Austin Mortgage Blog

Posts Tagged ‘FOMC meeting’

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.

Worries about European banks, UK austerity measures, US Housing, and the beginning of a two day FOMC meeting are all on today’s marquee

Worries about European banks, UK austerity measures, US Housing, and the beginning of a two day FOMC meeting are all on today’s marquee.  Stress tests and downgrades on banks across the pond got the early morning trade going.  Housing, as in Existing Home Sales, piled on to the gloom as the index fell to 5.66 million units, well below analysis’s expectations.  They were actually looking for an increase to 6.12 million.  Sales held steady in the Midwest, rose a touch in the South, jumped to 1.29 million in the West, and fell like a rock in the Northeast.  Pending Home Sales surprised on the upside, rising 6.0%.  New Home Sales (recorded at contract signing) jumped 14.8%, leaving many to scratch their heads wondering what happened to the Existing Sales numbers.  The divergence is most likely buried in the last dash for 8K buyers credit program which will shake out in the next 60 days.

FHFA (home price index) was plus .8% in April, reversing a two month slide.  On balance, housing looks to be stable but guarded.  Pimco strategist, Richard Clarida is on the wire talking about the Fed changing their language in tomorrow’s policy statement.  The change is regarding the economy as “sluggish” from stable, noting that since April, world and US economies have softened.  We have treasury paper coming to auction as well.  2’s today, 5’s tomorrow, and the 7 year note on Thursday.  Shouldn’t be a problem here.

We also got a peek at early predictions of month end extension needs.  Those are for money funds, etc. that much adjust to meet the Barclay’s index.  Extension needs for June look to be a bit larger than normal with the treasury complex needing to add .6 years and MBS .10 years.  In a nut shell, this will create buying in fixed income, adding support to Austin mortgage pricing.  Technically, the bias is neutral looking to buy weakness and sell strength.  Nothing new here as this has been the trend for the past several sessions.

Analyst Meredith Whitney expects U.S. economy to have rough 2nd half – if true, expect Austin mortgage rates to stay low into 2011

Last week, we anticipated today being a “no news” day, expecting the bond market would pick up right where it left off.  Not quite the case and a great reason to fear “headlines” at any time.  Over the weekend, China preempted the G-20 meeting, announcing that they will allow more flexibility with their currency (Yuan).  The move is very stock and global growth friendly as it would remove imbalances in manufacturing and exports.  Consequences of their actions have pushed the dollar lower and bonds, notes, etc. to higher yields.

Nothing huge here as the Dow is plus 107, 10 year note down 20/32’s (yield 3.29%), and mortgage backs off 7/32’s.  Potentially, this is big news but then again it is China.  Let’s just say traders have “trust” issues.  The week ahead will fire up tomorrow with Existing Home Sales, FHFA House Price Index, and day one of the FOMC meeting.  Wednesday, the FOMC concludes with any change in Fed Funds rate/monetary policy due at 1:15 pm cst.

New Home Sales will also be out in the morning.  Thursday’s data will release Durable Goods, Weekly Unemployment Claims, and the Kansas City Fed Survey.  We’ll end the week with final GDP Q1 and the Michigan Sentiment Survey.  This week’s data will be important as the focus will be on Housing, Unemployment, and the Fed.  All three seem to be the biggest drag on the economy.

In the “for what it’s worth” department, top analyst Meredith Whitney has a bearish call on equities (stocks) and expects the U.S. economy to have a rough second half.  If true, expect Austin mortgage rates to stay low into 2011. Technically, I completed my chart work on the cocktail napkin Friday night.  Bears have the advantage but only slightly, leading us to believe we’re trapped in a triangle pattern range trade.  Let’s call the market neutral and have great week.

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.

Euro is in the driver seat for every market

Another day, another Euro.  Or dollar as it may.  Trading lately has been anything but conventional as piece meal news from across the pond results in panic buying or selling.  Today is no exception as stocks opened steady on anticipated Euro zone resolution but has quickly faded (Dow down 140 points on a weakening Euro currency).  Matter of fact, the Euro is in the driver seat for every market.  It goes like this; as the Euro weakens, the dollar strengthens, stocks go lower, oil goes lower, gold goes higher, and 10 year note/mortgage backed security pricing gets better.  Flip side is Euro strengthens and then you know the rest of the story.

The only sore spot here is that credit spreads are once again blowing out.  Case in point is today’s 10 year note/mortgage back trade.  10 year is up 14/32’s (yield 3.34%), MBS up 1 stinkn’ 32^nd.  Keep a close eye on this as you know what happens when the market decides to reverse.  10 year will be down 16/32’s and MBS off 12/32’s.  It’s Murphy’s law.

Earlier today, CPI, inflation at the consumer level was down .1% and unchanged ex-food and energy.  No fear here.  This afternoon (1:00 cost) we will see the minutes of the last FOMC meeting.  Could be a market mover.  Technically, most oscillators (slow stochs, ADX, and RSI) are in harmony, telling us that the bull is back.  Just keep in mind that we have come a long way in a short period of time so some time of correction is due.

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.

New Home Sales gains also smell of the last mad rush for 8K in buyers credit money before we put that program to bed the end of next week

TGIF.  Bonds, notes, and mortgage back traders have all turned sellers today on a mixture of fundamental and technical data.  Word on the street has it that at least one half of the Fed Governors (FOMC) feel that the time is getting near to sell assets.  With 1.75 trillion dollars worth of mortgage backs, agency paper, and god knows what, unloading this on the market is not bond friendly.  Keep in mind that they are in unchartered policy territory, caught in their own wicked web of quantitative easing/zero interest rates and super hero inflation fighter/bloated balance sheet reducer.  Interesting as well that they are having the debate in a much more public forum right before next week’s FOMC meeting.

In other news, Durable Goods, items which are supposed to last 3 years or more, fell 1.3% yet ex-transportation, the index was plus 2.8%.  Orders for transportation equipment fell 12.9%, dragging the overall index into the red.  New Home Sales were also released, up 26.9% to 411K annual units.  The print blew away economists estimates of plus 330K.  Every region of the country rebounded with the “South rising again”, up 43% month on month.  Although the numbers were great, they are coming off the worst month (February) in 22 years.  The gains also smell of the last mad rush for 8K in buyers credit money before we put that program to bed the end of next week.

Given the fundamentals of the economy, bond pricing is very expensive, meaning that if that market was not being influenced by outside forces (global debt crisis, etc.) Austin mortgage rates would simply move higher.  That’s why borrowers need to be careful as every day is a new day and expecting the unexpected is more common place than you think.  We tipped you off to the technical trade that was developing yesterday and our bearish expectations.  It was a text book classic double top, fuel injected 6 speed and Hemi powered, convertible top with navigation and a kicker sound system.  Sorry, I got carried away.  The pattern did play out and added to the bond bearish news of the day, having pinched mortgage pricing for another .25 point.  Currently, the 10 year note is off 11/32’s (yield 3.82%), MBS off 8/32’s, and stocks up 9 points on the Dow.

We still feel that the trade is range bound between 3.75% and 3.83% so given our digits, additional selling is starting to lose favor.  Short term momentum is over sold in both notes and bonds which should give us a little support as well.  Call the market neutral with a little recovery due as we move into the last week of the month.  We’ll try to wrap this up later today.

No Surprises From Fed Meeting

There were no major surprises in the economic data or the Fed announcement this week. As a result, while volatility remained day to day, Austin mortgage rates ended nearly unchanged for the third straight week.

As expected at its meeting on Tuesday, the Fed held the fed funds rate steady, and the accompanying statement contained few changes. The statement retained the language about the fed funds rate remaining at extremely low levels for at least several months. The Fed’s assessment of the economy was a little more upbeat at this meeting, but pointed out that economic improvement will occur slowly. The Fed continued to signal that the $1.25 trillion MBS purchase program will conclude at the end of March. With less than two weeks of Fed MBS purchases remaining, investors will be watching closely to see if the Fed’s exit has an impact on Austin mortgage rates.

This week’s inflation data showed that inflation is not a concern right now. The February Core Consumer Price Index (CPI) increased at a low 1.3% annual rate. The Fed’s target range is commonly believed to be a 1.5% to 2.0% annual rate. The current low inflation environment makes it easier for the Fed to continue to hold the fed funds rate low to stimulate the economy.

Week Ahead Next week, Existing Home Sales will be released on Tuesday, and New Home Sales will come out on Wednesday. Durable Orders, an important indicator of economic activity, is also scheduled for Wednesday. A revised report on first quarter Gross Domestic Product (GDP), the broadest measure of economic activity, will come out on Friday, along with Consumer Sentiment. There will be Treasury auctions on Tuesday, Wednesday, and Thursday. Several Fed officials will be speaking during the week as well.

Even though this morning’s calendar has had its fair share of data, most markets have been quite with little volatility

Even though this morning’s calendar has had its fair share of data, most markets have been quite with little volatility.  Earlier today, the New York Fed’s Empire Manufacturing Index fell 2.05 points to 22.86.  The print was close to expectations with new orders up nearly 17 points and shipments plus 10 points.  Inventory rebuilding supported the number with unfilled orders, inventories, and employment all showing positive gains.  The proof will be if buyers take the new merchandise off the shelves.

Industrial Production/Capacity Utilization were also on the menu, up .1% and .2% in February.  This release had a heavy dose of weather related slow down, affecting construction and other outdoor occupations in its wake.  We would expect a much stronger number for March.

One of indexes we follow is the Treasury International Capital Flows or TIC data.  The index measures net acquisition of securities by foreign parties.  The data shows a slowdown of 33.4 billion in purchases for January.  This lagging indicator is important to our industry and to Uncle Sam’s debt.  China is till the top purchaser so let’s hope our Treasury Secretary and Google don’t tick em’ off too bad.

Technically, we are trading near the upper end of a narrow range.  The trade is constructive, holding gains of late last week.  With the FOMC meeting tomorrow ( 1 day meeting), we expect the market to stay quiet until the policy statement is released (1:15 pm cst tomorrow).  Currently, the 10 year note is off 3/32’s (yield 3.72%), mortgage backs off 2/32’s, and stocks off 35 points on the big board.

The market was doing just fine until the headlines broke the minutes of last month’s FOMC meeting (Fed Open Market Committee)

The market was doing just fine until the headlines broke the minutes of last month’s FOMC meeting (Fed Open Market Committee).  The “Street” didn’t take kindly to comments regarding treasury asset sales, consideration of a .25 bps hike in the Discount Rate, and a general hawkish tone once they can determine that a recovery is “self sustaining”.  The “headlines” unnerved traders, causing the 10 year note to drop ½ point in minutes.  Although the 10 year and mortgage backs are set to close on the weak side, major support held.  We are closing below the 21 day moving average for the first time since January 12^th, a not so good sign.  We need to be careful here as any close above 3.79% on the 10 year note will set a bearish trend in motion (currently 3.74%).  For now, we are just testing the bottom of the range with sellers holding an edge.  Best to stay defensive into tomorrow morning’s Weekly Claims release and PPI (inflation at the wholesale level).

Related articles

• FOMC Minutes: Market Watchers React (blogs.wsj.com)