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Maine Mortgage Update 10.29.2010 (end of day)
Mortgage bond prices closed slightly higher Friday afternoon applying downward pressure to mortgage rates.
In news released at the open, Q3 advanced gross domestic product rose 2.0%. That data was as expected. The only way we will ever recover from the Great Recession is to have GDP continue to increase. However that said, as GDP increases so will rates because an expanding economy can be inflationary.
In other news, the employment cost index rose 0.4%. Traders were expecting ECI to rise 0.5%. Lastly, consumer confidence stood at 67.7K vs. the expected 68.00 analysts had estimated. All in all the data was as expected.
Next week is going to rock and roll. Monday brings income, outlays, core PCE and IMS data, the election on Tuesday, Fed meeting Wednesday and the employment report Friday. Yikes!
Maine Mortgage Market Update 10.29.2010
9 am – Mortgage bond prices opened higher Friday morning adding to the gains seen Thursday afternoon.
In news released at the open, Q3 advanced gross domestic product rose 2.0%. That data was as expected. The only way we will ever recover from the Great Recession is to have GDP continue to increase.
In other news, the employment cost index rose 0.4%. Traders were expecting ECI to rise 0.5%.
Traders are now waiting for stocks to begin trade at 9:30 am ET and for the release of the University of Michigan consumer sentiment data set for 10:00 am ET.
Maine Mortgage Market Update 10.28.2010
Mortgage bond prices remain higher Thursday morning erasing the losses seen Wednesday afternoon and more.
In news released this morning weekly jobless claims stood at 434K and continuing claims stood at 4,356K. Analysts were expecting claims at 458K and 4,450K respectively. That data was better than expected and not bond friendly.
Traders will spend the day watching stocks as they wait for the results of Treasury auction of $29B in 7-year notes. Auction results are expected by 1:15 pm ET.
Third quarter GDP data will be released tomorrow morning.
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Maine Mortgage Market Update 10.27.2010
Mortgage bond prices opened lower Wednesday morning addling to the losses seen Tuesday afternoon. Rates are under pressure from strong economic data released this morning.
In news released at the open, orders for durable goods rose 3.3%. Traders were expecting orders to rise 1.8%. That data was sharply higher than expectations and not bond friendly.
Traders are now waiting for stocks to begin trade at 9:30 am ET and for the release of new home sales data set for 10:00 am ET. Also, this afternoon the Treasury will auction $35B in 5-year notes with results by 1:15 pm ET.
Why are rates under pressure? It comes from a variety of things including; what will happen during the election next Tuesday, what will the Fed do next Thursday, is inflation going to creep back or skyrocket and what is going with the economy and housing markets. Bond traders hate uncertainty and will take their money off the table when they get nervous.
Contact your Portland, Maine Mortgage Broker today for more info.
A Look ahead at events that can effect Mortgage bond prices
| Economic Indicator |
Release Date & Time |
Consensus Estimate |
Analysis |
| Existing Home Sales | Monday, Oct. 25, 10:00 am, et |
4.23m | Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, Oct. 26, 10:00 am, et |
50 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| 2-year Treasury Note Auction | Tuesday, Oct. 26, 1:15 pm, et |
None | Important. $35 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Durable Goods Orders | Wednesday, Oct. 27, 8:30 am, et |
Up 0.8% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| New Home Sales | Wednesday, Oct. 27, 10:00 am, et |
300k | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| 5-year Treasury Note Auction | Wednesday, Oct. 27, 1:15 pm, et |
None | Important. $35 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Q3 Advanced GDP | Thursday, Oct. 28, 8:30 am, et |
Up 2.4% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| 7-year Treasury Note Auction | Thursday, Oct. 28, 1:15 pm, et |
None | Important. $29 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Q3 Employment Cost Index | Friday, Oct. 29, 8:30 am, et |
Up 0.5% | Very important. A measure of wage inflation. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, Oct. 29, 10:00 am, et |
68.5 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Employment Cost Index
The employment cost index is a quarterly report issued by the Department of Labor. The report measures the growth of wages, salaries, and benefits costs over a certain period of time. Though ECI figures are usually weeks old, the data remains the best indicator of employment price pressures considering it factors employees’ total compensation.
If wage pressures become evident, higher expectations of inflation also tend to arise. However, increasing compensation does not necessarily lead to increased inflationary pressures. Oftentimes, increased productivity enables employers to increase compensation without increasing the costs of their goods or services. Be cautious heading into this release.
Maine Mortgage Market Update 10.26.2010
Mortgage bond prices remain lower Tuesday morning adding to the losses seen Monday afternoon. Rates remain under pressure as mortgage companies sell bonds to cover locked borrowers. Thin trading conditions are adding to the pressure.
In news released this morning, consumer confidence stood at 50.2. Traders were expecting confidence at 49.00. This data was not bond friendly.
With no more news set for release today, traders will watch stocks as they await the outcome of the Treasury auction of $35B in 2-year notes. Results are expected by 1:15 pm ET.
Maine Mortgage Market Update 10.25.2010
Mortgage bond prices remain higher Monday morning erasing all the losses seen Friday afternoon and more. Trade is quiet.
In news released today, existing home sales stood at 4.53M. Traders were expecting sales to stand at 4.25M. That data was better than expected however it had little effect on trade.
With no more news set for release today, traders will watch stocks to help gauge interest rate direction. At pricing the DOW was higher by 96-points.
Maine Mortgage Market Update 10.22.2010
Open 30Y FNMA MBS 4% Worse by 1/4
Mortgage bond prices are weaker this morning pushing rates higher.
Initially this morning bonds looked higher in overnight trade but so far we have seen nothing but weakness at the mortgage-backed securities open.
Unfortunately stronger stock futures and the additional debt hitting the market next week are weighing heavily upon trading this morning with the lack of any other data out there.
Maine Mortgage Market Update 10.21.2010
Mortgage bond prices are near unchanged this morning holding the gains from yesterday despite the data so far this morning.
Weekly jobless claims 452k, expected 455k, not exactly bond friendly but initial reaction muted. LEI, and Phil. Fed data @ 10am et
Yesterday afternoon Fed Beige Book:
Economy grows at modest pace in beginning of Oct
Housing weak, prices stabilizing
Consumer spending up
Prices of goods and services stable, wage pressures minimal
Fed’s Plosser says Fed should focus on long-term even if right decision disappoints markets, sees inflation moving up in 2011.
