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Mortgage news 07/29/2008

July 29th, 2008 3:06 PM

Tuesday's bond market has opened in negative territory following stronger than expected economic news and sizable stock gains. The stock markets are showing strength with the Dow up 122 points and the Nasdaq up 46 points. The bond market is currently down 16/32, which will likely push this morning's mortgage rates higher by approximately .125 - .250 of a discount point.

This morning's economic news came from the Conference Board who posted their Consumer Confidence Index (CCI) for July. It showed a reading of 51.9 and also revised last month's final reading higher by 0.6. This means that consumer confidence was higher the past two months than many had thought. This is considered bad news for bonds and mortgage rates because consumer spending is tied to consumer confidence.

There is no relevant economic news scheduled for release tomorrow that is relevant to mortgage rates. Look for the stock markets to influence bonds and mortgage rates. If s tocks rise again, bonds will likely fall and mortgage rates inch higher. If stocks give back today gains, we should see mortgage rates improve tomorrow.

There are two reports scheduled for release Thursday. The first is the quarterly Gross Domestic Product (GDP), which is considered to be the best indicator of economic growth. It is the sum of all goods and services produced in the U.S. and usually has a great deal of influence on the financial markets. Current forecasts are estimating a 2.3% pace. A larger increase will probably hurt bond prices, leading to higher mortgage rates. But a smaller increase would likely fuel a bond market rally.

The second report of the day is the 2nd Quarter Employment Cost Index (ECI) that measures employers' costs for wages and benefits. It is considered to be an important measurement of wage inflation and can have a pretty big impact on the bond market and mortgage rates. If it shows a rapid increase, raising inflatio n concerns, the bond market may drop and mortgage rates rise. It is expected to reveal an increase of 0.7%.

Posted by Scott Cox on July 29th, 2008 3:06 PMPost a Comment (0)

Mortgage News 07/31/2008

July 31st, 2008 3:15 PM

Thursday's bond market has opened in positive territory following favorable economic news and mixed stock reactions. The Dow is currently down 85 points while the Nasdaq has gained 11 points. The bond market is currently up 20/32, which should improve this morning's mortgage rates by approximately .375 of a discount point.

The first piece of news posted this morning was the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP), which is considered to be the best indicator of economic growth. It revealed a 1.9% annual rate of growth that was lower than forecasts. Today's release also revised the previous two quarters readings lower than previously announced, which dropped the last quarter of 2007 into negative growth. That was the first quarter of negative growth since 2001. Furthermore, today's release also showed a much weaker than expected reading in a key inflation reading of the data. Overall, this report was very f avorable for bonds and mortgage rates.

The second report of the day was the 2nd Quarter Employment Cost Index (ECI) that matched forecasts of a 0.7% rise. This index measures employers' costs for wages and benefits and is considered to be an important measurement of wage inflation. Since it met forecasts its result shave had little impact on the bond market or mortgage pricing this morning.

Also worth noting was the Labor Department's posting of last week's new claims for unemployment benefits. They were expected to say that 395,000 new claims for benefits were filed but announced that 448,000 we filed. That number is well above the benchmark 400,000 and the second consecutive week of being above it. That raises concerns in the market that the employment sector is weakening, especially with tomorrow's major report coming. If true, it would be very good news for the bond market and mortgage rates.

Tomorrow mornings brings us the release of two important reports, including one of the most important reports we see each month. This report gives us the U.S. unemployment rate, number of new jobs added to the economy and the average hourly earnings reading. The ideal situation for the bond market is rising unemployment, a loss of new jobs and little increase in earnings. This report is considered to be one of the single most important releases that we see each month.

While the today's GDP release can be considered the single most important report in general, it is posted quarterly rather than monthly like the Employment report. Tomorrow's Employment report is expected to show that the unemployment rate rose to 5.6% last month while approximately 75,000 new jobs were lost and a 0.3% increase in average earnings. The unemployment rate probably will not be much of a factor if the new jobs number varies from forecasts. However, due to the importance of the payroll numbers, we will undoubtedly see quite a bit of volatility in the markets and mortgage pricing.

Also scheduled for release tomorrow is the Institute for Supply Management's (ISM) Manufacturing Index for July. This index measures manufacturer sentiment by surveying trade executives about business conditions during the previous month. A reading above 50.0 means that more surveyed executives felt that business improved than those who said it had worsened. It is expected to show a decline to a reading of 49.2. A smaller than expected reading would be great news for the bond market and would likely improve mortgage rates tomrorow, assuming that the Employment report doesn't give us an major surprises.

Posted by Scott Cox on July 31st, 2008 3:15 PMPost a Comment (0)

Mortgage News 07/30/2008

July 30th, 2008 3:39 PM

Wednesday's bond market has opened in negative territory again as stock extend their gains. The stock markets are showing strength yet again with the Dow up 112 points and the Nasdaq up 13 points. The bond market is currently down 7/32, which will likely keep this morning's mortgage rates at yesterday's levels.

There is no relevant economic news scheduled for release today that is relevant to mortgage rates, but there are two reports scheduled for release tomorrow. The first is the quarterly Gross Domestic Product (GDP), which is considered to be the best indicator of economic growth. It is the sum of all goods and services produced in the U.S. and usually has a great deal of influence on the financial markets. Current forecasts are estimating a 2.3% pace. A larger increase will probably hurt bond prices, leading to higher mortgage rates. But a smaller increase would likely fuel a bond market rally.

The second report of the day is the 2nd Quarter Employment Cost Index (ECI) that measures employers' costs for wages and benefits. It is considered to be an important measurement of wage inflation and can have a pretty big impact on the bond market and mortgage rates. If it shows a rapid increase, raising inflation concerns, the bond market may drop and mortgage rates rise. It is expected to reveal an increase of 0.7%.

We also will get weekly unemployment claims from the Labor Department. They are expected to say that 395,000 new claims for benefits were filed last week. This would be a decline form the previous week's number, but this data usually is not of much importance to the markets unless it varies greatly from forecasts.

Posted by Scott Cox on July 30th, 2008 3:39 PMPost a Comment (0)

Mortgage News 07/28/2008

July 28th, 2008 12:16 PM

Monday's bond market has opened in positive territory following early stock weakness. The stock markets are showing losses with the Dow down 68 points and the Nasdaq down 7 points. The bond market is currently up 16/32, which should improve this morning's mortgage rates by approximately .125 of a discount point.

There is no relevant news scheduled for release today, but there are several important reports due this week that are likely to affect mortgage pricing. The first piece of news comes late tomorrow morning when the Conference Board posts their Consumer Confidence Index (CCI) for July. This index measures consumer sentiment, giving us an idea of consumer willingness to spend. This is important because consumer spending makes up two-thirds of the U.S. economy. If the CCI reading is weaker than expected, we may see bond prices rise and mortgage rates drop tomorrow. Current forecasts are calling for a reading of 50.0, which would be a lightly lower readin g than June's reading.

There is no relevant economic news scheduled for release Wednesday that is relevant to mortgage rates. However, there are two on the schedule for Thursday. The first is the quarterly Gross Domestic Product (GDP), which is considered to be the best indicator of economic growth. It is the sum of all goods and services produced in the U.S. and usually has a great deal of influence on the financial markets. Current forecasts are estimating a 1.8% pace. A larger increase will probably hurt bond prices, leading to higher mortgage rates. But a smaller increase would likely fuel a bond market rally.

The second report of the day is the 2nd Quarter Employment Cost Index (ECI) that measures employers' costs for wages and benefits. It is considered to be an important measurement of wage inflation and can have a pretty big impact on the bond market and mortgage rates. If it shows a rapid increase, raising inflation concerns, the bond market may drop and mortgage rates rise. It is expected to reveal an increase of 0.7%.

Overall, it likely will be a fairly active week in the mortgage market. With several important economic reports on tap, we will likely see noticeable movement in mortgage rates more than one day. The most important day of the week is Friday with the Employment and ISM reports being released, but Thursday's GDP release is highly important to the markets and could heavily influence mortgage pricing also.

Posted by Scott Cox on July 28th, 2008 12:16 PMPost a Comment (0)

Mortgage News 07/25/2008

July 25th, 2008 1:30 PM

Friday's bond market has opened in well in negative territory as traders erase a sizable rally in bonds yesterday. The stock markets are in positive territory after their large sell-off yesterday helped fuel the bond rally. The Dow is currently up 51 points while the Nasdaq has gained 17 points. The bond market is currently down 16/32, which will erase yesterday's late rally and prevent much of an improvement in this morning's mortgage rates.

None of today's economic news did anything to help bond prices or mortgage rates. The first was June's Durable Goods Orders that showed an increase in orders for big-ticket items of 0.8%. This was much larger than the small decline that forecasted, indicating that the manufacturing sector may be stabilizing.

The second report was the revision to July's University of Michigan Index of Consumer Sentiment. It showed a reading of 61.2 that was well above the earlier reading of 56.6. This means that consumers w ere much confident about their own financial situations than many had thought. That is considered bad news for bonds because higher levels of confidence usually means that consumers are more willing to make large purchases, helping to fuel consumer spending.

The third was June's New Home Sales report, but it was the least important of the three. It showed a much higher level of sales than was expected and revealed an upward revision to May's sales numbers. Fortunately, this data is not considered to be of high importance or we may have seen bonds even lower than current levels.

With exception to Monday, next week is packed with relevant economic reports. Included in the long list of reports scheduled for release is the single most important quarterly report and the arguably the most important month report. In addition, there are several other pieces of data that may influence the markets and mortgage rates next week. Look for more details on next week's events in Sunday's weekly preview.

Posted by Scott Cox on July 25th, 2008 1:30 PMPost a Comment (0)

Mortgage News 07/23/2008

July 23rd, 2008 2:30 PM

Wednesday's bond market has opened in negative territory since there is no relevant economic data to offset early stock gains. The stock markets are in positive territory with the Dow up 24 points and the Nasdaq up 18 points. The bond market is currently down 13/32, which will likely push this morning's mortgage rates higher by approximately .250 of a discount point.

There is no relevant economic data scheduled for release this morning, however, the Federal Reserve will release its Beige Book report this afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. With Fed Chairman Ben Bernanke's testimony last week, I don't think we will see any significant surprises in this report, and therefore will likely not cause much movement in mortgage rates later today.
There are two housing sector related releases scheduled for this week with the first coming tomorrow morning. Neither will likely have much of an impact on the bond market or mortgage rates. June's Existing Home Sales will be posted tomorrow morning and is expected to show a decline in sales.

We also have a 5-year Treasury Note auction Thursday that may influence bond trading but will also give us an indication of investor appetite for bonds. If it is met with a strong demand from investors, bond prices may rise during afternoon trading. However, if the sale was met with a poor demand, we could see bond prices fall and mortgage rates rise late tomorrow.

Posted by Scott Cox on July 23rd, 2008 2:30 PMPost a Comment (0)

Mortgage News 07/22/2008

July 22nd, 2008 1:50 PM

Tuesday's bond market has opened in negative territory as investors remain concerned about inflation sensitive securities. The stock markets are mixed with the Dow up 34 points and the Nasdaq down 4 points. The bond market is currently down 13/32, but due to strength in bonds late yesterday we will likely see little change in this morning's mortgage rates.

There is no relevant economic data scheduled for release today or tomorrow morning. This will leave the bond market and mortgage rates to be influenced by stock and oil prices. This could further pressure bonds in my opinion, so please proceed cautiously if still floating an interest rate. I would not be surprised to see an upward revision to mortgage pricing later today if bonds remain near current levels.

The Federal Reserve will release its Beige Book report tomorrow afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when de termining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. With Fed Chairman Ben Bernanke's testimony last week, I don't think we will see any significant surprises in this report, and therefore will likely not cause much movement in mortgage rates tomorrow afternoon.

There are two housing sector related releases scheduled for Thursday and Friday, but I don't think they will have much of an impact on the bond market or mortgage rates. June's Existing Home Sales will be posted Thursday while New Home Sales will be released Friday. I would expect that other reports or factors will drive bond trading and mortgage pricing much more than these will.

We also have a 5-year Treasury Note auction Thursday that may influence bond trading but will also give us an indication of investor appetite for bonds. Generally speaking, despite the lack of a data-packed calendar, I would still maintain constant contact with your mortgage professional.

Posted by Scott Cox on July 22nd, 2008 1:50 PMPost a Comment (0)

Mortgage News 07/20/2008

July 21st, 2008 10:35 AM

This week will be interesting for the bond market and mortgage rates. There are six economic reports scheduled for the financial and mortgage markets to digest, but only one of them is considered to be of high importance to the markets. But with data being posted all but one day of the week, we may see some fluctuations from day to day in mortgage pricing.

The first report of the week comes tomorrow morning with the release of June's Leading Economic Indicators (LEI) at 10:00 AM. This Conference Board index attempts to measure economic activity over the next three to six months. While it is not a factual report, it still is considered to be of relative importance to the bond market. It is expected to show a 0.1% increase, meaning that we may see a slight increase in economic activity over the next few months. A decline in the index would be good news for the bond and mortgage markets.

The Federal Reserve will release its Beige Bo ok report Wednesday afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. With Fed Chairman Ben Bernanke's testimony last week, I don't think we will see any significant surprises in this report, and therefore will likely not cause much movement in mortgage rates Wednesday afternoon.

There are two housing sector related releases scheduled for Thursday and Friday, but I don't think they will have much of an impact on the bond market or mortgage rates. June's Existing Home Sales will be posted Thursday while New Home Sales will be released Friday. I would expect that other reports or factors will drive bond trading and mortgage pricing much more than these will.

Friday brings us the release of two of the week's most important reports. The first will come from the Commerce Department when they will post June's Durable Goods Orders at 8:30 AM ET. Current forecasts are currently calling for a gain of 0.1% after showing little change in new orders during May. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. These are products that are expected to last at least three years. A stronger than expected number may lead to higher mortgage rates Friday morning. If it reveals a smaller than expected rise or a decline, mortgage rates should drop Friday.

Also being released Friday is the final revision to July's University of Michigan Index of Consumer Sentiment. Unless we see a drastic revision to the preliminary estimate, I think the markets will probably shrug this news off.

Overall, this is a moderately significant week for the bond market and mortgage rates. If we get weaker than expected economic results, we may see mortgage rates move low er for the week. However, stronger than expected results will likely lead to higher rates for the week. We also have a 5-year Treasury Note auction Thursday that may influence bond trading but will also give us an indication of investor appetite for bonds. Generally speaking, despite the lack of a data-packed calendar, I would still maintain constant contact with your mortgage professional.

Posted by Scott Cox on July 21st, 2008 10:35 AMPost a Comment (0)

Mortgage News 07/18/2008

July 18th, 2008 1:50 PM

Friday's bond market has opened well in negative territory as investors continue to shy away from inflation-threatened securities. The stock markets are mixed during morning trading with the Dow up 38 points and the Nasdaq down 23 points. The bond market is currently down 21/32, which will likely push this morning's mortgage rates higher by another .375 of a discount point.

There is no relevant economic data scheduled for release today, but this morning's bond losses don't come as a surprise. It appears that the sentiment in the bond market has turned more pessimistic than optimistic, partly due to inflation concerns. That has led to bonds and long-term securities becoming of less interest to investors. The result is bond prices falling as they are sold and mortgage rates rising. Unfortunately, I am not so sure that this is the end of the selling, so please be careful if still floating an interest rate.

There are a couple of reports scheduled for release next week that are relevant to mortgage related bonds and rates. However, none are considered to be of extremely high importance to the markets. The first comes Monday morning with the release of June's Leading Economic Indicators (LEI). This report is considered to be moderately important to the markets.

The rest of the week brings is insight to housing sales, manufacturing activity for big-ticket items and the Fed Beige Book that breaks down economic activity in the U.S. by region. Look for more details on these and the rest of the upcoming week's events in Sunday's weekly preview.

Posted by Scott Cox on July 18th, 2008 1:50 PMPost a Comment (0)

Mortgage News 07/17/2008

July 17th, 2008 2:31 PM

Thursday's bond market has opened in negative territory as stocks continue their upward move and inflation concerns make bonds less attractive to investors. Yesterday's rally in bonds seem to be carrying over into this morning's trading with the Dow up 58 points and the Nasdaq up 7 points. The bond market is currently down 5/32, which with yesterday's late selling will likely push this morning's mortgage rates higher by approximately .500 of a discount point compared to yesterday's morning rates.

The minutes from the last FOMC meeting did raise some concern in the bond market yesterday and helped fuel the stock rally. Some of excerpts included indications that the Fed's next move would likely be an increase to key short-term interest rates rather than another rate cut. This means that the Fed is more worried about inflation than a slowing economy. Since inflation erodes the value of a bond's future fixed interest payments, this news sent mortgage related bonds lower and mortgage rates higher.

Today's only relevant data was June's Housing Starts report that surprised many by showing an increase in starts of new homes. It was expected to show another decline in starts. However, this data is not considered to be of high importance and has not had much influence on today's trading or mortgage pricing.

The Labor reported that 366,000 new claims for unemployment benefits were filed last week. This was an increase from the previous week, but not as high as analysts had expected. However, since this data tracks only a week's worth of claims it also hasn't affected mortgage rates this morning.

There is no relevant economic data scheduled for release tomorrow, meaning that stocks will likely heavily influence bond trading and mortgage rates. With this week's volatility, we could see traders adjust portfolios ahead of the weekend. That could lead to further volatility in bonds and mortgage rates again tomorrow.

Posted by Scott Cox on July 17th, 2008 2:31 PMPost a Comment (0)

Mortgage News 07/15/2008

July 15th, 2008 4:14 PM

Tuesday's bond market has opened in positive territory again as the volatility in stocks continues. The stock markets are in negative territory with the Dow down 106 points and the Nasdaq down 28 points. The bond market is currently up 18/32, which likely improve this morning's mortgage by approximately .250 of a discount point.

The Labor Department gave us June's Producer Price Index (PPI) this morning, saying that prices rose 1.8% last month. This exceeds the 1.3% increase that was forecasted. However, the core data reading of 0.2% that excludes more volatile food and energy prices fell short of forecasts. This means that food and energy prices spiked more than expected, but since core prices did not rise as much as thought that data is being considered favorable for bonds.

June's Retail Sales report was also released today, showing a 0.1% increase in sales when analysts had predicted a 0.4% rise. This was lower than expected and indicates tha t consumers are being more frugal than thought. That is good news for bonds because consumer spending makes up two-thirds of the U.S. economy.

Fed Chairman Bernanke's testimony before the Senate Banking Committee this morning did not reveal any significant surprises. He indicated there was concern about the housing market along with energy costs and their impact on the economy, saying that they could drag on the economy the remainder of the year. He will likely repeat the same testimony tomorrow before the House Financial Services Committee. I am not expecting his words to impact bonds or rates tomorrow unless something in the question and answer portion surprises us.

Tomorrow brings us the release of June's Consumer Price Index (CPI). It is a mirror of today's PPI with the exception that the CPI measures inflation at the more important consumer level of the economy. Analysts have forecasted a 0.7% increase in the overall index a nd a 0.2% rise in the core data. The core data is considered to be the key reading because it excludes more volatile food and energy prices, giving us a more stable measure of inflation. Higher than expected readings could raise inflation fears and push mortgage rates higher tomorrow.

June's Industrial Production data will also be posted tomorrow morning. This data measures output and U.S. factories, mines and utilities, giving us an indication of manufacturing sector strength. It is expected to show a 0.2% rise in production, indicating that the manufacturing sector showed moderate growth during the month. A smaller than expected increase would be good news and could help push mortgage rates slightly lower tomorrow.

Also worth noting is the release of the minutes from the last FOMC meeting. There is a possibility of the markets reacting to them following their 2:00 PM ET release tomorrow, especially if they show some divisiveness by its members durin g discussion and voting at the last meeting.

Posted by Scott Cox on July 15th, 2008 4:14 PMPost a Comment (0)

Mortgage News 07/03/2004

July 3rd, 2008 1:46 PM

Thursday's bond market has opened down slightly after this morning's Employment report failed to deliver any significant surprises. The stock markets are reacting favorably with the Dow up 90 points and the Nasdaq gaining 6 points. The bond market is currently down 5/32, which will likely keep this morning's mortgage rates at yesterday's afternoon levels.

The Labor Department gave us today's only relevant economic news, saying that the unemployment rate remained at 5.5% last month when it was expected to slip to 5.4%. The report showed that 62,000 jobs were lost during the month, which nearly matched forecasts of 60,000. The report also revised May's job loss from 49,000 to 62,000, meaning that there was little difference between May's employment situation and June's. This lack of ?further deterioration? is being taken as good news for stocks and helped prevent bonds from moving higher this morning.

Also worth noting was the Labor Department's weekly release of unemployment claim figures. They said this morning in a separate release that 404,000 new claims for benefits were filed last week. This was the first time that claims crossed the important benchmark of 400,000 since March. Claims exceeding 400,000 is believed to be a recessionary sign and indicates that the employment sector is weakening. However, this news is being overshadowed by the much more important monthly report that was released today rather than its typical Friday posting day.

Keep in mind that the bond market will close at 2:00 PM today and all markets will be closed tomorrow in observance of the Independence Day holiday. All markets will reopen Monday morning.

Next week is pretty light in terms of economic releases, especially compared to this week's data. There are only a couple of reports scheduled that are even relevant to bonds and mortgage rates, but none are considered to be of high-importance. Look for more details on next week's events in Sunday's weekly preview.

Posted by Scott Cox on July 3rd, 2008 1:46 PMPost a Comment (0)

Mortgage News 07/01/2008

July 1st, 2008 12:36 PM

Tuesday's bond market has opened in positive territory despite the release of stronger than expected economic news. The stock markets are showing losses with the Dow down 38 points and the Nasdaq down 6 points. The bond market is currently up 5/32, but we likely will see little change in this morning's mortgage rates due to some weakness late yesterday.

The Institute of Supply Management (ISM) reported late this morning that their manufacturing index for June rose from 49.6 in May to 50.2 in June. Analysts were expecting to see a decline in the index with a reading of 48.6. This means that manufacturer sentiment was stronger than thought. This is actually considered to be negative news for bonds and mortgage rates, however, the market seems to be geared towards oil and stock prices today.

The Commerce Department will post May's Factory Orders data late tomorrow morning, which is similar to the Durable Goods Orders report that was released last week. The biggest difference being that tomorrow's report covers both durable and non-durable goods. It usually doesn't have as much of an impact on the bond market as the durable goods data does, but can lead to changes in mortgage pricing if it varies from forecasts. Current expectations are showing a 0.5% rise in new orders from April's levels. A smaller than expected rise in orders would be considered good news for the bond market and should help lower mortgage rates slightly tomorrow.

I would not be surprised to see some volatility in bonds and possibly mortgage rates later today and tomorrow. Accordingly, it may be wise to lock an interest rate if closing in the immediate future if you are still floating. This volatility, if it does come, could improve mortgage rates or lead to upward revisions. I am not so certain that they will be favorable to mortgage shoppers, hence the lock recommendation. This doesn't mean that I am sure rates will move higher over the next day or so. It simply means that the likelihood of seeing much of an improvement during that time frame is outweighed by the potential risk of a spike in rates. Maintaining fairly constant contact with your mortgage professional is recommended for the next few days.

Posted by Scott Cox on July 1st, 2008 12:36 PMPost a Comment (0)