in tandem with the European markets; however, this has been somewhat positive for U.S. treasuries. Mortgage bonds are slightly improved from Wednesday’s market close, but by only a few basis points.
Next week the U.S. Treasury will auction a record amount of 2yr, 5yr and 7yr notes, and the Federal Reserve begins a two day policy meeting on Tuesday, with a rate decision and policy statement coming Wednesday afternoon. The looming crisis in Greece, the huge supply of new U.S. debt coming to market, and some uncertainty surrounding the Fed policy statement could cause significant volatility in the markets, and it is difficult to determine if that will be positive or negative for mortgage prices.
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