Mortgage bonds remain near unchanged holding the gains from yesterday afternoon.
We were able to close positive yesterday despite the DOW closing up 173 points. The DOW is currently down 49.
There is no data set for release today, but news that China has tightened their lending standards – for the second time in two weeks – is grabbing the market’s attention this morning.
Over and above their normal banking reserve requirements, China is now requiring their banks to set aside additional capital in reserves. This is being done in an effort to drain money from their financial system, and stave off inflation…which now stands at a overheated 4.4% and represents a 2 year high. So while US Stocks are lower this morning – as is the US Dollar – Bonds are not making any gains, due to the inflation threat in China. Why? Because the inflation threat in China will continue to be combated with further rate hikes by the People’s Bank of China…and if rates move higher abroad, global investors in search of the highest yield may find foreign Bonds increasingly more attractive.
Yesterday, the Treasury announced that it will purchase $99B in 2, 5 and 7-Year Notes during the holiday shortened week on Monday, Tuesday and Wednesday. With trading volume a little thinner due to fewer Traders working during a holiday week, and all this fresh new Bond supply coming to market – we could see the present high volatility pick up a notch further still.
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!
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.
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.
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.