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Austin mortgage borrowers are advised to stay a little on the defensive side until we get further confirmation that the market is headed back to those July highs

7yr auction results -  Issue stopped 2bps behind the auction deadline quote at a 2.394% yield, bid to cover of 2.78 as compared to an average cover of 2.86.  Indirects took just 42.3% of the issue vs 51% last month.  Overall the auction was given about a C+ grade.  So much for expectations.

Stocks have gained a little ground, now only down 40.  Mtg backs dipped off the auction results but now are back up 5s.  10yr is up a tick trading 2.99%

Austin mortgage borrowers are advised to stay a little on the defensive side until we get further confirmation that the market is headed back to those July highs.

Have a great afternoon!

We might be in for a ride to even lower Austin mortgage rates

Morning Austin Mortgage Market Report – Major market sectors reversed short-term trends yesterday as Treasury prices rose and equity markets edged lower. The five-year note auction met very strong demand and yields for that portion of the curve declined 10bp. The Fed’s Beige Book suggested weak growth in most areas and actually showed slowing economic activity in some regions.

Yesterday’s early morning data included a 1% decline in durable goods orders and like the Fed report, suggested a sluggish economy. Somewhat encouraging housing data released earlier in the week supported the notion housing markets might be stabilizing, but careful review led most analysts to conclude seasonal factors, not expired tax credits, and other transient factors resulted in headline home price and sales figures appearing stronger than actual underlying trends. Foreclosure filing trends also suggest the housing market will continue to struggle as a report from RealtyTrac shows increased filings in 75% of the major metropolitan areas increased during the first half of this year with problems spreading into what had previously been some of the least affected areas. This morning’s weekly jobless claims report showed 457,000 first time claims for the week ending July 24th, an in-line-with-expectations decline of 11,000 from the prior week.

Buying today has taken prices through the 8-day moving average at 122-31 and the 62% retracement of the drop from the July high at 123-05.  The latter indicates that a full retracement of that rally is underway.  This move would take prices to the July high at 123-24.  Daily studies, however, are still a bit skeptical of the strength.  If we see a strong move above 123-24, hold on, we might be in for a ride to even lower Austin mortgage rates.

To wrap up this week’s coupon auctions, the Treasury will sell $29bln 7-year notes at high noon.  The auction is expected to follow others this week with a fairly positive result.  Stocks are taking it on the chin, currently down around 80 points.  10yr is up 3+, trading 2.99%.  Mtg backs are trading a bit unstable, currently reading anywhere from up 4s to up 6s.

Austin mortgage borrowers are encouraged to lay a little defense until the dust settles Thursday afternoon

In what looks to be a repeat of yesterday, stocks took off early this morning on the heels of DuPont’s great quarter and the Case Shiller Home Index coming in better than expected.

First on DuPont; all divisions of their business has double digits gains and revised guidance higher for the 3^rd and 4^th quarter.  Even their overseas sales were up over 30%.  Not bad.

Next came the housing numbers, up 4.6% on the 20 city index and up 5.4% on the 10 city index.  Charlotte and Las Vegas were the only not so bright spots across the county.  After the release of this dynamic duo, optimism started to spread.  Even the Euro zone banks (Deutsche in particular) seemed to be improving with the German Banking giant reporting a 6.2% gain in net profits.

Just as the light at the end of the tunnel got brighter, Consumer Confidence hit the screen, down more than expected to 50.4. The 4 point decline points to deteriorating future expectations and continued job worries.  The Richmond Fed survey hit about the same time, piling on as the index fell 7 points.  After that pair, stocks dropped and bonds/notes/ and mortgage backs made a comeback to unchanged.  With volatility what it is, the numbes are changing once again.

Stocks are currently plus 25 points, 10 year notes down 15/32’s, and mortgage backs (low note rates) are off 4/32’s while slightly higher rates are off 2/32^nd.  Technically, we see caution in the charts, especially ahead of the 12:00 cst 2 year note auction.  Every time we try to rally we get low volume and no follow through.  Tell tale sign that the market is neutral best case.  On the positive side, we are at good support, a target we’ve been looking for as the market reversed (good support is 3.05% to 3.08%).  Given all of the above, our bias is neutral/defensive, waiting to see what level of participation gets involved on the 2 year note auction.

Keep in mind that we have 39 billion of 5 year notes tomorrow and 29 billion of 7’s on Thursday’s auction block.  We anticipate pressure on mortgage pricing until we get though all the supply (auctions).  At that time, expectations are for the market to work it’s way back into the middle of the range (improve pricing) as Austin mortgage interest rates will continue to stay low.  Slow employment growth, soft housing, and weak consumer confidence, in our opinion, trump good earnings and future revenue growth on blue chip companies that continue to hoard cash.  Austin mortgage borrowers are encouraged to lay a little defense until the dust settles Thursday afternoon.

Short term, Austin mortgage borrowers are encouragerd to stay defensive

It’s early on Monday morning and the market already looks like Ventura Highway.  Stocks were lower in pre-market trading (bonds higher) until Fed Ex came out and revised 3^rd quarter earnings (quarter ending 8/31) up 20 cents a share and pushed guidance higher for the remainder of the year.  Stocks turned around, going positive and as a consequence, bonds, notes, and mortgage backs took a dip.

Then along came New Home Sales, expected to be 320K annualized units.  The print was much better than that, up 24% to 330K units.  Stocks got another boost (now up 68 on the big board) as fixed income instruments (such as mortgage backs) dipped a little deeper.  Currently, the 10 year note is off 10/32’s (yield 3.03%) while MBS are off 4/32’s (tighter spreads which is good).  We also had the Chicago Fed National Activity Index out, which dropped .94 to its worst level since October.  Manufacturing output, or the lack thereof, did the trick.

Fast money is selling the long end of the curve, dragging the 10 year note along with it.  Not a lot of downside is expected from here.  The week ahead will feature Case Shiller Home Prices, Consumer Confidence, Durable Goods, Weekly Claims, and GDP on Friday.  Good week for data and market moving volatility.  For the week ahead, we see the market weaving and bobbing with a neutral/bearish type bias as investors will be looking to buy treasuries at yields slightly higher than current.  We still like the market long term as the detours are everywhere.

Short term, Austin mortgage borrowers are encouragerd to stay defensive.

Stock traders have put a positive spin on the Euro Bank stress tests

Just a heads up as stock traders have put a positive spin on the Euro Bank stress tests.  Currently, the Dow is 90 points with financial equities having a pretty good day.  Notes and mortgage backs are taking a little heat with the 10 year off 15/32’s (yield 2.98%) and mortgage backs off 5/32’s.  A worsening Austin mortgage price change is close but not in order at the moment.  It is something to pay attention to, however.  Technically, the selling in all sectors (all time frames of the yield curve) has been noticed but not significant enough to eliminate bullish readings on the daily chart.  As I mentioned in an earlier Market Update, we see this as more of a consolidation trade than a new trend change.  It could however, cost you if you’re not careful.  Put your defense on the field, Austin mortgage borrowers!

7 of 91 Euro zone banks failed the stress test

7 of 91 Euro zone banks failed the stress test.  As we expected, two of the Spanish banks didn’t make the grade along with one German institution, a couple of Greek banks, and an Irish bank.  All four top tier French banks made the grade.  Market reaction has been like playing crack the whip, moving in both directions with high volatility.  As the dust settles, we’re very close to the pre-release levels as the 10 year note is off 9/32’s, MBS off 2/32’s, and stocks up 28 points.  Could be much ado about nothing.  We do however recommend that Austin mortgage borrowers proceed with caution.

Today’s “big deal” will be the results of European bank stress tests

Today’s “big deal” will be the results of European bank stress tests, due out at 11:00 am cst.  Street talk has it that the tests will show a couple of Spanish banks failed portions of the test.  Others are rumored to have done ok.  This will be a market mover so stay tuned.  If the tests are better than expected, we’ll see stocks rally and bonds/Austin mortgage pricing get pinched.  Worse than expected results will produce the opposite reaction.  Volatility has already been huge this morning as we’ve seen current coupon mortgage backs trade in a 10/32’s range.  Currently, the 10 year note is off 6/32’s, mortgage backs off 3/32’s, and stocks plus 30 something on the big board.  Our tactical bias is neutral/defensive as the top of the range has been good resistance (best pricing), with the next move being consolidation, trading back to the bottom of the range.  Keep in mind this could all change given the stress test results out in a little over an hour.  Long term this is still a low Austin mortgage interest rate environment until housing and employment boot strap themselves back to life.  We’ll give you the skinny once the tea and biscuits crowd gives us a jolly good!

With the market being so psycho and at historic lows in Austin mortgage rates, best to be careful

In the “Strange Case of Dr Jekyll and Mr Hyde”, Robert Louis Stevenson wrote about a London lawyer who investigates the strange occurrences between Dr. Jekyll and Mr Hyde.  The tale is one of a split personality, one that has both good and evil which are quite distinctive of each other.  If Robert Stevenson were alive today, he could write the same piece as an op-ed for the Wall Street journal.  Yesterday, the stock market’s personality was one of fear and confusion when Fed Chief Bernanke opened his mouth, calling the economy “unusually uncertain.”  The results produced a 100 plus point selloff.

Today, the good personality appears, as the Fed Chief stuck to yesterday’s script and Big Caps like Caterpillar and 3M wacked it out of the park (better bottom line earnings and top line revenue stronger than expected).  Results, Dow up over 200 points as if everything in the economy is all right.  Euro zone manufacturing numbers were better than expected, adding a little icing on the cake.  The point I’m trying to make here is that volatility is at all time highs.  This is a product of an economy that is slowly coming out of a recession, showing bright spots from time to time while evil in the form of housing and employment woes let their personality loose just the same.  Expect this type of market trashing until a clear direction can be found.  One that points to a double dip or one that points to a more sustained recovery.  We believe the latter has the highest percentage outcome.

Reasons being are that the Euro zone appears to be stabilizing (tomorrow’s stress test results will be key), large blue chip companies are doing pretty well despite the gloom and doom, and interest rates, both by the Fed and the market (mortgage backs) will be low until the aforementioned bias is intact and investor sentiment turns bullish.  Just the same, do not take anything for granted.  Earlier today, Weekly Unemployment Claims jumped 37K to 464K while Continuing Claims fell 223K.  Distortions here are huge, maybe Consensus worker layoffs and long term claimants felling off the table.  Time will tell.  June Existing Home Sales took a dip as well, down 5.1%, the second consecutive month of declines.  The number was actually better than economists expected.  Wow, great news, their only down 5.1%.  Let’s call the Claims and Existing Sales today’s evil twins.

All of the above has pinched the 10 year note and mortgage pricing but to no great degree.  10 year down 10/32’s, MBS off 4/32’s.  The selling has not hurt the chart, just neutralized conditions a bit.  We see neither bull nor bear in control or as we like to call it, a Goldilocks market (just right).  With the market being so psycho and at historic lows in Austin mortgage rates, best to be careful.  You never know if tomorrow will be Dr Jekyll or Mr Hyde.

Semiannual Monetary Policy Report to the Congress

Semiannual Monetary Policy Report to the Congress

The Fed Chief is on the hill, still speaking about the state of our economy.  I haven’t caught much of his speech, only been following the market reaction.  Stocks don’t like it, down 120 on the Dow.  Bonds like it, up 8/32’s on the 10 year note.

Keep in mind that the market is volatile, something like herding cats.  Austin mortgage borrowers are encouraged to take advantage of your opportunities.  Complete report above.

Failure to rally isn’t bad, just paints the chart neutral which will cause Austin mortgage rates/pricing to stay close to current levels

Part of the yesterday’s late market action, stocks rally/bonds slipping, had to do with a rumor about the Fed.  Word has it that they may stop paying interest on excess reserves and step back into the market buying fixed income assets (treasuries and mortgage backs).  Given that backdrop, Gentle Ben heads to the hill today, testifying to the Senate in his annual Monetary Report to Congress.  This could be a market mover so heads up around 2:00 pm cst.  Otherwise, its steady as she goes with stocks plus 9 points on the Dow, 10 year note down 3/32’s, and mortgage backs unchanged.

Technically, the early strength helped to recover from yesterday’s selling.  That has put the chart back into a neutral pattern, allowing the slightly bullish trend to continue on the daily chart.  We came close to our target of 2.88% but no cigar.  Now the market will need to rally soon or this will become just another range trade.  Failure to rally isn’t bad, just paints the chart neutral which will cause Austin mortgage rates/pricing to stay close to current levels.  Kinda like being all dressed up and no place to go.