Austin Mortgage Blog

Posts Tagged ‘10-year note’

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.

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.

Good time for Austin mortgage borrowers to put both hands on the wheel

Stocks put in a pretty good showing today, considering the soft earnings/revenue picture on a number of Big Cap companies.  Even Housing Starts, or the lack thereof, have been taken in stride.  Stocks which at one time were off nearly 200, reversed course, closing up 75 points on the day on the Dow.  Nasdaq traders had similar results with a plus 24 point gain as the gun sounded.  Technical structure on both equity platforms charted what we call an “outside day up”.  Bullish all the way.

Treasuries and mortgage backs hung in there, yet pared their gains to present levels of plus 4/32’s (10 year note) and plus 1/32^nd MBS.  Nothing huge to read into but just the same, the follow through buying in stocks is worth notice.  10 year notes will retain their bullish edge (day end trading) but are starting to lack a trend reading.  This typically will tell us that buyers of treasuries still have the advantage but will need a little giddy up go to stay at these levels.  Good time for Austin mortgage borrowers to put both hands on the wheel.

After a early morning rally due to stocks falling into the abyss, both stocks and bonds are reversing course

After a early morning rally due to stocks falling into the abyss, both stocks and bonds are reversing course.  The stock slide was the result of earnings and lack of top line revenues by the likes of J & J and Goldman Sachs.  IBM posted the same type of results, hitting bottom line earnings but with a negative revenue bias going forward.

At the open, the Dow fell 150 plus while the 10 year note and mortgage backs jumped 5 to 7/32’s.  As we speak, the 10 year note is plus 6/32’s, mortgage backs up 2/32’s, and the Dow off only 50 something.  With most markets being in a period of high volatility, anything can happen.  That’s why I’ll cut this short and tell you that the market is 1 to 2/32’s away from a worsening Austin mortgage price change.  Be careful out there.

Great Austin mortgage rates should be with us well into the 3rd quarter or until you see strong hands get back into stocks or the employment picture start to improve

As we fade into the sunset, stocks had a terrible day while bonds, notes, and mortgage backs didn’t see their levels back off from the highs.  From a chartist perspective, we see the yield on the 10 year note heading for a target of 2.79% to 2.88%.  Now the question becomes how much lower can yields go?  They could go back to 2.09% (full retracement) but that would probably need a financial meltdown or sever double dip recession to be the catalyst.  Stocks are however looking for a bottom, one where investors will buy in size.  Don’t think we’ve found that yet.  Given that opinion and the weak economic data to support no or slow growth, yields appear to have not found a top.  As I learned early in my career, traders picking tops and bottoms is akin to dogs chasing cars.  Both just don’t last long.

The market, whether it be stocks or bonds will turn when the last one buys or sells.  Putting this nonsense into something useful for all of you, we believe a top or low yield mark is near.  Reasons being are low volume rallies in treasuries and widening spreads in mortgage backs.  Today for example, the 10 year note closed up 15/32’s (yield 2.93%) yet mortgage backs finished the day plus 3/32’s.  I don’t like that risk reward.  Next is a set of divergences that are starting to show up on hourly 10 year note charts.  Nothing huge but just maybe the market is getting a little stretched.

Great Austin mortgage rates should be with us well into the 3^rd quarter or until you see strong hands get back into stocks or the employment picture start to improve.  Neither seem to be next week’s story.  As for me, my fingers are tired, needing to grab a cold glass of the grape to help them heal!  Have a great weekend.