Austin Mortgage Blog

Posts Tagged ‘mortgage pricing’

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.

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.

A tug of war for Austin mortgage interest rates seems in the cards

Isn’t it funny what a trillion dollars can do for you.  Well, that’s what the European Union threw at countries such as Greece, Spain, Ireland, and Portugal in a move that mimicked what our Federal Reserve and Treasury departments did a little over a year ago.  Stocks took off in stealth fashion across the globe.  When stateside trading opened in NY, the Dow jumped 400 points at the bell.  Currently, the Dow is up 406 while the Naz is plus 102 points.  Too early to call the close which will be important.  We’ll want to see if traders are buying the bailout given passage is still needed by all 16 countries and the austerity measures (wage cuts, layoffs, retirement age rising, etc. etc.) have yet to be implemented in Greece.  They (citizens) could just be taking a rest before the street fighting once again begins.  Overall, the move has hope and removes a negative for growth round the globe.

Bonds, notes, and mortgage backs have felt the pinch but mortgage backs have held up quite nicely.  10 year note is off 33/32’s (yield 3.55%), 30 year bond is off 74/32’s (yield 4.42%), and yet MBS are down 8/32’s.  The week ahead is light on data with Retail Sales, Industrial Production, and Michigan Sentiment survey being the heavy hitters on Friday.  We will however have supply to contend with this week as the Treasury auctions 38 billion of 3 year notes tomorrow, 24 billion of 10 year notes on Wednesday, and 16 billion of the 30 year bond on Thursday.  Stock pricing and movement will hold the key to how well the paper is received.

Technically, the weakness today has taken the chart back to pre-Europe chaos levels and forced sell signals to emerge on 60 minute charts.  Daily charts however are not giving us a new bear trend.  When you have this type of divergence, the market is trying to tell us that it will take time to show it’s true colors as nothing is in harmony.  In English, this means that Austin mortgage rates and pricing can go one way or the other in short order but most likely hold steady at current levels.  Best to stay on defense as stocks certainly look better, Europe looks better, and the Federal Reserve Chairman hints of Fed Funds rate hikes sooner than later.  Personally, we like the chart (better chance of lower Austin mortgage rates/better pricing) but the fundamentals (economic data) points to a steady recovery.  A tug of war for Austin mortgage interest rates seems in the cards.

Constant streaming of riots, bank burning, and chaos in Greece have ripped the Dow for over 800 points

A funny thing happened on the way to the poor house, the 401K poor house that is.  Constant streaming of riots, bank burning, and chaos in Greece have ripped the Dow for over 800 points.   This market is a loose cannon with panic buying coming from all across the globe.  Mortgage pricing has improved but you can tell by the chart how dramatic this move is.  Traders call it a blow off top.  One that is wicked and takes no prisoners if you need to buy.  They will often reverse just as fast as they go up.  Be careful out there.

Greece is the word

Just a quick note as we are close to a worsening mortgage price change.  Treasuries rallied as contagion and fear have investors and traders by the throat.  Burning banks in Greece and riots in the street are a wake up call to every nation in the world who spends more than they take in.  Hope the White House is watching.  Flight to quality buying is in bull form with the 10 year note up 20/32’s (yield 3.54%) and the 30 year bond up 1 point.  The rally is all treasury related as mortgage backs are up only 5/32’s.

Chart work points to resistance reached from 4 month ago levels and overbought conditions are in vogue.  When something happens to change the dynamics of the Euro fiasco, we will see a reversal of fortune in mortgage pricing.  The economic fundaments of our country just don’t support lower Austin mortgage rates.  Be careful out there as this rally is a one trick pony!   More in a few.

The market will need to close above this level (below in yield) or at least stay near that level to confirm a near bull trend is in the making

44 billion of 2 year notes hit the screen to yield 1.024% with 31% going to Indirect bidders.  The “street” took 21.4% while the issue grew a 1.4 bps tail.  Bid to cover was 3.03 to 1 versus an average of 3.19 to 1.  Weak indirect bidding, good sized tail, and below average bid to cover make this somewhat of a dog.  Give it a C, best case.  Post auction, treasuries and mortgage pricing have taken a dip.  Stocks coming back from the abyss has not helped our case either.  Technically, the rally today has formed a high volume area at 117 21 (yield of 3.68%).  The market will need to close above this level (below in yield) or at least stay near that level to confirm a near bull trend is in the making.  Given that so may outside influences have played a factor today, we view the move as somewhat suspicious.  Not saying that we’re going to reverse in any huge way.  Just cautious about any further advances (rally).  Keep that in mind as the day progresses.  If you have a minute, catch some of the Goldman executive grilling.  Great theater.

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.

For the market to do better (Austin mortgage pricing improvement), we need to breach and close above 116 10 (below 3.83% yield)

Today’s trade has been one of bullish trending action for both bonds and stocks. Stocks are higher on good earnings expectations and some positive movement on the Greek debt crisis. Word has it that EU/IMF has a plan for 40 to 61 billion EU on a three year loan at 5.0%. Trouble is that it would address their liquidity issues but not their solvency. Treasuries and mortgage backs continue to grind higher (lower yields) due to tactical reallocations and sellers that appear to be “worn out”.

One word of caution as you look at the chart. Currently, we’re right up against the top of the range (116 10 in futures and 3.83% 10 year note yield). For the market to do better (Austin mortgage pricing improvement), we need to breach and close above 116 10 (below 3.83% yield). Otherwise, all that has happened is that we’re tested the top of the range and we’ll once again consolidate, moving back towards the center of the range. Traders like the set up and prefer to short (sell) the market at this level with tight stops. Meaning that if their wrong, they will know quickly and will get out with small losses.

The economic calendar heats up as well this week. Housing data tomorrow, inflation and Retail Sales on Wednesday, housing, inflation, and Weekly Claims Thursday, and Michigan Sentiment Survey on Friday.

Details of the 21 billion 10 year note auction just hit the tape – this was a very good auction

Details of the 21 billion 10 year note auction just hit the tape.  Yield posted at 3.90%, Indirect Bids at 43%, bid to cover 3.72% (average 2.93%), and best of all, the issue traded 3.3 bps through the screen at the bell.  This was a very good auction.  We’ll give it an A-.  Not quite sure what is going on here given the strong demand as the market was looking for this to be a woofer.  Nonetheless, Austin mortgage pricing will improve as mortgage backs and treasuries improve.  Yield on the 10 year now trades at 3.90%, an important level which we will watch into the close.