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Market News for the week---va mortgage rates

9/28/2009

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Markets are looking optimistic this morning ahead of an insanely busy week. Monday begins slowly with no major macroeconomic data on the schedule, but later in the week are key industry surveys, the monthly employment numbers, critical spending figures, plus housing prices and a variety of speeches from the Federal Reserve Board.

“The key data out this week on home prices, consumer confidence, spending and production are expected to show the recovery is gaining traction, and job losses are slowing,” said Jennifer Lee, economist at BMO Capital Markets. “This might shore up investor confidence after weaker-than-expected reports last week on home sales and factory orders raised doubts about the recovery’s durability.”

Key Releases This Week:

Monday:

Treasury Auctions:

1:00 ― 3-Month Bills

1:00 ― 6-Month Bills

Tuesday:

9:00 ― The S&P Case-Shiller Home Price Index is the most closely watched measure of national home prices. Last week the FHFA released its results and showed prices moving up 0.3% in the same period, but the Case-Shiller measure is more comprehensive, largely because it captures homes purchased using subprime mortgages and other alternatives.

“The first-time home-buyer tax credit certainly helped demand for homes ― and values ― but so did the calendar; home sales typically improve in late spring and early summer as families try to finish moving before school begins,” said Mark Lieberman, senior economist at Fox Business News. 

9:50 ― Richard Fisher, President of the Dallas Federal Reserve, delivers a economic update to the Texas Christian University Business Network of Dallas.

10:00 ― The Conference Board’s measure of Consumer Confidence should be in line with the advance seen in last week’s sentiment measure from the University of Michigan. Last month it rose 7 points to 54.1; this month a modest gain to 57.0 is expected by markets. A surprise could be in store due to rising unemployment, but the continued advance in stock markets ― last week’s 2.2% dip excluded ― should provide a sense of optimism.

7:00 ― Well after the markets close, Charles Plosser, President of the Philadelphia Fed, will give a speech on the Fed's role in the recovery process at the Lehigh Valley Economic Outlook in Easton, Pennsylvania. 

Treasury Auctions:

1:00 ― 4-Week Bills

8:15 ― Three weeks of improvement in initial jobless claims is making the case for fewer lay-offs in September, as can be seen in the forecasts for this month’s ADP Private Employment Survey. In August, 260,000 jobs disappeared in the ADP results, whereas this month analysts expect only 195,000 jobs to vanish. Even the range is narrower than usual, from -133k to -260k. 

The ADP results don’t factor in the growth from government jobs, so Friday’s Nonfarm Payrolls report should show even more moderation.

“Our forecasts for a 170k decline in nonfarm payrolls translates into a 260k drop in ADP employment, based on recent differences between the two series,” said forecasters from Nomura.

8:30 ― A second revision to the second quarter’s Gross Domestic Product report is expected to bump the figure down a notch to -1.2% from -1.0%. Comparing to the -6.2% drawback in Q1, that’s still a major improvement.

9:45 ― The Chicago Business Barometer is often considered the most important forecasting tool for the nationwide ISM survey of manufacturing conditions, even though it measures business in general, including the services industry. In August the survey improved to 50.0, meaning business was flat but on the threshold of growth. This month a score of 52.0 is expected, but an upward surprise wouldn’t be too unexpected as several regional surveys have already bested forecasts this month.

10:30 ― Dennis Lockhart, President of the Atlanta Fed, gives a talk on the economic outlook to the University of South Alabama in Mobile.

Thursday:

8:30 ― The Personal Income & Outlays report is expected to show that wages remain stagnant, but despite this, spending should have increased substantially, in large part because of the success of the cash-f0r-clunkers program. Median estimates look for wages and core prices to both inch up 0.1%, while total consumer spending should jump 1.1%. 

“July marked the return to the true underlying personal income figures, devoid of the huge government transfer payments that skewed the May and June data.  In July, personal income was flat and we expect only a +0.1 percent gain in August. 

“Even though job loss is slowing, the work week remains near its historical low and wages remain under severe pressure,” said Ellen Zentner, senior macroeconomist at BTMU. She expects consumption to beat the consensus with a 1.3% gain, which would be “the largest monthly jump since the 0% financing incentive that caused vehicle sales to spike in October 2001.”

8:30 ― Jobless Claims have been moderating for three consecutive weeks but analysts aren’t yet calling the improvement a sustainable trend. There are expected to be 537k new claims for the week ending Sept. 26, up from 530k in the week before. Even so, data in September is already pointing to the lowest drop in payrolls since July 2008.

10:00 ― Forecasters expect the closely-watched ISM Manufacturing Survey to see its best results in three years this month. In August it hit growth mode for the first time since the start of the recession, beating expectations with a score of 52.9 (50+ indicates expansion.) Regional surveys points to modest improvement to 53.5 in September.

Analysts from IHS Global Insight said it will “creep higher,” but outsized gains seen in July and August are unlikely to be repeated. “The index should remain solidly above the neutral 50 reading, at 53.5, but just not add much to August's 52.9 reading,” they added.

10:00 ― As far as markets go, the Construction Spending report will take a backseat to the ISM survey, but for those in real estate the index provides a broad picture of new projects in the residential, non-residential, and public sectors. Unfortunately, that picture isn’t yet pretty. Spending should decline by 0.1% in August following a 0.2% decrease in July. Economists looks for single-family home construction to rise, but commercial and nonresidential to decline.

10:00 ― After the surprisingly weak existing home sales report last week (the headline fell 2.7%), analysts will be looking closely at the Pending Home Sales Index for August. The report looks at contracts that have been signed but not finalized, thereby acting as a leading indicator of actual sales in the following month or two.

5:30 ― Sandra Pianalto, President of the Atlanta Fed, speaks to Market News International seminar in New York.

Friday:

8:30 ― The economy may be in technical recovery, but the average worker still has plenty of reason to believe that it will feel like a recession for months to come. In September’s Employment Situation report, the unemployment rate is expected to climb one-tenth to a fresh 26-year high of 9.8%, while nonfarm payrolls are set to drop 170,000. The latter drop is an improvement from the -216k print in August, but the economy is still a long way off from adding jobs on a month to month basis. 

“While the rate of layoffs has slowed dramatically, hiring remains uninspiring, flagging another month or two of net job losses and an eventual 10% handle on the jobless rate,” said Jennifer Lee from BMO. “Rampant joblessness, still-high household debt and the need to replenish savings will restrain consumer spending through the turn of the year.”

10:00 ― With markets still digesting the latest employment numbers, the Factory Orders report is bound to be ignored unless there are major revisions to new orders for durable goods. In July factory orders jumped 1.3% ― the fastest monthly pace in in 13 months ― and stabilization looks likely to continue with economists expecting a +1.0% print in August.
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News for VA mortgage rates

9/25/2009

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New home sales increased for the fifth straight month in August, but the 0.7% gain didn’t match the median estimate of +1.6%. The annual pace of sales is now 429,000, 3.4% below the August 2008 rate.

Not only were sales lower than expected, they were also so lopsided that only one of the four areas even experienced growth. Sales in the West jumped 12.1%, but sales fell 16.3% in Northeast and 5.8% in the Midwest,  activity in the South was flat.

There was some good news though: five months of sales increases has caused excess inventory to dwindle. At the current sales place there are just 7.3 months’ worth of supply on the market, compared with 7.6 months’ in July and 12.4 months’ at the beginning of the ear.

“Virtually all of the remaining excess is in completed homes, rather than in homes still under construction,” said analysts from Nomura. They also noted that with raw inventory at 262k units, overhang is at the lowest level in 25 years. 

The cutback has come at a price though . . . literally. The median sales price of new houses sold in in the month dropped to $195,200, a significant decline from the $215,600 price in July. Since its peak, prices have deflated 25.7%. 

Elsewhere in the report, revisions added 1.8% to the sales pace for May and June, but July’s dramatic 9.6% surge was trimmed to 6.5%.

“The recovery road, as is glaringly evident today, is fraught with bumps and potholes,” said Jennifer Lee, economist at BMO. “But, we are still on that road.”
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VA Loan rates news for September 14th

9/14/2009

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The week begins on a light note with no major data scheduled for release. However, one week ahead of the Federal Reserve’s Open Market Committee meeting, markets will hear three central bank officials voice their opinions on policy, regulation, and the economic outlook.

Equity futures are looking to extend Friday’s losses, which put an end to five straight daily advances. Despite the slide on Friday, the benchmark S&P 500 gained 2.6% on the week as a series of fresh data points helped investors overcome the sentiment that equities were overheated. Since hitting a 12-year low in early March, the S&P 500 has advanced by 52.6%, marking the fastest spurt since the 1930s and putting the index at its highest level in 11 months.

Looking ahead to this week’s data, it would appear there’s a good chance for equities to build on those gains. The week’s biggest release, retail sales, is set to have “a blockbuster performance” in August owing to the cash-for-clunkers program, according to analysts at TD. The government’s incentive program should also boost the industrial production numbers for July, and housing starts are expected to see their fifth monthly gain while the housing market slowly stabilizes.

But that’s all later in the week; with no data on the docket for today, the market’s direction will be less clear. Looking to global markets for a sense of investor sentiment provides no optimism. Aside from the 1.24% gain in China’s Shanghai Index, stocks are performing poorly to begin the week. Japan’s Nikkei fell 2.32% and Hong Kong’s Hang Seng shed 1.08%, while in Europe, London’s FTSE 100 is currently down 0.74% and France’s CAC 40 is down nearly 1%.

Meanwhile, reversing trends from last week: the US dollar has rebounded from annual lows seen, WTI Crude is down 79 cents to $68.50 per barrel, and Gold is back under the $1,000 per ounce mark at $998.80.

Key Releases This Week:

Monday:

8:35 ― Elizabeth Duke, a governor of the Federal Reserve, speaks on regulatory reform at the AICPA national banking conference in Washington, DC.

12:30 ― Jeffrey Lacker, President of the Richmond Fed, addresses the Risk Management Association on financial regulation, in Charlotte, NC.

3:50 ― Janet Yellen, President of the San Francisco Fed, speaks on the economic outlook and monetary policy to Certified Financial Analysts of San Francisco.

Treasury Auctions:

1:00 ― 3-Month Bills

1:00 ― 6-Month Bills

Tuesday:

8:30 ― Retail Sales are expected to see a 2% boost in August, mostly owing to car sales during the cash-for-clunkers program. August was the third straight monthly gain for light vehicles sales, which grew from an annual rate of 9.7 million units in June to 11.2 million in July, and then to 14.1 million in August. 

“While auto sales have experienced significant stabilization, the other components of retail sales remain extremely weak as consumers continue to spend cautiously,” said analysts at BBVA. 

With autos excluded, retailers are expected to post a more modest 0.4% gain, reflecting a slow recovery as consumers shift to savings mode after years of excess consumption. However, the modest gain compares favorably to the 0.6% cutback to sales in the prior month.

8:30 ― Soaring oil prices are expected to push the Producer Price Index up in August, in line with recent volatility. PPI shot up 1.8% in June, was dragged down 0.9% in July, and in August it should climb 0.8% as gas prices went up almost 30%.

“Food prices will probably reverse some of July's 1.5% contraction, lifting the headline index still higher,” said analysts at IHS Global Insight, whose forecast double the consensus at +1.6%.

Core prices, which exclude the volatile food and energy components, is expected to edge up 0.1% in the month.

8:30 ― As always, the month’s first look at manufacturing conditions will be the Empire State Survey, which surprised analysts last month when it soared to its highest level since the recession began in December 2007. That initiated a series of positive reports last month, culminating in a 52.9 score for the nationwide ISM report ― the highest score since June 2007. The Empire report, released by the New York Fed, posted a 12-point score in August, which is to be topped by 14-point score this month.

10:00 ― Business Inventories were probably reduced 0.9% in July after suffering a 1.1% setback in June. The more inventories are slashed, the quicker growth will be when businesses eventually begin to restock, or so the conventional wisdom believes. But for now, continued cutbacks go hand in hand with GDP declines and payroll cutbacks.

“The inventory to sales ratio is declining, which could indicate that the adjustment is nearing bottom,” said analysts at BBVA. “Although a slower rate of decline in inventories could result in a positive effect on GDP, businesses are expected to hold inventories at low levels until demand is restored.”

Treasury Auctions:

1:00 ― 4-Week Bills

Wednesday:

8:30 ― Rising energy prices should push the Consumer Price Index up 0.4% in August, though forecasts are as low as -0.1% as lower priced vehicles sold in the cash-for-clunkers program could have a pulldown effect. 

The median forecast expects the less volatile core component to post a 0.1%, suggesting that underlying prices remain sluggish, in line with wages.”

“Ongoing economic slack, which can be seen in the form of the high unemployment rate, low capacity utilization and declining wages, will continue to emit downward pressure on prices,” said the research team at BBVA. 

9:15 ― The sentiment-based ISM manufacturing survey indicated that conditions were improving in August with new orders and production each posting advanced. That should be confirmed in the Industrial Production report, which is set to jump 0.7% in the month following a 0.5% upscale in July. Two months of increases would help the third quarter see growth mode, but in the medium-term analysts remain cautious about the outlook. 

“Inventories and capital spending (capex) need to show strong growth for this nascent economic recovery to gain traction, because consumer spending is expected to lag in this cycle, owing to structural headwinds—high debt service, high debt to income and low savings,” said economists at Deutsche Bank. “In the past, recovering production and a bottoming in capacity use have always been a harbinger of a pickup in capex.” 

1:00 ― The Homebuilder Sentiment gets little market attention, but those in real estate will want to see if confidence improves for the fourth straight month in September. The index is currently at 18, the highest level since June 2008, but overall that’s still abysmal. Not until inventories are severely cut back will homebuilders have reason to be optimistic about the larger picture.

Thursday:

8:30 ― New projects to build single-family home have risen for the past five months, including gains of 5% or more in the past four months. However, multi-family units have been struggling, which brought the overall figure for Housing Starts down 1% in July. Things are looking better for August: single-family units are expected to keep increasing, while multi-family units may have bottomed out.

“Multi-family permits fell to an all time low in July (data start in 1959),” note economists at IHS Global Insight. “Mathematically, they cannot fall much further, and for August we project a small gain.”

8:30 ― New Claims for Unemployment Insurance fell 26,000 to 550k last week, the lowest level in seven weeks. Rather than triggering a new trend in the labor market, however, analysts expect initial claims to bounce right back to 575k in the week ending Sept. 12 ― the survey week for nonfarm payrolls.

10:00 ― Like its cousin index in New York, the Philadelphia Fed Survey shot into growth mode last month, and analysts look for continued improvement in September. Forecasters look for a score of 8.0. If both indexes are pointing towards continued gains, investors could get optimistic that the nationwide ISM survey will post another upside surprise when it is released in the first week of October.
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VA mortgage rates info for today

9/9/2009

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It’s another day of slow economic news but, unlike yesterday, US markets are looking down, potentially ending three days of gains. Globally, European equities are performing strong while China’s Shanghai Index post its seventh straight gain, but equities in Japan and Hong Kong each fell around 1%.

Today's major release is at 2:00, when the Federal Reserve releases the Beige Book, an anecdotal summary of the economy written by each of the 12 District banks. With many economists believing the recession technically ended in May or June, analysts will look to the report to see how central bankers assess the economy just ahead of the September 22 FOMC meeting.

"The survey will likely report a patchy recovery, boosted by the auto cash-for-clunkers program, and continued downward pressure on wages and prices," said Ian Shepherdson of High Frequency Economics.

The details could certainly have an impact on equity markets, but as for policy, the Fed has made it clear that an accommodative stance will be the norm well into 2010.

google_protectAndRun("ads_core.google_render_ad", google_handleError, google_render_ad); Recapping yesterday afternoon’s economic news, consumer credit contracted by $21.5 billion, compared with forecasts looking for a decrease of just $4 billion. That marks the sixth straight contraction ― the longest string of declines in 18 years ― with July being the weakest month in almost four decades. 

“This pulled the annual change down to -4.5%, the worst y/y rate in 65 years!” said BMO analyst Michael Gregory. “Despite all the hoopla about the cash-for-clunkers drive out of recovery, all recoveries are destined to run out of steam without credit creation working in the boiler.”

In fixed income, the benchmark 10-year yield has moved to 3.48%, up from 3.42% in the early afternoon yesterday. The Treasury holds two auctions at 1:00 today, in 4-Week Bills and 10-Year Notes.
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