Fri, 30 Dec 2011 12:23:53 -0800WeeblyWed, 14 Dec 2011 11:43:31 -0800http://www.myvarefinance.net/1/post/2011/12/mortgage-rate-news-for-va-home-loans-for-12142011.htmlTreasuries and mortgages were unchanged in early activity this morning with US stock indexes weaker. At 9:30 the 10 yr traded +4/32 at 1.95% and mortgage prices +3/32 (.09 bp). The debt crisis in Europe is not getting better, its actually worsening after the EU summit fumbled again with nothing but way out plans. Moody’s said on Monday that last week’s euro crisis summit didn’t provide new measures which would lead to a resolution of Europe’s debt problems, and it would review European Union sovereign ratings in the first quarter of 2012. S&P said before the meeting that it may cut the credit rankings of euro members. Italy sold 5 yr notes at the highest rate in 14 years, more evidence the debt mess is nowhere close to any resolution. In the UK additional evidence Europe is moving back into recession; the unemployment rate increased to 8.3% frm 7.9% in the latest quarter. Unemployment among 16-24-year-olds climbed 54,000 to 1.03 million, or 22%, the highest since comparable records began in 1992.

 

Yesterday's FOMC meeting disappointed investors with the Fed not willing to add more easing. Stocks in Europe weaker and in the US opening soft at 9:30. In the FOMC statement  the Fed said that there is an “apparent slowing in global growth” and that “strains in global financial markets continue to pose significant downside risks to the economic outlook.” While admitting the obvious, the Fed also said the US recovery is moving slowly but in a positive direction.

 

Nov export prices were up 0.1% while import prices increased 0.7%; no reaction in the markets to the report. At 1:00 Treasury will finish this week's auctions with $13B of 30 yr bonds, it will likely be very well bid as was yesterday's strong 10 yr auction. The 10 yr trading now below 2.00%; can it be sustained. Since the beginning of Nov every move below 2.00% has been short-lived; after the blown EU summit last week there is a renewed run for safety into US treasuries. While history is important, this time may be different in that Europe has clearly demonstrated that there is no immediate way to deal with the possibility of defaults in Italy and Spain. While unlikely defaults will actually occur, investors are not going to accept that as a given.

 

The weekly MBA mortgage applications weaker on purchases but better on re-finances. The volume of purchase applications swung lower in the December 9 week, down 8.2% vs an 8.3% rise in the prior week. Swings in weekly data can be severe but the overall trend for purchase applications has been positive. The volume of applications for refinancing has also been positive, up 9.3% on top of the prior week's 15.3% gain. Low mortgage rates are behind the demand with the 30-year averaging 4.12%, down six basis points for the lowest rate of the year.

 

At 1:00 Treasury auction $13B of 30 yr bonds, look for another strong auction with good demand.

 

So far this morning not much movement in the bond and mortgage markets; the stock market opened weaker but also has seen little movement. Technically the bond market remains bullish, that the 10 yr is under 2.00% is nice but can it hold? In past moves below 2.00% buying dried up and the note moved quickly back above it. It depends on US equity markets and the turmoil in Europe. After last week's disappointment over the EU summit meeting that produced nothing there is another round of safe haven buying; based on history the 10 won't hold below 2.00% for long. Take advantage of the current rates.

]]>Fri, 02 Dec 2011 11:59:25 -0800http://www.myvarefinance.net/1/post/2011/12/mortgage-rate-news-for-va-home-loans-12-02-11.htmlNov employment at 8:30 was generally in line with estimates. Today's news will feature the unemployment rte dropped to 8.6% frm 9.0%; non-farm jobs increased 120K while private non-farm jobs increased 140K, average hourly earnings +0.1%. The unemployment rate is the lowest since March 2009, but there is a hitch to the headline; the labor participation rate declined to 64.0% frm 64.2% implying that more potential workers have dropped out from looking for a job. The decrease in the jobless rate reflected a 278,000 gain in employment at the same time 315,000 Americans left the labor force. Revisions to Sept and Oct added 72K more jobs than originally reported. The U-6 underemployment rate declined  from 16.2% to 15.6%, it includes part- time workers who’d prefer a full-time position and people who want work but have given up looking.

 

That non-farm jobs increased 120K reflects many jobs are temporary hirings for the holidays, the reaction in the bond and mortgage markets wasn't much change from yesterday's closes although slightly lower as traders discount the decline in the unemployment rate and job growth was fractionally lower than general estimates. The stock indexes were trading better prior to 8:30 on the back of continued improvement in Europe's equity markets; there was little change in the indexes following the report.

 

In Europe there is some increased optimism that the debt crisis may be helped by the ECB funneling funds to the IMF then the IMF leverages the funds and provides funds to Italy and Spain taking them back from the abyss. Next Friday Europe's leaders will meet in a summit in Brussels, the meeting must end with something more than what the world has had to swallow for two years----a lot of talk but little action. Given the improvement in Europe's equity markets this week and the best week for Italy's and Spain's 2 yr note yields this week, optimism is increasing.

 

At 9:30 the DJIA opened 90 points better, the 10 yr note at 9:30 -9/32 at 2.12% a near term support level and mortgage prices off just 4/32 (.12 bp).

 

So far today the employment report has had little impact on the US financial markets. The bellwether 10 yr note has near term support at 2.12% that has been tested a few times and held, at 10:00 it traded at 2.11% after ending yesterday at 2.10% after moving to 2.14% intraday yesterday. Mortgages have been held captive in a 50 basis point price range for three weeks now while the 10 yr volatility swings its yield from 2.12% to 1.86% on every sentence out of the mouths of Europe's leaders.

 

We haven't changed our outlook that the US interest rate markets are unlikely to decline much from the present levels and have more potential to rise that decline. While Europe's mess will take years to resolve the markets now are believing that a plan will surface soon that will remove much of concern that Europe's banks would fail. Over the last couple of weeks the safety moves into US treasuries has ebbed substantially. We can argue that the US economy won't  improve much based on the housing market and the high level of unemployment, however trading in the equity markets implies investors are increasingly more optimistic about the future. Either way one sees it the reality is that no one is sure, that has lead to huge wings in the indexes and has contributed to keeping interest rates from falling further.

]]>Thu, 10 Nov 2011 07:27:50 -0800http://www.myvarefinance.net/1/post/2011/11/news-affected-va-mortgage-rates-for-nov-11-2011.htmlEurope continues to control US markets; yesterday there was a passing thought that Italy's debt problems would deal a serious blow to the country with its interest rates at record highs since the EU began. Yesterday another passing thought that the EU would eventually be restructured based on comments from French Pres Sarkozy that a two tier EU may be the best thing eventually. Yesterday the stock market dropped 389 points, the 10 yr note yield fell 12 basis points to close under 2.00% at 1.96%. That was yesterday; like it has been the last few weeks, one day its doom and gloom, the next not as bad. No one actually knows what will happen tomorrow; therein lies the difficulty in attempting to assess the situation on a day to day basis. 

Yesterday there were comments from supposed knowledgeable people that the ECB was precluded from buying bonds from individual EU countries; obviously that isn't the case. We reported it as fact and one reason that the debt problems in the region were unlikely to be resolved for years and that there would be defaults in a number of countries. Overnight reports from the wires saying the ECB was in buying Italian bonds, so far no confirmation from the central bank.  Italy did sell bills today, the demand was strong and for the moment markets are less concerned that Italy can not fund itself. The country sold 5 billion euros ($6.8B) of one-year bills at an average yield of 6.087% after yields yesterday on 10-year notes surged past the 7 percent level.

In Greece there is apparently a new leader that will form an interim government;  former vice- president of the European Central Bank Lucas Papademos will head a national unity government for Greece, according to the country’s presidency.

At 8:30 this morning weekly jobless claims along with the every other day optimism about Europe driving stock indexes higher and interest rate prices lower. Weekly claims fell 10K to 390K the lowest claims in 7 months, expectations were fro unchanged at 400K; continuing claims also fell, from 3.707 mil to 3.615 mil.

Sept US trade balance declined to -$43.11B, if here is any consensus in the markets these days the forecast was for the balance to -$46.3B. Oct import prices fell 0.6% against estimates of -0.2%; export prices fell 2.1%.

At 1:00 this afternoon Treasury will complete borrowing $72B this week with $16B of 30 yr bonds. The 10 yr auction yesterday was weaker than traders were expecting, sending rates higher on the reaction before regaining strength into the close with the 10 at 1.96%. This morning the 10 yr is hovering at 2.05%. 
 
At 9:30 the DJIA opened +126, NASDAQ +30, and the S&P +13; the 10 yr note 2.05% +9 bp and mortgage prices down 8/32 (.25 bp). 

 Attempting to trade on fundamentals these days is almost impossible with the constant changes happening in Europe. Looking solely at the technicals, the 10 yr note presently is sitting right on its 40 day average at 2.05% with its 20 day average at 2.09%. 30 yr FNMA MBS today trading below its 40 day and at the moment holding at its 20 day, similar to the 10 yr note. The relative strength in both markets is hanging at neutral. The overall technical picture slightly positive but not by much. That the 10 yr this morning is back over 2.00% somewhat negates its close yesterday below 2.00%. With US markets being completely dominated by what happens in Europe the outlook for US interest rates is in the end is impossible to anticipate. Bottom line; markets are adrift in a sea of uncertainty over Europe and the impact on the US economy.

]]>Thu, 25 Aug 2011 10:40:15 -0800http://www.myvarefinance.net/1/post/2011/08/news-affecting-va-mortgage-rates-va-home-loans-and-va-refinance-loans-irrrl-for-aug-25th-2011.htmlRate markets started better this morning after rates rose yesterday. The 10 yr note yield jumped 13 bp yesterday and has increased 22 bp this week. Mortgages following but haven't been hit quite as hard as the treasury market. Better economic data yesterday on July durable goods orders and what was described as a mediocre 5 yr note auction triggered a strong move in stocks as well as traders backing away after the 10 failed at 2.00%, the level it failed at at the end of 2008.  

Weekly jobless claims helped the bond market a little this morning; claims were expected to decline 3K to 5K, as reported they increased 5K to 417K; last week's claims were revised from 408K to 412K. Continuing claims did decline to the lowest level since Sept 2008, to 3.641 mil frm 3.721 mil last week. The increase in claims isn't a serious increase, claims have been about 400K for weeks now. There is no increase in employment and likely will not be any improvement for the remainder of the year. 

At 9:00 the DJIA was a little weaker, pointing to a down open in stocks. The 10 yr note up 16/32 at 2.23% -6 bp and mortgage prices +6/32 (.18 bp). 

At 1:00 this afternoon Treasury will complete its borrowing with $29B of 7 yr notes auctioned. While we didn't think yesterday's 5 yr auction went that badly, markets took it as not as well bid as what was expected. The strength of today's 7 yr will be closely watched, farther out on the curve; if it isn't a solid auction treasuries will likely back off and prices may decline taking mortgages with them. 

Most of the day's trading will be in preparation for Bernanke's speech tomorrow from Jackson Hole. Markets are with mixed thoughts about what the Fed chairman will have to say about the economy and economic outlook, both in the US and globally. Lot of talk that he will announce another Fed easing program, mostly based on last year at this conference is when he announced QE 2. While some believe the Fed will act, there are many traders not buying into another easing. QE 2 was only considered a success from the what if perspective; what if the Fed didn't buy $600B of treasuries? would US interest rates increased? It didn't help the economy, it didn't increase employment and it didn't increase consumer confidence. 

Warren Buffett stepped up this morning to stop the decline in BofA's stock, BofA stock has plummeted recently on increasing losses from mortgage operations. The bank made a huge mistake in hindsight when it bought Countrywide and all its bad loans. Buffett bought 50K shares of preferred stock for $5B. The bank stock jumped 25% in minutes after the news hit the wires. That Buffett is in the game will likely stabilize BofA's stock and increase confidence in the leadership at the bank. 

The Buffett decision not only moved BofA stock up 25% but added overall enthusiasm to the entire equity market. The DJIA looked like it would open down after the claims data, it opened up 50 and continued to increase to +82; by 10:00 however the indexes were falling back and the bond and mortgage markets are once again improving. The 10 yr note, up 16/32 to 2.23% -6 bp prior to the Buffett news, at 9:30 up just 4/32 and back to 2.28%; at 9:45 back down to 2.25%. Mortgage prices fell back to unchanged after being up 6/32 (.18 bp) at 9:00; at 9:45 +6/32 (.18 bp). Trading in MBSs this morning has been volatile, lender pricing uncertain as to where the market was trading at the time prices were released. The rest of the day may be volatile in the stock market as well as interest rate markets; at the end of the day likely about unchanged in financial markets. By 10:00 stock indexes were lower, the 10 yr at its best level, mortgage prices also at their best levels. ]]>Wed, 24 Aug 2011 07:50:39 -0800http://www.myvarefinance.net/1/post/2011/08/economic-news-affecting-va-mortgage-rates-va-home-loans-and-va-refinance-loans-for-august-24th-2011.htmlPrior to 8:30 the DJIA futures was down over 100 points after the strong 322 point rally yesterday. At 8:30 July durable goods orders, expected up 1.9%, was reported up 4.0%; excluding the volatile transportation orders durables was expected down 0.4%, as reported up 0.7%. A very good report that turned the trade in stock indexes around to trade unchanged at 9:00. Bookings for goods meant to last at least three years rose the most in four months, after falling a revised 1.3% in June. The bond and mortgage markets were a little stronger prior to durables, then fell back some but still not much change from yesterday's levels.

 

All markets continue to increase focus on Bernanke's opening speech Friday at Jackson Hole. Risk trades coming off in equities and the bond market as well as currency trading. Gold fell $62 yesterday this morning down again another $42 at 9:00. Will we get another money printing QE? or has the Fed recognized it has run  out of bullets in terms of increasing economic growth? Keeping interest rates low is already a given from the Fed after the statement from the FOMC two weeks ago; so far the historic low long term interest rates, including mortgage rates, has had no real impact on the economy. With many believing another easing will occur, maybe Bernanke feels cornered and has to do something. What he should do is chastise politicians and the Administration for failing to accept that spending cuts are now mandatory as well as increased revenues. Not going to happen.

 

Earlier this morning the weekly MBA mortgage applications; weaker again. The purchase index fell steeply for a second week, down 5.7% in the August 19 week and now at its lowest level in 15 years. Low interest rates aren't helping with applications falling across the board including a 15% fall for jumbo loans and an eight percent fall for government housing programs. Low rates had triggered a surge in refinancing applications which however eased back 1.7% in the latest week. Rates moved slightly higher in the week with the 30-year up seven basis points to 4.39%.

 

At 9:30 the DJIA opened -50, the 10 yr note -3/32 at 2.17% and mortgage prices up 1/32 (.03 bp) frm yesterday's close. After the lower open, by 9:45 the DJIA began to improve and interest rate markets backed off to trade lower in price, the 10 yr note yield at 9:45 at 2.19% +3 bp while mortgages were down 5/32 (.15 bp). Lenders that priced prior to 9:30 are watching closely, anymore weakness will set up re-pricing.

 

Like yesterday, we are not looking for much in the way of movement, but the very near term bias is slightly negative for the bond and mortgage markets as long as equity markets don't crack. Short covering and positioning ahead of Bernanke on Friday is providing a little support in equities on the idea another easing from the Fed would drive investors back into stocks. Frankly, I don't understand that logic; QE 2 didn't help, another easing that will push interest rates lower---so low that investors have little choice but to buy stocks----seems like a huge stretch. Low interest rates and some improvement in stock prices has had no positive impact on the economy.

 

At 1:00 this afternoon Treasury will auction $35B of 5 yr notes, yesterday's 2 yr auction met with good demand, most expect the 5 yr today will also be well bid.

 

At 10:00, the June FHFA housing price index, not much of a market mover, fell 4.3% yr/yr; from May to June +0.9%. No reaction to it as it isn't new news. ]]>Tue, 23 Aug 2011 07:18:13 -0800http://www.myvarefinance.net/1/post/2011/08/economic-news-affecting-va-mortgage-rates-va-home-loans-irrrl-loans-for-august-23-2011.htmlTreasuries and mortgages opened a little weaker this morning but crawled back to about unchanged at 9:00; the DJIA trade prior to the 9:30 open up 49. Gold down early this morning. This week is about waiting until Friday when Bernanke will speak at the opening of the Fed's annual economic conference. Many in the markets are looking for another stimulus from the Fed; we are not sure what the Fed chairman will decide but we are certain whatever the Fed does won't directly add jobs, increase consumer spending or help the housing industry. Doing an easing would likely push long term rates down more, but won't increase home buying. What it would do is add more emphasis to drive more investors into the stock market, looking for some meager returns. QE 2 did nothing to improve the economy, printing more money doesn't seem to make much sense.

 

In Europe the debt crisis is driving consumer sentiment down, fearing economic decline. German investor confidence fell more than economists forecast to the lowest in more than 2 1/2 years in August. The ZEW Center for European Economic Research said its index of investor and analyst expectations, which aims to predict developments six months in advance, plunged to minus 37.6 from minus 15.1 in July. That’s the lowest since December 2008 and the biggest drop since July 2006. (Bloomberg)

 

This week should see improvement in the equity markets ahead of Friday's Bernanke speech; traders short equities likely will square up by Friday. Interest rates are likely to creep up a little, but not much, also on Bernanke expectations. As noted, the only thing that more Fed buying will do is push rates lower, firms that make money driving investors into stocks are leading the idea of another easing move from the Fed.

 

At 9:30 the DJIA opened +67, the 10 yr note -7/32 at 2.13% while mortgage prices were +1/32 (.03 bp). Prior to 9:30 mortgage prices were trading down as much as 8/32 (.25 bp).

 

The economic data today; at 10:00 July new home sales were expected down 0.7%, sales as reported sales down 0.7% to 298K annualized; the median sales price $222K, a six month supply based on sales. Yr/yr the median price is up 4.7%. The August Richmond Fed manufacturing index plunged to -10 frm -1 in July; the services index fell to -1 frm +7 in July. There was not much reaction to two reports, the stock market actually gained while the rate markets didn't move on the data. Mortgage prices are better at 10:00 than earlier this morning, at 10:05 up 6/32 (.18 bp) on the day.

 

At 1:00 this afternoon Treasury will sell $35B of 2 yr notes, the first of three auctions this week. The current rate on the 2 yr note is a whopping 0.22%, the Fed funds rate is about half that; the one month T-bill gets you 0.005%. It is little wonder with these zero interest rates that investors are being driven to gold and other precious metals and commodities. Generally speaking, there isn't much opportunity to earn a return these days.

 

Today will be no different than most recently; if the stock market gets traction interest rate markets will suffer a little, if stock indexes fall the bond and mortgage markets will improve. The present situation is fluid; lenders still conservative on their pricing given the uncertainty about what loans will actually close at the rate committed. Already this morning the mortgage market has exhibited volatility; thin trading is causing mortgage prices to swing from -8/32 to +4/32 a few times in the first two hours of trading. ]]>Fri, 29 Jul 2011 07:17:01 -0800http://www.myvarefinance.net/1/post/2011/07/economic-news-affecting-va-mortgage-rates-va-home-loans-va-refinance-irrrl-va-loans2.htmlTreasuries and mortgages were better early this morning on the failure of the House to pass its "plan" yesterday as was expected based on comments frm Speaker Boehner through the day. Safety moves into treasuries as Congress and the Administration move closer to a possible default is driving longer dated treasuries lower and with them mortgage rates. There is a lot of talk as you know, that the US will suffer a decline in its credit rating by the rating agencies. Based on reports this morning 75% of investors in treasuries said they would not change their investments or jettison treasuries if in fact the downgrade actually happens. 

At 8:30 more improvement in treasuries and mortgages with the advance GDP report for Q2 showing the economy grew just 1.3% against general estimates of +1.9%. Q1 GDP was revised lower, from +1.9% on the final read last month to +0.4%, a huge revision lower. Forecasts of 85 economists in the survey ranged from 0.9% to 2.9%. At $13.27 trillion in the second quarter, GDP has yet to surpass the pre-recession peak. The GDP estimate is the first of three for the quarter, with the other releases scheduled for August and September when more information becomes available. Consumer spending from April through June showed the smallest gain since the second quarter of 2009, when the economy was in recession. The slump reflected a 4.4% decline in purchases of durable goods like automobiles. Q2 employment cost index increased 0.7%; yr/yr up 2.2%.

Markets spent a lot of gray matter yesterday on the idea the Boehner plan would pass the House late yesterday; it didn't happen as conservative Tea Party members refused to go along even with Boehner flexing his leadership muscle. Even if the House would have passed its plan the Senate had made it clear it would be dead on arrival if it had reached the chamber. The next step isn't' clear; that said there are countless opinions about what will happen and what the impact will be under various scenarios.

President Obama is scheduled to talk about the impasse on the debt ceiling at 10:20 this morning.  

More data at 9:45 when the July Chicago purchasing mgrs index hit; forecasts were for an unchanged index at 61.1, as reported 58.8; employment at 51.5 frm 58.7, new orders at 59.4 frm 61.2 and prices pd at 71.7 frm 70.5. Another weak report however the stock market didn't seem to react much to it, as the key indexes were already down hard from yesterday's closes. Treasuries and mortgage markets did add to their gains on the release, the 10 yr note yield dipped to 2.86% down 2 bp below its level prior to the report; mtgs jumped 4/32 (.12 bp in price) 

At 9:55 the U. of Michigan consumer sentiment index, expected at 64.0 frm 63.8; was 63.7. The 12 month out expectations index at 55 frm 52. No reaction to it. 

 The bellwether 10 yr note this morning fell to 2.87% close to the 2.85% seen a month ago. With Washington in current gridlock on the debt ceiling investors are piling into safety positions, in US treasuries. That Congress and this Administration are at an impasse at the moment is surprising to me; I really believed they would act responsibly, always overestimate the will of politicians even though I set the bar exceptionally low.

At 9:30 the DJIA opened -130, the 10 yr note +20/32 at 2.88% -8 bp and mortgage prices +10/32 (.31 bp).

The bond and mortgage markets are testing last month's low yields this morning. Given the mess in Washington the potential for even lower rates has increased; however, we have to respect the technicals and the momentary double bottom in yields if rates don't push lower. The next few days are critical. ]]>Thu, 28 Jul 2011 07:31:57 -0800http://www.myvarefinance.net/1/post/2011/07/economic-news-affecting-va-mortgage-rates-va-home-loans-va-refinance-irrrl-va-loans1.htmlTreasuries and mortgages prior to 8:30 were up nicely, not unusual as in the last seven days every other day the bond and mortgage markets have some gains, and every other day prices fall with no real change in the level of rates.  At 8:30 weekly jobless claims took some wind out of the rate markets; after 16 weeks of claims above 400K, claims this morning declined 24K to 398K. The stock indexes reversed from lower levels to up a little. Continuing claims fell 17K to 3.703 mil; last week's claims were revised up 4K to 422K from 418K. The lower claims didn't turn rate markets completely, just a slight move lower but still held better levels than yesterday's closes; within 30 minutes the bond and mortgage markets recovered all of the minor price declines.  

CEOs of all major banks sent a letter to Obama, Republicans and Democrats urging they get their act together and deal with the debt problems. One more huge voice but likely won't budge anyone. According to news reports Republicans in the House will vote today on the Boehner plan to increase the debt limit; a two step plan that calls for a temporary increase then another round in early 2012. Many of the Tea Party freshmen members of the House have been resisting accepting Boehner's plan; yesterday he told them to "get their ass in line", tough talk. If the House actually passes the Boehner plan it will go to the senate where Sen.. Reid will make amendments to it, likely removing the temporary increase to increasing the ceiling through all of 2012. Then the bill will go back to the House. If Senate Republicans balk over changes to the Boehner plan it will leave Democrats and the President with the choice of accepting the plan or let the US default. All that said, it is still a fast moving target and likely will have more moves before there is a deal avoiding default. 

The bond market continues to believe there will be no default, interest rate markets are holding generally unchanged for the last two weeks with yields swinging up and down every other day with no actual significant changes. One view traders hold is that even if the rating agencies were to lower US credit ratings as they have warned if the Boehner plan is passed, it won't have any impact on US interest rates. A lower credit rating will not take away the fact that the US is still the strongest and safest place in the world. That view is key to why the bond and mortgage markets are not seeing any increase in interest rates. Banks searching for hints of credit-market distress ahead of next week’s deadline to raise the debt ceiling are finding few signs of panic so far. 

At 9:30 the DJIA opened +6, the S&P +1, and NASDAQ +2; the 10 yr note +9/32 at 2.95% -3 bp and mortgage prices up 10/32 (.31 bp).  

At 10:00 NAR June pending home sales, expected down 2.0%, were up 2.4% after increasing 8.4% in May. Yr/yr pending sales up 19.8%. No reaction to the data, sales still very volatile but showing some small signs of improvement.

At 1:00 Treasury will auction $29B of 7 yr notes to complete this week's borrowing. Yesterday's 5 yr wasn't met with strong demand, not a bad auction just not as solid as recent 5 yr debt issues. 

Treasuries still holding most of their bullish technical readings; the 10 yr trading under its key 20 and 40 day averages on the yield charts. The RSI is hovering at 50, a neutral reading. The MBS markets are a little more volatile than treasuries but will follow the 10 yr; note the MBS chart, prices are slightly declining; unable to its 20 day average. Got to go with the technicals but still wonder whether interest rates can decline much from the present levels. These are unusual times with Europe still teetering on defaults in a number of countries; we haven't heard much recently as all attention is aimed at the US debt ceiling issue; difficult to handicap what will happen next once the debt ceiling is increased ]]>Wed, 06 Jul 2011 07:53:22 -0800http://www.myvarefinance.net/1/post/2011/07/economic-news-affecting-va-mortgage-rates-va-home-loans-va-refinance-irrrl-va-loans.htmlTreasuries and mortgages rallied yesterday after the panic moves last week that shot the 10 yr note up 37 basis points and mortgage rates up 26 basis points. The rally in stocks last week and the jump in interest rates came with both markets very over-extended and triggered by better economic reads on two manufacturing indexes (Chicago and ISM), the momentary debt crisis in Greece averted, the surprisingly weak demand for Treasury's $99B of auctions and the end of QE 2. Yesterday and so far this morning markets are better but the outlook remains questionable that interest rates will decline to the lows seen three weeks ago. 

This morning the bond and mortgage markets continued to gain; at 9:00 the 10 yr note traded +9/32 at 3.09% and mortgage prices +5/32 (.15 bp). The US stock market following the declines in Europe in pre-market trading. Equity markets being hit some on China increasing rates again, the third tome this year to head off inflation that has increased; the rate up 25 basis points to 6.5%. Tomorrow the ECB will likely increase its base lending rate. Rates increasing globally except here in the US. In Europe Portugal, Ireland, Italy and Spain interest rates increasing after Moody's rated Portugal's debt to junk status. Europe's banks and those countries facing continued debt fears that won't likely be solved for a long time, possibly years. The ECB, IMF and the EU trying to hold it all together but fighting a huge headwind.  

At 9:30 the DJIA opened slightly lower, down 10; the 10 yr note +5/32 3.10% -2 bp and mortgages at 9:30 +3/32 (.09 bp) frm yesterday's close.  

Early this morning the weekly MBA mortgage applications report.  Mortgage applications decreased 5.2% from one week earlier. The Refinance Index decreased 9.2% from the previous week. The Refinance Index has decreased for 3 consecutive weeks, reaching its lowest level since May 6, 2011. The seasonally adjusted Purchase Index increased 4.8% from one week earlier. The unadjusted Purchase Index was 11.7% higher than the same week one year ago. The four week moving average for the Market Index is down 0.5%. The four week moving average is up 0.8% for the seasonally adjusted Purchase Index, while this average is down 1.1% for the Refinance Index. The refinance share of mortgage activity decreased to 66.4% of total applications from 69.5% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.1% from 5.8%of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.69% from 4.46%, with points decreasing to 0.90 from 1.19 (including the origination fee) for 80% loans. This is the highest 30-year rate recorded in the survey since the middle of May 2011. The average contract interest rate for 15-year fixed-rate mortgages increased to 3.79% from 3.64%, with points decreasing to 0.88 from 1.11 (including the origination fee) for 80% loans. This is the highest 15-year rate recorded in the survey since the beginning of May 2011. 

A few minutes ago at 10:00 the June ISM services sector index, expected at 54, was 53.3 frm 54.6; new orders component 53.6 frm 56.8, prices 60.9 frm 69.6 and employment 54.1 frm 54.0. A little weaker but not much, close to 50 level which is pivotal; under 50 is contraction, over is expansion. There was not much initial reaction to the report.

Markets still focused more on employment due out Friday and tomorrow the ADP non-farm private jobs estimate (+60K) and Friday's BLS estimate +80K on non-farm payrolls and +110K non-farm private jobs increase. The estimates are not strong, employment still soft, could get a bullish surprise when the BLS reports on Friday morning.  

]]>Thu, 30 Jun 2011 11:23:58 -0800http://www.myvarefinance.net/1/post/2011/06/new-affecting-va-mortgage-rates-va-loans-va-home-loans-va-refinance-irrrl.htmlThe bond and mortgage markets opened better this morning after the strong selling the last two sessions taking rates up 20 basis points. The Greek debt issue is off the radar for the moment after its parliament voted to cut spending and qualify for assistance from the IMF and EU keeping Greece from defaulting, at least for now. Safety trades in US treasuries being closed and the very weak treasury auctions this week along with the end of QE 2 today---all combined to drive rates higher in a rapid move. Mix in that the ECB will likely increase its base interest rates next week and the tone has changed. Both the 10 yr note and FNMA 4.0 coupon hit and held their respective 200 day averages but broke all other shorter term averages, the momentum oscillators are now in bearish levels. As we continue to point, the bond and mortgage markets are going to remain volatile over the next week or so as investors work through the end of QE 2, Europe's continuing debt issues and the weakening economic outlook. We are not looking for interest rates to increase in a major way but it is unlikely rates will return to the best levels seen three or four days ago.

 

Germany’s biggest banks and insurers and the government agreed on a draft proposal to roll over Greek debt holdings before a meeting with Finance Minister Wolfgang Schaeuble today, people familiar with the plan said.(Bloomberg)

 

Weekly jobless claims at 8:30 were down just 1K to 428K, estimates were for a decline of 8K. Continuing claims declined 12K to 3.72 mil. Weekly claims have now been above 400K for 12 consecutive weeks, no improvement but equally no increases in claims.

 

At 9:30 the DJIA opened +47, the 10 yr note +7/32 at 3.10% -2 bp and mortgage prices +5/32 (.15 bp).

 

At 9:45 the June Chicago purchasing mgrs index, expected at 53.8 frm 56.6 in May, jumped to 61.1; new orders increased to 61.2 frm 53.5, employment did decline to 58.7 frm 60.8 and prices pd at 70.5 frm 78.6 on a decline in oil prices recently. The report much stronger than thought flipped the bond and mortgage markets from minor price gains to lower prices; mortgage prices at 9:3 up 5/32 (.15 bp) at 9:50 -5/32 (.15 bp), a .30 bp swing lower and breaking the 200 day averages on the 10 yr yield and prices on the FNMA coupon. VOLATILITY!

 

Will the Fed launch QE 3 at some point? That is the question being debated in minds of traders now with the economic outlook declining somewhat. Many believe the Fed is out of bullets to help the economy, historically low US interest rates haven't helped much, at least based on where the economy stands now; however what would have been the situation if the Fed hadn't executed QE 2, buying $600B of US treasuries? Bernanke has said it is now a fiscal matter, meaning Congress and the Administration have the ball now; that of course isn't a confidence builder in the minds of investors since Washington continues to play its political games while the country stumbles.  

 

Today is the end of the month and the end of the quarter, to some extent today trading in equities and bonds may be impacted on moves large investors need to make to adjust their portfolios for the end of the 2nd quarter.

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