Austin Mortgage Blog

Posts Tagged ‘stocks’

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.

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.