Austin Mortgage Blog

Posts Tagged ‘10-year notes’

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.

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.

High probability of a worsening Austin mortgage price change

Just a quick note as the market is starting to take a little heat.  Culprits seem to be hedging for 21 billion of 10 year notes on today’s auction block (high noon cst) and stocks, which are riding a 6 day winning streak.  Currently, the Dow is plus 160 as the likes of Alcoa beat estimates and provided very good guidance going forward.  What we see here is some of the risk premium being taken out of the market as Europe has not imploded, stocks seemingly finding their footing as the market was looking for fading guidance (and not getting it), and the “double dip recession” being taken off the table.

Bonds, notes, and mortgage backs are or were at historic lows.  That said, my bias above provides traders with sticker shock as they look at pricing.  Therefore the fade and/or consolidation trade is in vogue.  As we speak, the 10 year note is off 16/32’s.  Mortgage backs are off nearly a quarter.  English translation is a high probability of a worsening Austin mortgage price change.  We see the tactical bias as being defensive with conditions and chart work pointing to a more bearish outcome.  Borrowers are advised to stay with this market and don’t let it put you to sleep.  It could be costly.

Austin mortgage rates remaining low well into the third quarter

Big week ahead as stocks kick off  2^nd quarter earnings and the economic news calendar heats up.  On the stock front, the key to earnings will not be earnings at all, as they are expected to be good to very good.  What traders will be looking for is guidance going forward.  In other words, how do CEO’s feel about the business climate going into the second half of the year?

Alcoa kicks it off with their release due out after the closing bell.  Bonds, notes, and mortgage produce seem to be in a reactive mode, trapped between financial crisis, economic challenges ahead, government regulation, and regulative groups that will take on a life of their own.  Fed Chief Bernanke was on the biscuits and gravy circuit this morning, talking about small business having access to credit being “crucial” given that this sector employs one half of all Americans and accounts for 60% of gross job creation.

35 billion of 3 year notes just crossed the block at 1.055% with 41% going to indirect bidders (low side). The bid to cover was 3.20%, beating the average of 3.05%.  21 billion of 10 year notes will come tomorrow and then 13 billion of 30 year bonds on Wednesday.  Should not be a problem to get rid of the paper.  Technically, the market tested the 38% retracement level last Thursday and bounced, suggesting that the move was corrective in nature.  Daily studies however, are not positioned to endorse a new rally, instead projecting a “trendless” period of time.  What this tells us is that we will continue to trade the small range that has been with us for a couple weeks now, swinging from high to low, low to high depending on stocks and ‘headlines”.

Nothing huge here as we see Austin mortgage rates remaining low well into the third quarter.

Gold hit a new high this morning of $1254.50 on European currency and equity concerns

Gold hit a new high this morning of $1254.50 on European currency and equity concerns.  Fed Chair Bernanke hit the wire as well, trying to assure the markets that the US will avoid slipping back into recession.  Doesn’t seem as many are listening given another round of early stock gains followed by selling into strength.  Stock bulls are doing their best to defend the 1040 level in S&P’s (currently 1046) but need to move higher or will most likely fall under their own weight with a new target of 980.

Treasuries and mortgage backs continue on the cheap, proving a safe haven for investors to park money.  While our market looks to be on track for further gains, the stability we’ve seen (at these levels) has not been able to shift studies to bullish readings.  This puts the market is somewhat of a vulnerable position, needing to trade and close below  a yield of 3.09% on the 10 year note (currently at 3.16%).

We have auction paper to distribute this week starting with 36 billion 3 year notes today, 21 billion of 10 year notes tomorrow, and 13 billion of the 30 year bond on Thursday.  “If and when” risk assets (stocks) find some stability, the correction in treasuries will be sharp and swift.  Don’t see it in the cards right now but just the same, at some point it will take you by surprise.  With the 10 year note up 3/32’s and MBS up 4/32’s, the tactical bias is neutral to slightly bearish.  Careful out there.

Watch stocks, they are in the driver’s seat

Bonds, notes, mortgage backs, and stocks are all trading in the red.  Stocks off only 3 points as they have come back from much worse levels.  The Naz has gone positive.  Stock market gyrations have put pressure on notes and mortgage backs.  Currently, the 10 year note is off 6/32’s (yield 3.22) and mortgage backs are a mirror image, down 6/32’s as well.

Big week for news with Existing Home Sales out this morning.  The print of plus 7.6% looks good headline but when you dig into the details, you’ll see inventories jumped to 8.4 months and 49% of the sales were first time home buyers.  Something to watch in the future.

Spain took over one of their banks today.  The 146 year old institution had too much bad real estate debt.  Hummmmm.  Technically, the market is consolidating to relieve over-bought conditions and put the chart back into harmony.  We do not see a Katie bar the door reversal, just a trade to let everything catch up.  Watch stocks, they are in the driver’s seat.

Post-FOMC meeting release

Post-FOMC meeting release: Market is quiet with the 10 year note slipping a little, now up 3/32’s to yield 3.37%. Mortgage backs are still at plus 1/32nd, holding their own. Stocks making a comeback with the Dow down 55 points and the Naz off 13. Markets are as nervous as cat so be careful out there.

A tug of war for Austin mortgage interest rates seems in the cards

Isn’t it funny what a trillion dollars can do for you.  Well, that’s what the European Union threw at countries such as Greece, Spain, Ireland, and Portugal in a move that mimicked what our Federal Reserve and Treasury departments did a little over a year ago.  Stocks took off in stealth fashion across the globe.  When stateside trading opened in NY, the Dow jumped 400 points at the bell.  Currently, the Dow is up 406 while the Naz is plus 102 points.  Too early to call the close which will be important.  We’ll want to see if traders are buying the bailout given passage is still needed by all 16 countries and the austerity measures (wage cuts, layoffs, retirement age rising, etc. etc.) have yet to be implemented in Greece.  They (citizens) could just be taking a rest before the street fighting once again begins.  Overall, the move has hope and removes a negative for growth round the globe.

Bonds, notes, and mortgage backs have felt the pinch but mortgage backs have held up quite nicely.  10 year note is off 33/32’s (yield 3.55%), 30 year bond is off 74/32’s (yield 4.42%), and yet MBS are down 8/32’s.  The week ahead is light on data with Retail Sales, Industrial Production, and Michigan Sentiment survey being the heavy hitters on Friday.  We will however have supply to contend with this week as the Treasury auctions 38 billion of 3 year notes tomorrow, 24 billion of 10 year notes on Wednesday, and 16 billion of the 30 year bond on Thursday.  Stock pricing and movement will hold the key to how well the paper is received.

Technically, the weakness today has taken the chart back to pre-Europe chaos levels and forced sell signals to emerge on 60 minute charts.  Daily charts however are not giving us a new bear trend.  When you have this type of divergence, the market is trying to tell us that it will take time to show it’s true colors as nothing is in harmony.  In English, this means that Austin mortgage rates and pricing can go one way or the other in short order but most likely hold steady at current levels.  Best to stay on defense as stocks certainly look better, Europe looks better, and the Federal Reserve Chairman hints of Fed Funds rate hikes sooner than later.  Personally, we like the chart (better chance of lower Austin mortgage rates/better pricing) but the fundamentals (economic data) points to a steady recovery.  A tug of war for Austin mortgage interest rates seems in the cards.

Today’s early trade pushed treasuries to higher yields and worsened mortgage pricing, but only slightly

New day, same story.  Sovereign debt remains the primary focus, taking stocks hostage for the fourth day in a row.  Never mind that Q1 Productivity was up 3.6% while Unit Labor Costs fell 1.6%.  Or that Weekly Unemployment Claims fell 7K to 444K.  Even the Monster Employment index rose 8 points.  The Greece fire has put a smoke screen in front of conventional wisdom, driving traders to safe haven investments such as treasuries, the dollar, and gold.

Today’s early trade pushed treasuries to higher yields and worsened mortgage pricing, but only slightly.  That occurred on a flat to slightly higher open for the Dow.  Currently, the big board is off 68 points as sellers are still looking for any strength to get out.  Reasons being that as Greece is on the edge of the cliff, global slowing will occur or even worse, a default in the Euro zone that could really put a pinch on global credit and stock earnings.

Our mortgage back market opened off a tick or two but has recovered to unchanged levels.  10 year note trades a 3.52% yield.  The tactical bias for today is neutral as we expect the chart to stay within yesterday’s highs and lows.  Traders call this an “inside day”, typical structure on the day before a big risk event (Employment Report for April 7:30 am cst Friday).  Overall conditions remain bullish but are over bought and need a stall or correction to bring their levels back into harmony.

With the Big Daddy of all data out tomorrow and the market rallying smartly into it, the risk reward for additional gains is possible but a low probability bet.  With expectations for a positive jobs number tomorrow, it’s only a matter of time before we get over Greece and focus on economic fundamentals.  We will discuss expectations for tomorrow’s jobs report later today.  Take a little caution with you into tomorrow.  Remember, it’s better to be a live dog than a dead lion!

Earlier today, the February Trade Deficit grew to 39.7 billion

Earlier today, the February Trade Deficit grew to 39.7 billion. Economists were looking for the number to come in closer to 38.5 billion. The jump was concentrated in the goods deficit rising 1.9 billion. March Import Prices were also released, up .7%. 80% of the rise can be traced to a 2.9% increase in fuel prices. Been to the pump lately? Fixed income prices were strong in early trading as “forced buying” in both the 5 year and 10 year notes took place as the top of the range was breached.

After going negative, the market has started to boot strap itself back up. From the technical side, trading above the range highs is encouraging but is viewed as “cautiously optimistic”. With Ben Bernanke due on the hill tomorrow and most of the low volume trade directed by fast money types and day traders, the market may need time to prove itself. Stocks are up a hand full, mortgage backs up 2/32’s, and the 10 year note is trading at 3.81%, all positive elements. At least for today. We’ll call the market neutral/bullish yet still feeling the need to keep both hands on the wheel.