MMG Update + By The Numbers - Monday, November 17, 2008 10:43am ET
Current Trend Direction: Sideways
Risks favor: Carefully Floating
Current Price of FNMA 6% Bond: $101.12, Unchanged
Bad news continues to infiltrate the markets today and Mortgage Bonds, currently near unchanged levels, are already far below where they were earlier. Stocks around the globe are lower fueled by worldwide recession fears. Japan became the latest economy to fall into a recession.
The New York Empire State Manufacturing Index came in near estimates at - 25.4, representing lowest reading since records began in 2001.
Banking giant Citigroup announced it will lay off 50,000 people on top of the 23,000 jobs they cut earlier this year. These heavy cuts would leave the second-largest US bank with about 300,000 jobs worldwide.
Our man on the Street, Joe Oakes, says that top executives at Goldman Sachs have decided to forgo their 2008 bonuses in the midst of one of the worst years on Wall Street in memory. Seven top executives have asked the compensation board committee to grant them no bonuses along with CEO Lloyd Blankfein. Blankfein's bonus in 2007 was $70 million...he'll have to struggle to make ends meet with that.
Industrial Production showed a 1.3% rise, higher than the -0.1% expected. September's -2.6% reading was revised lower to -3.7% making it the largest monthly drop in industrial production in over 60 years.
Mortgage Bonds continue to linger near the 200-day Moving Average for the 9th consecutive trading session. Bond prices attempted to rally earlier and moved up to touch exactly on the 200-day MA, but were turned lower as sell programs kicked in. For now we can float - but be ready to lock should pricing drift further to the downside and away from the 200-day MA.
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Marina Vialtsina
Showing posts with label floating. Show all posts
Showing posts with label floating. Show all posts
Monday, November 17, 2008
Tuesday, July 1, 2008
Market Update
MMG Update - Friday, June 27, 2008 10:59am ET
Current Trend Direction: Sideways
Risks Favor: Cautiously Floating
Current Price of FNMA 6% Bond: $100.59, +19bp
On the heels of the Fed decision to leave the Fed Funds Rate unchanged, their favored gauge of inflation arrived this morning, the Core Personal Consumption Expenditure (PCE) reading. The Core PCE rose 0.1% during May, lower than expectations of 0.2% - which left the closely watched year-over-year Core inflation rate at 2.1%. This is outside the Fed's desired range of 1 - 2%, but tolerable in light of the ongoing inflation fears...which has to come as a relief to the Fed.
Also embedded in the PCE report are readings on Personal Income and Spending, which both grew at rates larger than estimates in May. The boost in spending was likely due to the stimulus checks that were sent out to many American taxpayers in the beginning of May.
Oil hit a record high of $142.26 this morning and the inflationary fears inherent in rising oil prices are keeping a lid on both Stocks and Bonds. Stocks have been downright ugly, as the Dow is poised for the worst June since the Great Depression. But at the same time, Mortgage Bonds haven't performed well either...inflation is bad news for both Stocks and Bonds.
The University of Michigan's Consumer Sentiment index fell to 56.4 in June, from 59.6 in May. It's the lowest since 1980 and the third-lowest reading in the 56-year history of the survey. Mortgage Bonds are being helped by this poor economic news.
The ceiling of resistance at $100.47 is being tested again, but has been difficult to break of late. This gives us extra reason for a cautious approach this morning, as we want to see if prices can break above this barrier...but also must remain on guard, because a reversal from this level leaves a long way down before the next floor of support. Take a look at the Bond Page, and you can see how Bond prices have been unable to overcome the $100.47 ceiling, even in the face of a nearly 400 point decline in the Stock market yesterday, which should have pushed some money over into Bonds. We can carefully Float for now, but be ready to Lock as this formidable level of resistance could push prices lower still.
Current Trend Direction: Sideways
Risks Favor: Cautiously Floating
Current Price of FNMA 6% Bond: $100.59, +19bp
On the heels of the Fed decision to leave the Fed Funds Rate unchanged, their favored gauge of inflation arrived this morning, the Core Personal Consumption Expenditure (PCE) reading. The Core PCE rose 0.1% during May, lower than expectations of 0.2% - which left the closely watched year-over-year Core inflation rate at 2.1%. This is outside the Fed's desired range of 1 - 2%, but tolerable in light of the ongoing inflation fears...which has to come as a relief to the Fed.
Also embedded in the PCE report are readings on Personal Income and Spending, which both grew at rates larger than estimates in May. The boost in spending was likely due to the stimulus checks that were sent out to many American taxpayers in the beginning of May.
Oil hit a record high of $142.26 this morning and the inflationary fears inherent in rising oil prices are keeping a lid on both Stocks and Bonds. Stocks have been downright ugly, as the Dow is poised for the worst June since the Great Depression. But at the same time, Mortgage Bonds haven't performed well either...inflation is bad news for both Stocks and Bonds.
The University of Michigan's Consumer Sentiment index fell to 56.4 in June, from 59.6 in May. It's the lowest since 1980 and the third-lowest reading in the 56-year history of the survey. Mortgage Bonds are being helped by this poor economic news.
The ceiling of resistance at $100.47 is being tested again, but has been difficult to break of late. This gives us extra reason for a cautious approach this morning, as we want to see if prices can break above this barrier...but also must remain on guard, because a reversal from this level leaves a long way down before the next floor of support. Take a look at the Bond Page, and you can see how Bond prices have been unable to overcome the $100.47 ceiling, even in the face of a nearly 400 point decline in the Stock market yesterday, which should have pushed some money over into Bonds. We can carefully Float for now, but be ready to Lock as this formidable level of resistance could push prices lower still.
Tuesday, May 6, 2008
Mortgage Market Update - Oil hits a new high
MMG Update - Tuesday, May 6, 2008 9:14am ET
Current Trend Direction: Sideways
Risks favor: Floating
Current Price of FNMA 5.5% Bond: $100.59, +19bp
Bonds are moving higher this morning after bad news was released for Fannie Mae, the largest provider of US home financing. The company said it lost $2.19 Billion in the first quarter due to the current housing and credit crisis, which equates to a loss of $2.57 a share compared with a profit of 85 cents a year ago. And like Freddie Mac, the company plans to raise capital and cut its dividend. Stocks traded lower on the news, pushing money into Bonds and helping Bond pricing improve.
In other headlines, oil hit a new record high of $120.93 this morning. Oil prices have doubled over the past twelve months, pushing the average price at the pump to $3.60 a gallon. Goldman Sachs is forecasting that black gold could rise to $150-$200 a barrel in the next twelve months. If this plays out as they suggest, the inflationary effects of high oil prices could pressure Mortgage Bonds lower, causing home loan rates to move higher...so this will be a story to watch. In other words, it might be the time to buy now while rates are low. And, because of the inflation alone, we may see higher home prices.
For now, Bonds continue to ride a dual floor of support at the 50 and 100-day Moving Averages. We will continue to Float for now, and watch how the Bond behaves near this strong floor.
Current Trend Direction: Sideways
Risks favor: Floating
Current Price of FNMA 5.5% Bond: $100.59, +19bp
Bonds are moving higher this morning after bad news was released for Fannie Mae, the largest provider of US home financing. The company said it lost $2.19 Billion in the first quarter due to the current housing and credit crisis, which equates to a loss of $2.57 a share compared with a profit of 85 cents a year ago. And like Freddie Mac, the company plans to raise capital and cut its dividend. Stocks traded lower on the news, pushing money into Bonds and helping Bond pricing improve.
In other headlines, oil hit a new record high of $120.93 this morning. Oil prices have doubled over the past twelve months, pushing the average price at the pump to $3.60 a gallon. Goldman Sachs is forecasting that black gold could rise to $150-$200 a barrel in the next twelve months. If this plays out as they suggest, the inflationary effects of high oil prices could pressure Mortgage Bonds lower, causing home loan rates to move higher...so this will be a story to watch. In other words, it might be the time to buy now while rates are low. And, because of the inflation alone, we may see higher home prices.
For now, Bonds continue to ride a dual floor of support at the 50 and 100-day Moving Averages. We will continue to Float for now, and watch how the Bond behaves near this strong floor.
Monday, April 7, 2008
Morgage Update: Stocks and Bonds
The recent euphoria in the Stock market continues, and the word in the trading pits is that perhaps the credit crunch is over. Today, we are hearing about more financial institutions raising capital, and this time it is Washington Mutual saying that it has investors injecting $5 Billion in cash. Traders are reading the recent investments and capital raising in the financial sector as a sign that the worst days of the credit crisis may be in the rear view mirror. As a result, Stocks overall are trading higher, and as money flows out of Bonds and into Stocks, this is hurting Bond prices a bit this morning.
Today kicks off the beginning of earnings season for Stocks, which may have the potential to add to the euphoria or change the mood to a negative one depending on the results. With the scent of recession in the air, the quality of corporate earnings and especially future guidance will largely influence the direction of both Stocks and Bonds in the coming days. If corporate earnings are reported weaker than expected, Stocks may come off the happy gas and head lower, which would provide a boost to Bonds.
Mortgage Bonds, while trading lower, are improved from the worst levels seen earlier in the day. Additionally, prices remain well above support at the 50-day Moving Average. For now, we will continue to Float and give Bonds a chance to further improve - but be ready to Lock your mortgage rate if things turn sour.
Today kicks off the beginning of earnings season for Stocks, which may have the potential to add to the euphoria or change the mood to a negative one depending on the results. With the scent of recession in the air, the quality of corporate earnings and especially future guidance will largely influence the direction of both Stocks and Bonds in the coming days. If corporate earnings are reported weaker than expected, Stocks may come off the happy gas and head lower, which would provide a boost to Bonds.
Mortgage Bonds, while trading lower, are improved from the worst levels seen earlier in the day. Additionally, prices remain well above support at the 50-day Moving Average. For now, we will continue to Float and give Bonds a chance to further improve - but be ready to Lock your mortgage rate if things turn sour.
Thursday, November 1, 2007
Quarter Rate Cut
Today's FOMC adjournment brought us the expected quarter point rate cut that was expected by many, but the post-meeting statement created concern about inflation. The Fed referenced the weak housing market as a contributing factor to the change in short-term interest rates, but also indicated that inflation remains an issue, particularly with the high energy and oil prices we are currently seeing.The move and comments leads many to believe that the Fed will not make another rate cut in the near future.
The stock markets have surprisingly reacted well to the news with the Dow up 131 points and the Nasdaq gaining 35 points. However, the bond market and mortgage rates have not faired so well. The bond market is currently down 23/32, which will likely revise this afternoon's mortgage rates higher by approximately .25 of a discount point from this morning's rates.
This morning's release of the 3rd Quarter Gross Domestic Product (GDP) revealed a 3.9% annual pace of economic growth, exceeding forecasts of a 3.1% rate. This means that economic activity was moderately stronger than expected. However, offsetting that was good news in the key inflation reading within the report. It showed a significantly lower reading than was expected, indicating inflationary pressures were well under control.
Also posted this morning was the 3rd Quarter Employment Cost Index (ECI), which tracks employer costs for salaries and benefits. It showed a 0.8% that was slightly lower than forecasts. This can also be taken as good news for bonds and mortgage pricing because it eases wage inflation concerns.
Now that the Fed meeting is behind us, we have to turn our attention to the remaining economic news of the week. There are a couple of high-impact reports still left to be posted that may significantly affect the markets and mortgage rates. September's Personal Income and Outlays report will be posted early tomorrow morning. This data gives us an indication of consumer ability to spend and current spending habits. It is important to the markets because consumer spending makes up two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. This is bad news for the bond market and mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. Analysts are expecting to see increases of 0.4% in income and 0.4% in outlays.
The Institute for Supply Management (ISM) will release their Manufacturing Index for October late Thursday morning. This index measures manufacturer sentiment and can have a considerable impact on the financial markets and mortgage rates. Current forecasts call for a decline from September's 52.0 reading. If we get a reading below 51.5, we should see mortgage rates drop tomorrow morning. On the other hand, a reading above 51.5, indicating manufacturing activity may be stronger than thought, could fuel a stock rally and drive mortgage rates higher.
If I were considering financing/refinancing a home, I would....Float if my closing were taking place within 7 days...Float if my closing were taking place between 8 and 20 days...Float if my closing were taking place between 21 and 60 days...Float if my closing were taking place over 60 days from now...This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
The stock markets have surprisingly reacted well to the news with the Dow up 131 points and the Nasdaq gaining 35 points. However, the bond market and mortgage rates have not faired so well. The bond market is currently down 23/32, which will likely revise this afternoon's mortgage rates higher by approximately .25 of a discount point from this morning's rates.
This morning's release of the 3rd Quarter Gross Domestic Product (GDP) revealed a 3.9% annual pace of economic growth, exceeding forecasts of a 3.1% rate. This means that economic activity was moderately stronger than expected. However, offsetting that was good news in the key inflation reading within the report. It showed a significantly lower reading than was expected, indicating inflationary pressures were well under control.
Also posted this morning was the 3rd Quarter Employment Cost Index (ECI), which tracks employer costs for salaries and benefits. It showed a 0.8% that was slightly lower than forecasts. This can also be taken as good news for bonds and mortgage pricing because it eases wage inflation concerns.
Now that the Fed meeting is behind us, we have to turn our attention to the remaining economic news of the week. There are a couple of high-impact reports still left to be posted that may significantly affect the markets and mortgage rates. September's Personal Income and Outlays report will be posted early tomorrow morning. This data gives us an indication of consumer ability to spend and current spending habits. It is important to the markets because consumer spending makes up two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. This is bad news for the bond market and mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. Analysts are expecting to see increases of 0.4% in income and 0.4% in outlays.
The Institute for Supply Management (ISM) will release their Manufacturing Index for October late Thursday morning. This index measures manufacturer sentiment and can have a considerable impact on the financial markets and mortgage rates. Current forecasts call for a decline from September's 52.0 reading. If we get a reading below 51.5, we should see mortgage rates drop tomorrow morning. On the other hand, a reading above 51.5, indicating manufacturing activity may be stronger than thought, could fuel a stock rally and drive mortgage rates higher.
If I were considering financing/refinancing a home, I would....Float if my closing were taking place within 7 days...Float if my closing were taking place between 8 and 20 days...Float if my closing were taking place between 21 and 60 days...Float if my closing were taking place over 60 days from now...This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
Monday, October 15, 2007
Shall you lock Interest Rate if you are purchasing a house?
Friday News: So far today, Bond prices remain relatively unchanged. Overall, they are still hovering near the important 200-day Moving Average, having touched it 12 of the past 16 trading days.
The Producer Price Index (PPI), which measures inflation at the wholesale or producer level, was reported this morning and showed some inflation pressure. Bonds initially traded lower on the news, but have since improved higher.
Bonds continue to trade sideways, bouncing back and forth above the 200-day Moving Average. So for now, I will recommend floating, but I will be watching closely as the bond remains above a layer of support."
The Producer Price Index (PPI), which measures inflation at the wholesale or producer level, was reported this morning and showed some inflation pressure. Bonds initially traded lower on the news, but have since improved higher.
Bonds continue to trade sideways, bouncing back and forth above the 200-day Moving Average. So for now, I will recommend floating, but I will be watching closely as the bond remains above a layer of support."
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