Austin Mortgage Blog

Posts Tagged ‘bullish’

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.

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.

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.

Not to say we will not see lower Austin mortgage rates and better pricing but for that to come to fruition, we’ll need a major catalyst

Initial Weekly Claims fell 19K, Continuing Claims dropped 45K, and Durable Goods dropped 1.1%.  Month end hedge fund extensions and risk related worried and still in play as well.  Taking the big picture view, Austin mortgage interest rates have adopted a soft housing and employment situation stateside, along with global debt and growth issues that just won’t go away.

With the 10 year note now trading at 3.09%, a level not seen since last April, many are talking about our market being “bubble-ishous”.  The other contingent thinks bond prices are just “insane”.  With the 10 year yield at levels not seen since 2008 and 1962, one would think that a correct is imminent.  Quite possible but not a given.  Technically, our chart work makes a case for 2.92% to 2.78% on the 10 year note.  All depends on stocks and the economy.  Even the FOMC “downgraded” the economy to underperform.

Early buying today has started to show signs of a new bullish trend, endorsed by almost every oscillator.  The key to a new trend will be a close below 3.09% on the 10 year note.  This will activate a break of the major double top which has been in place for over a year.  “If” this happens, the next target will be 2.88%.  Not to throw cold water on the bulls but we think this market is a little long in the tooth, pricing in as much bad news as one could imagine.

Not to say we will not see lower Austin mortgage rates and better pricing but for that to come to fruition, we’ll need a major catalyst.  Something like a stock market rout or collapse of Greece.  In English, the smart money will bet against this, at least for a corrective trade that could take the 10 year note back to 3.25%.  Pricing was struck with MBS unchanged, now down 5/32’s. Trigger fingers are getting twitchy.

With Austin mortgage rates at or near historic lows, best bet is to take a little off the table before the market “potentially” picks your pocket. Careful out there.

Stocks just can’t catch a break, slip slidding once again into negative territory

Stocks just can’t catch a break, slip slidding once again into negative territory.  Bonds, notes, and Austin mortgage pricing are the benefactors, continuing to push to lower yields.  The 10 year note is plus 20/32’s, trading at a yield of 3.17%.  Stocks are off 100 plus on the big board.  Also, we have broken out of the triangle pattern to the upside (bullish).  Need to close at current level or better and maintain into tomorrow’s trade.  Easier said than done with auctions and the FOMC on tap for tomorrow.  Meanwhile, Austin borrowers are encouraged to take advantage of the great Austin mortgage rates currently available.

Latest news regarding the Euro zone’s debt crisis was again good news

Treasuries have been under pressure most of the morning as the risk trade was back on.  The latest news regarding the Euro zone’s debt crisis was again good news.  Spain announced sharp austerity programs to cut its budget deficits and the EU aims to seek further power over member country budgets.  In a nutshell, the news added more of a boost to global stocks after opening higher.  Stocks have held nice ground today, currently trading up at the highs at +140 points.  While our 10yr has suffered a little more, mortgage backs opened flat and still continue to trade the range.  Mixed conditions are being expressed on price charts by a triangle pattern between 121-015 and 118-12.  The pattern is not bullish, yet not bearish, needing a breakout to confirm a direction.  The lower line, support, has been breached, but a break below the preceding low at 118-225 is needed to boost the bearish case.  We are currently sitting about 118-275 on futures.  The upper line, resistance, lies at 119-07.  Above that area would shift conditions bullishly, but would require a break above 119-13/18 to confirm it.  Directional signals are mixed to say the least.  Treasury has just auctioned off $24bln new 10yr notes, which was reduced by $1bln from the last issue in February.  The issue tailed about .2 bps stopping at a 3.548% yield, which was very good.  The bid to cover was on the lighter side only seeing 2.96% as opposed to the average around 3.04% seen over the last six auctions.  Indirects were right on the button coming in at 41%.    Overall, the auction gets a B from most economists.

Seems like a good day to take advantage of the best Austin mortgage pricing in quite some time

While Goldman Sachs is getting grilled on the hill, stocks and bonds are putting on a show of their own.  Earlier today, the Case Shiller Home Price Index rose .6% for the first time since December 2006.  The number was however less than economists had expected (plus 1.2%) and reflect that the pace of decline is less severe than a year ago.  That point is confirmed as 11 of the 20 cities showed year over year declines but 18 of 20 cities show yearly improvement when matched again January of last year.  Las Vegas and Tampa are still taking it on the chin while San Francisco led the field with a 12% increase.

In other news, the Conference Board Consumer Confidence Index jumped 5.6 points to 57.9.  Both current and future expectations rose with the only drawback being concerns about income remaining weak.  The FOMC (Fed Open Market Committee) started their two day meeting today with little expected, except for some possible minor policy tweaking.  Results and/or changes are due out tomorrow at 1:15 pm cst.  The Fed is in the market today, peddling 44 billion of 2 year notes.  Results will be out at high noon cst today.

With all that’s going on, the stage stealer seems to be Greece and their two year note going over 15% and now a down grade to Portugal’s debt. S & P has cut Greek bond rating to junk, equivalent to subprime paper.  Flight to quality buying in treasuries has goosed the market high while punishing stocks in its wake.  Mortgage backs are along for the ride, up 14/32’s as we speak.  Stocks are in sea of red, down 140 something on the big board.  Technically, the stealth rally has taken us to major resistance, right at the low yield mark of 3.67%.  A break and close below 3.67% is needed to confirm the upside move and project that further gains (lower yields better mortgage pricing) is in the cards.  With most oscillators now neutral to bullish, the only fly in the ointment is growing overbought conditions on the chart.

Seems like a good day to take advantage of the best Austin mortgage pricing in quite some time.  More in a few.

Mortgage companies and loan officers telling borrowers and REALTORS they have guaranteed USDA money is plain and simple not true

Let me set the record straight on the availability of USDA funds. First of all, USDA has NOT been reallocated and will run out of money soon.  Locking in a loan does NOT guarantee a borrower will receive USDA money. Mortgage companies and loan officers telling borrowers and REALTORS that THEY have guaranteed USDA money is plain and simple not true.  The only way to guarantee a loan from USDA is to have USDA approve the loan and issue the certificate. USDA approval can only happen once the mortgage company approves first, and then sends the loan to USDA for approval.  I have received emails from loan officers who read my blog. They are adamant that USDA funds are still available to guarantee their customers. I will take the high road with this program and let the other guy be the one explaining to the REALTOR and borrower that USDA ran out of funds despite being told otherwise.  Disappointing your customer will be multiplied by 10.  Telling the truth will earn you respect. Borrowers still MIGHT be able to get a USDA loan, but I would never guarantee a loan program that is likely to run out of funds before closing.

CPI, inflation at the consumer level, rose a meager .1% while the core (ex-food and energy) remained unchanged. Owner’s equivalent rent (.25% of the index) helped the core index while a drop in transportation costs (-.1%) helped the overall index.  The report was a good one, telling us that there is little to no inflation in the pipeline.  Retail Sales were also released, up a better than expected 1.6% with the ex-autos component  up .6%.  The breakdown was interesting as retail stores increased sales (primarily women’s and teen apparel) yet electronic sales fell 1.3%.  Sales of food and beverages rose .2% and as I mentioned, clothing sales jumped 2.3%.

Year on year, total retail sales are up 7.6% which looks good on the surface but digging into the details, there are concerns. One is that the majority of sales involve purchases of less than $500.00.  Probably pent up demand as sales, especially fashion have not been great since 2007.  The other question is how sustainable is this pace given our soft employment picture.

Mortgage applications for last week were on the slide as well, down 9.6% with both refi’s and purchase applications off an equal amount. A spike in interest rates combined with an under employed borrower will continue to be a challenge.  The good news here is that Austin interest rates will stay low until the recovery brings housing into the mix.  At that time, Austin mortgage rates will go up a bit but no one will care as the public will feel better about the future and homes for sale will have 3 contracts to present the first week they are on the market.  Get ready, it will happen.

As far as the market is concerned, stocks are better (up 50 on the big board), the 10 year note is off 6/32’s (yield 3.83%), and mortgage backs are off the same amount (6/32’s). Buyers have not been able to maintain overnight gains which is consistent with a trendless market.  As we may see more range trading ahead, the overall chart picture has improved on both the market profile and slow stochastics metrics.  The improvement we see in a number of studies will keep us in the neutral/bullish camp for the time being.

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.

Borrowers are best to take advantage of any price improvement by Thursday afternoon

The bond market seems to be defying gravity despite all kinds of reasons to trade towards higher yields.  One reason the Treasury market seems to have found support is that the SIFMA (Securities Industry and Financial Markets Association) is reporting 700 billion in fails to receive/deliver mortgage backed paper.  Throw in 70 billion that FNMA and FHLMC bought back in February (delinquent buyback program) and you have a number of investors scrambling to hedge up positions in fixed income portfolios.  On a go forward basis, FNMA and FHLMC are expected to buy back another 150 billion.  Accelerating prepayment speeds has also given the fast money types a reason to back MBS and flip to another asset class (treasuries) with a more predictable prepayment speed.  All of the above will make the set up into Friday’s payroll numbers a dicey affair.

Borrowers are best to take advantage of any price improvement by Thursday afternoon.  Technically, the buying looks suspect because it is not endorsed by any daily study turning bullish.  All are neutral, telling us that all we’re doing is rattling around in the range.