Austin Mortgage Blog

Posts Tagged ‘mortgage backs’

Austin mortgage borrowers are advised to stay a little on the defensive side until we get further confirmation that the market is headed back to those July highs

7yr auction results -  Issue stopped 2bps behind the auction deadline quote at a 2.394% yield, bid to cover of 2.78 as compared to an average cover of 2.86.  Indirects took just 42.3% of the issue vs 51% last month.  Overall the auction was given about a C+ grade.  So much for expectations.

Stocks have gained a little ground, now only down 40.  Mtg backs dipped off the auction results but now are back up 5s.  10yr is up a tick trading 2.99%

Austin mortgage borrowers are advised to stay a little on the defensive side until we get further confirmation that the market is headed back to those July highs.

Have a great afternoon!

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.

Stock traders have put a positive spin on the Euro Bank stress tests

Just a heads up as stock traders have put a positive spin on the Euro Bank stress tests.  Currently, the Dow is 90 points with financial equities having a pretty good day.  Notes and mortgage backs are taking a little heat with the 10 year off 15/32’s (yield 2.98%) and mortgage backs off 5/32’s.  A worsening Austin mortgage price change is close but not in order at the moment.  It is something to pay attention to, however.  Technically, the selling in all sectors (all time frames of the yield curve) has been noticed but not significant enough to eliminate bullish readings on the daily chart.  As I mentioned in an earlier Market Update, we see this as more of a consolidation trade than a new trend change.  It could however, cost you if you’re not careful.  Put your defense on the field, Austin mortgage borrowers!

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!

Failure to rally isn’t bad, just paints the chart neutral which will cause Austin mortgage rates/pricing to stay close to current levels

Part of the yesterday’s late market action, stocks rally/bonds slipping, had to do with a rumor about the Fed.  Word has it that they may stop paying interest on excess reserves and step back into the market buying fixed income assets (treasuries and mortgage backs).  Given that backdrop, Gentle Ben heads to the hill today, testifying to the Senate in his annual Monetary Report to Congress.  This could be a market mover so heads up around 2:00 pm cst.  Otherwise, its steady as she goes with stocks plus 9 points on the Dow, 10 year note down 3/32’s, and mortgage backs unchanged.

Technically, the early strength helped to recover from yesterday’s selling.  That has put the chart back into a neutral pattern, allowing the slightly bullish trend to continue on the daily chart.  We came close to our target of 2.88% but no cigar.  Now the market will need to rally soon or this will become just another range trade.  Failure to rally isn’t bad, just paints the chart neutral which will cause Austin mortgage rates/pricing to stay close to current levels.  Kinda like being all dressed up and no place to go.

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!

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.