Austin Mortgage Blog

Posts Tagged ‘bonds’

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.

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!

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.

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.

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.

Fed thinking projects a low Austin mortgage interest rate environment until sustainable employment growth materializes

Bonds, notes, and mortgage backs have been slowly fading as the day moves on, due in part to stocks opening higher and holding their gains.  Currently, the Dow is up 183 points and nervous about the last hour of trade, waiting to see if the rally can hold or fades as has been the pattern.  No news today but Fed Governor Fisher (Texas) was on CNBC, talking about a slowing second half yet one that will avoid a double dip.  Interesting that he is considered a hawk, one that has been tough on monetary policy and inflation.  In the conversation, he comments about no need for further asset purchases but with a slowing second half of the year in his forecast, low inflation and a weak economy seem to be in play.  This follows the Fed thinking and projects a low Austin mortgage interest rate environment until sustainable employment growth materializes.  Most of the trade has been done within a 1 point range with willing sellers and buyers at the extremes.  Markets like this need a catalyst to move.  Maybe tomorrow’s Weekly Claims will get some trending action going.  So for right now, the market is not too hot, not too cool, but just right.

Austin mortgage interest rates appear to be locked in a tight range, trading at or near the best levels we’ve seen in 14 months

As we start a new week after a long weekend, quiet trading has been the mood for both bonds and stocks.  Stocks are higher however, bouncing from severe oversold conditions and “no bad news” over the weekend.  Rumor has it that bank stress tests in Europe are looking to be better than excepted, helping the banking sector both in Euro land and stateside do a bit better.  Currently, the Dow is plus 136 while the Naz is up 30.

Bonds, notes and mortgage backs have held in there, even as stocks hold their gains.  10 year notes are plus 4/32’s and mortgage pricing is flat to plus 2/32’s.  As we have mentioned in the past, Austin mortgage interest rates appear to be locked in a tight range, trading at or near the best levels we’ve seen in 14 months.  Reasons being are the lack of employment growth in the US, soft housing, Europe feeling queasy, and China concerns over growth.  Tough to find a reason for higher yields, worsening mortgage pricing well into the third quarter.

Earlier today, the Institute for Supply Management (ISM) non-manufacturing index fell to 53.8.  The jobs component fell below 50 for the first time since December 2007.  Adds fuel to our bias I just wrote about.  The week ahead is light on news with Thursday’s Weekly Jobless Claims highlighting the week.  Technically, notes and mortgage pricing will take their cue from stocks.  That said, S&P futures are now breaking back above the neck  line taken out last week.  In English, stocks put in several negative sessions doing some technical damage.  They are trying to reverse it this morning.

“If” they can hold gains, further upside (stock rally) will be in the cards.  That should put pressure on mortgage pricing but not in a huge way.  Look for a lack luster trade as we move into the shortened week.

Odds of a worsening Austin mortgage price change are starting to rise

Overnight, European banks got a boost on lower than expected funding needs and a successful rollover of 3 month paper.  Stocks abroad liked the news which in turn carried over to stateside trading.  Bonds, notes, and mortgage backs trade as if they are tired.  Nothing huge but at the moment, we are off 6/32’s on current coupon MBS and down 6/32’s on the 10 year note (yield 2.99%).

The tactical bias is still a bullish one as traders look to buy the dip into month end/quarter end extension needs.  ADP Jobs expectations hit the tape plus 13k for June, well below the consensus call of plus 60K.  ADP estimates that manufacturing gained 16K, goods producing jobs lost 17K, and services jobs rose 30K.  Once again, small business jobs growth produced the bulk of the services sector jobs.  Expectations for Friday’s Employment Report are still looking for a loss of 110K.  Not a pretty picture.  Chicago Purchasing Managers Index was also released, dipping slightly to 59.1.  The number was right on expectations.

For now, it looks like fast money is taking profits on the longer end of the curve (10’s through 30’s) as the note dips below 3.0%.  Real money buyers are in the mix, picking up most of what’s out there for sale.  With the contagion in Europe and domestic housing/employment woes in vogue, it’s hard to see the market doing much of anything.  The chart reveals much of the same.  Stalls have held above support as higher highs and higher lows are being produced.  Overall supportive but just the same, the market has come a long way in short period of time.  Some type of consolidation would not be a surprise at all.  Currently, mortgage backs are off 6/32’s.

Odds of a worsening Austin mortgage price change are starting to rise.  Be careful out there.