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Posts Tagged ‘DOW’

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.

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.

Probability of a worsening Austin mortgage price change is gaining

Stocks are ok, trading between flat and plus 50 on the Dow (currently up 35).  The 10 year is behaving, down only 1/32^nd but mortgage backs are widening.  Probability of a worsening Austin mortgage price change is gaining.  Nothing huge, just volatile.  Home builders confidence did nothing to help the economy, slipping to levels not seen since early 2009.  The economic data week ahead is light with Housing data tomorrow and Weekly Claims/Housing on Thursday.  As I mention late last week, borrowers should be careful as the market continues to churn on headlines from out of the blue!

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.

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.

Austin borrowers are advised to lock in their Austin mortgage interest rates and step aside as we’re not sure whether the light in the tunnel is the end or a train

Weekly Unemployment Claims hit the tape plus 13K this morning while Continuing Claims jumped 43K to 4.62 million.  The rise canceled out last week’s drop and brings the 4 week moving average to 466K.  Not the type of print that notates a recovery in jobs.  Pending Home Sales didn’t do us any favors, falling 30%.  This level was last visited in May of 2009 and in our opinion, represents much more than losing the 8K tax credit program.  Construction Spending completed the bearish economic trifecta, falling .2% as private spending did the damage, down .5% month on month.

In the glass half full category, Ford, Chrysler, and GM all posted sales gains as that sector starts to stabilize.  Currently, stocks are off 61 points on the big board, 10 year note is plus 8/32’s, and mortgage backs are off 2 to 5/32’s, depending on the interest rate.  As I have talked about in the past, money flows are coming out of foreign sovereign debt and into treasuries.  Trouble is, that’s as far as the money goes.  Risk/reward is moving more and more towards risk in MBS, corporate paper, and anything other than an instrument backed by the full faith of Uncle Sam.  With stocks trading firmly below 1040 on the S&P chart, investors are net bearish, looking for a pull back to 940/970.  That would clip the Dow for 1 large.  Add to it the uncertainty of tomorrow’s Employment Report and all you see is traders with a fist full of scared money.

Speaking of the jobs number, the call is for job losses of 100K.  We’ll preview the report later today.  Given what we know, we see the pull back in mortgage paper (higher Austin mortgage rates,  lower pricing) as nothing more than consolidation, expecting that it will not become a major reversal.  However, we are seeing a divergence set up on the daily chart, telling you that a least a pause is in order until tomorrow’s fireworks begin (7:30 am cst).

With risk reward not in your favor, Austin borrowers are advised to lock in their Austin mortgage interest rates and step aside as we’re not sure whether the light in the tunnel is the end or a train.

Expect Austin mortgage rates to stay low for some time to come

Just when you thought the economy was doing a little better……. someone throws cold water on it. The chill came via Weekly Unemployment Claims which jumped 12K to 472K. The higher than expected claims number was largely the result of new filers from manufacturing, construction, and educational services.

Continuing Claims rose as well, up 88K on the week. CPI, inflation at the consumer level fell .2% with the core index up .1%. Just like PPI, nothing in the cards here to rattle the Fed. Philly Fed was also on tap, falling like a rock from 21.4 to 8. Employment indicators within the index did the damage, falling 1.7 points.

Last but not least, Leading Indicators rose .4% in May. Nothing special here as this index is widely treated as “rear view mirror” data and typically kicked to the curb. Overall, what is starting to take shape is a weakening situation in both housing and employment, coupled with falling consumer confidence. The BP mess doesn’t help either as the sickening scene from continued oil flowing does nothing for one’s psyche.

Market’s are red hot for bond bulls and woe is me for stock holders. Dow off 50 points has led the 10 year note higher by 20/32’s (yield 3.21%). Mortgage backs are plus 11/32’s, having a nice day as well. Technically, prices are nearing the best levels of the year (3.14% yield). Bulls will need to close below that level (3.13% or lower) to break out of the triangle pattern we’ve had in place since May. Daily oscillators however are bearish so overall, we do not have all time frames in harmony.

In English, it will become more and more difficult to improve Austin mortgage pricing/ lower yields without new fuel (catalyst). At the same time, the economic fundaments do not support higher Austin mortgage rates or worsening mortgage pricing. So, expect Austin mortgage rates to stay low for some time to come. Stay tuned for tomorrow.

Austin Mortgage Market Update – For the week of June 14, 2010

For the week of June 14, 2010 – Vol. 8, Issue 24

>> Austin Mortgage  Market Update INFO THAT HITS US WHERE WE LIVE The Mortgage Bankers Association reported demand for purchase mortgages was down 5.7% last week from the week before. Analysts felt the decline showed that the federal tax credits ending in April took away from future sales. However, as reported in the April 19 INSIDE LENDING, those tax credits are still available to some service personnel. For members of the military, Foreign Service, and intelligence community who have been on official extended duty, the homebuyer tax credit was extended one full year — to April 30, 2011, for a signed contract and June 30, 2011, for the closing. If you have clients in these services, please have them contact us right away to see if they meet the specific provisions to qualify for this valuable benefit. There are lots of other good reasons for housing to continue its recovery. Mortgage rates are at record low levels and economists report that relative to rents, national average home prices are about 10% below fair value and are at their lowest level relative to replacement cost in over thirty years. >> Review of Last Week BULLS PREVAIL… It was another super volatile week on Wall Street with the Dow down 115 points one day, up 123 points the next, then soaring 273 points a couple of days later. Ultimately, the bulls kept stock prices heading north and all three major indexes ended UP for the week. We finally got good economic news from across the seas, as Chinese exports grew 48.5% year over year, Australia’s unemployment rate dropped to 5.2%, and European debt worries subsided for the time being. Wednesday the Fed reported in its regional economic review that the economy had strengthened in all twelve of its Districts for April and May. Testifying before Congress, Chairman Ben Bernanke said, “The private sector is beginning to take over this recovery.” He added, “The economy… appears to be on track to continue to expand through this year and next.” These are encouraging comments from this typically cautious man. The jobs situation is of course still a concern, although new unemployment claims fell again last week and continuing claims dropped by 255,000 to 4.462 million, the lowest level so far in the recovery. Investors were concerned to see May retail sales down 1.2%. But the report also showed core retail sales, excluding autos, building materials, and gas, were up 0.1%. This bit of encouragement was bolstered by the University of Michigan Consumer Confidence Survey, up strongly from last month to a 75.5 reading. For the week, the Dow ended UP 2.8%, to 10211.07; the S&P 500 was UP 2.5%, to 1091.60; and the Nasdaq was UP 1.1%, to 2243.60. Stocks were positive for the week, but bond prices also held up thanks to the success of the week’s treasury auctions and Friday’s mixed consumer data driving flight-to-safety buyers to bonds. With the rise in Mortgage Bond prices, we are now following the FNMA 30-year 4.0% bond, which closed UP 12 basis points on Friday, ending at $99.72. Freddie Mac’s weekly survey showed national average mortgage rates holding at their historically low levels. >> This Week’s Forecast HOMES, INFLATION–UP OR DOWN?… We’re back to an action-packed week of economic data. Highlights include May Housing Starts and Building Permits on Wednesday, which should show us how builders feel now that the homebuyer tax credit has expired for all but some qualified service personnel mentioned above. Then wholesale inflation comes in with the PPI and Core PPI, followed by Thursday’s CPI and Core CPI, those all-important consumer inflation readings. Inflation is expected to remain at the benign levels that are holding down the Fed funds rate. The week is bookended with manufacturing reports, Monday for the New York region and Friday for the Philadelphia area. >> The Week’s Economic Indicator Calendar Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. Economic Calendar for the Week of June 14 – June 18 Date Time (ET) Release For Consensus Prior Impact Tu Jun 15 08:30 Empire Manufacturing Index Jun 20.00 19.11 Moderate W Jun 16 08:30 Housing Starts May 653K 672K Moderate W Jun 16 08:30 Building Permits May 631K 610K Moderate W Jun 16 08:30 Producer Price Index (PPI) May –0.5% –0.1% Moderate W Jun 16 08:30 Core PPI May 0.1% 0.2% Moderate W Jun 16 09:15 Industrial Production May 0.8% 0.8% Moderate W Jun 16 09:15 Capacity Utilization May 74.4% 73.7% Moderate W Jun 16 10:30 Crude Inventories 6/12 NA –1.83M Moderate Th Jun 17 08:30 Initial Unemployment Claims 6/12 450K 456K Moderate Th Jun 17 08:30 Continuing Unemployment Claims 6/5 4.475M 4.462M Moderate Th Jun 17 08:30 Consumer Price Index (CPI) May –0.2% –0.1% HIGH Th Jun 17 08:30 Core CPI May 0.1% 0.0% HIGH Th Jun 17 10:00 Leading Economic Indicators (LEI) May 0.4% –0.1% Moderate Th Jun 17 10:00 Philadelphia Fed Manufacturing Index Jun 18.8 21.4 HIGH >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months Last week Chairman Ben Bernanke commented the Fed would probably raise rates before “unemployment is where we’d like it to be,” but most economists still feel we’ll be in a low-rate environment a while longer. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same. Current Fed Funds Rate: 0%–0.25% After FOMC meeting on: Consensus Jun 23 0%–0.25% Aug 10 0%–0.25% Sep 21 0%–0.25% Probability of change from current policy: After FOMC meeting on: Consensus Jun 23 1% Aug 10 3% Sep 21 8%