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%.
Wednesday, November 30, 2011
Tuesday, November 29, 2011
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.
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.
Monday, November 28, 2011
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%.
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%.
Friday, November 25, 2011
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.
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.
Wednesday, November 23, 2011
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.
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.
Tuesday, November 22, 2011
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.
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.
Monday, November 21, 2011
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.
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.
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