A slight bit better in the bond and mortgage markets today, but overall interest rates on mortgages hasn’t changed for the last six days with the bellwether 10 yr note hovering around 2.00% for over a week now. This morning the stock indexes are opening lower after the strong rally yest4erday that saw the NASDAQ achieve its best daily gain this year (+54). There are no scheduled economic reports today.
European shares fell for the first time in three days and the pound strengthened after Bank of England policy makers said inflation may be higher than forecast. U.S. stock futures dropped while Spanish bonds rose for a second day. Inflation may be more of a danger than previously expected and the Bank of England should refrain from further stimulus, according to the minutes of a meeting of its Monetary Policy Committee released today. The yield on the Spanish 10-year bond fell six basis points, dropping for the second straight day.
The DJIA opened -84 at 9:30; mortgage prices +2/32 (.06 bp) and the 10 yr note 1.98% -1 bp. So far another flat day appears to be what we will see today.
Warren Buffett said this morning he has prostate cancer; he said it is contained and there is no evidence it has spread. Likely he will undergo radiation treatments to treat the disease. Generally not having any impact on markets.
When last month’s employment report was released there were concerns that some were getting the report out before others making it unfair and possibly having a momentary imp[act on trading in markets. Most reporting companies have their own communications connections at the Labor Dept. but now Labor is saying no more, news organizations are going to be required to use internet access provided by the Labor Dept. to end any chance that news is out sooner by some than others. There is always something to tinker with these days after the financial collapse in 2008. The agency ordered media organizations to remove computer software, hardware and communications lines they have installed at the department to transmit news on data such as the unemployment rate and consumer prices. Instead, reporters will have to use government equipment, software and Internet connections. Under the current system, credentialed journalists in so-called lockups are given data in advance of their release to the public, allowing time to prepare stories, headlines and tables. Communication by phone or computer is cut off for the half hour that reporters are typically given to write their stories. A Department of Labor employee then flips a switch that opens telephone and data lines, allowing journalists to transmit their stories using their own equipment.
The weekly mortgage applications out today for the week ending 4/13. The Market Composite Index, a measure of mortgage loan application volume, increased 6.9%. The Refinance Index increased 13.5% from the previous week. The seasonally adjusted Purchase Index decreased 11.2% from one week earlier. The four week moving average for the seasonally adjusted Market Index is up 1.60%. The four week moving average is down 0.52% for the seasonally adjusted Purchase Index, while this average is up 2.36 percent for the Refinance Index. The refinance share of mortgage activity increased to 75.2% of total applications from 70.5%. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.05% from 4.10%, with points increasing to 0.45 from 0.43 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.36% from 4.43%, with points remaining unchanged at 0.36 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.83% from 3.87%, with points increasing to 0.61 from 0.55 (including the origination fee) for 80% loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.33% from 3.37%, with points increasing to 0.41 from 0.37 (including the origination fee) for 80% loans. The average contract interest rate for 5/1 ARMs decreased to 2.83% from 2.89%, with points decreasing to 0.35 from 0.38 (including the origination fee) for 80% loans.
Looks like another day when the bond and mortgage markets will be flat with not much movement. The 10 yr note isn’t showing much demand to move lower than 2.00% and MBSs follow it. Next week’s FOMC meeting appears to be what traders are waiting for; some evidence the Fed is about to consider another easing. We are not expecting much in the way of improvement after the big decline a week ago.
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