Austin Mortgage Blog

Posts Tagged ‘Weekly Unemployment Claims’

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.

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.

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.

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.

With Austin mortgage rates/pricing at the best levels of the year and the 10 year note hitting 2010 low yields, the time is right for borrowers to lock in their Austin mortgage rates

Just another day at the office; Dow off 250 points, Naz down 68 points, 10 year note up 1 point, and mortgage backs up 8/32’s. The markets are anything but normal.

Take for example this morning’s release of Weekly Unemployment Claims which rose 25K. Most thought the jobs situation was stabilizing. China seemed as though it’s growth would never slow. Now their slowdown is very real and the Shanghai Index chart (Chinese Stocks) has turned bearish. Greek’s have once again taken to the streets, looking for another bank to burn. Seems as though they are not in love with the austerity plan. When will Europe and our country for that matter figure out that when more people are riding in the wagon than pulling it, we have a problem. Off the soap box, on to the news.

The Weekly Claims number was a shocker. Analysts had expected a drop to 440K, not the 471K print. Continuing Claims dipped however, but not to the levels we were looking for. Not so good for the economy but good for Austin mortgage rates. Stocks are now in 10% correction mode from the highs. Another 5% is certainly possible. Leading Economic Indicators for April were also released, down .1%. The index fell for the first time in a year, adding insult to injury as far as stocks are concerned.

Last but not least, the Philly Fed Manufacturing Index rose 1.2% to 21.4. Looks like things are improving in the city of brotherly love. With Austin mortgage rates/pricing at the best levels of the year and the 10 year note hitting 2010 low yields, the time is right for borrowers to lock in their Austin mortgage rates.

We feel the market has priced in a ton of bad news. Not that it can’t get worse because we all know that’s possible. Just the same, it will take more and more negative news to drive the trade to lower yields. Given all of our oscillator work, we see a very overbought market. One that’s ripe for a correction. At the same time, until investors feel certain that the world will not come to an end, yields will not rise much. Perfect time for Austin borrowers to use the exclusive float down program offered by Max Leaman at PrimeLending Austin. Call Max at (512) 293-1239.

Today’s early trade pushed treasuries to higher yields and worsened mortgage pricing, but only slightly

New day, same story.  Sovereign debt remains the primary focus, taking stocks hostage for the fourth day in a row.  Never mind that Q1 Productivity was up 3.6% while Unit Labor Costs fell 1.6%.  Or that Weekly Unemployment Claims fell 7K to 444K.  Even the Monster Employment index rose 8 points.  The Greece fire has put a smoke screen in front of conventional wisdom, driving traders to safe haven investments such as treasuries, the dollar, and gold.

Today’s early trade pushed treasuries to higher yields and worsened mortgage pricing, but only slightly.  That occurred on a flat to slightly higher open for the Dow.  Currently, the big board is off 68 points as sellers are still looking for any strength to get out.  Reasons being that as Greece is on the edge of the cliff, global slowing will occur or even worse, a default in the Euro zone that could really put a pinch on global credit and stock earnings.

Our mortgage back market opened off a tick or two but has recovered to unchanged levels.  10 year note trades a 3.52% yield.  The tactical bias for today is neutral as we expect the chart to stay within yesterday’s highs and lows.  Traders call this an “inside day”, typical structure on the day before a big risk event (Employment Report for April 7:30 am cst Friday).  Overall conditions remain bullish but are over bought and need a stall or correction to bring their levels back into harmony.

With the Big Daddy of all data out tomorrow and the market rallying smartly into it, the risk reward for additional gains is possible but a low probability bet.  With expectations for a positive jobs number tomorrow, it’s only a matter of time before we get over Greece and focus on economic fundamentals.  We will discuss expectations for tomorrow’s jobs report later today.  Take a little caution with you into tomorrow.  Remember, it’s better to be a live dog than a dead lion!

A couple of missed earnings reports and a sack of rotten Gyros did the trick

Finally, a little economic news to chew on.  First up, PPI, inflation at the wholesale level grew .7% in march while the core index was plus .1%.  Gas and food were the drivers of the headline number, up 2.1% and 2.4% respectfully.  The “core” index strips out food and energy which is why that component is nearly flat.  Given the numbers, we see very little inflation at hand or in the pipeline.

Weekly Unemployment Claims were also released, posting a drop of 24K.  The level however remains stubbornly high at 456K, an indication that it will take some time to turn this Titanic around.  Existing Home Sales, a piece of data near and dear to our hearts rose 6.8% to 5.35 million annualized.  Inventory rose as well, up 1.5% which represents 8 months of supply.  With the 8K buyers credit saying adios later this month, long term projections for a housing recovery are murky.  We shall see.

Last but not least was the FHFA Purchase only House Price Index.  Overall, the index was off .2% in February and down 3.4% year on year.  Prices declined in the South Atlantic, New England, and West North Central areas while modest increases were seen in the Middle Atlantic, Pacific, and West South Central regions.  High inventory levels due to foreclosures will continue to put this index under pressure.

Earlier today, treasury yields fell to their lowest levels in a month as Greece continues to slip into the ocean.  Yields on Greek 2 year notes are now over 11% as their yield curve inverts.  That’s the technical term for going on life support before someone pulls the plug.  Stocks are also in the soup, down 74 points on the Dow.  A couple of missed earnings reports and a sack of rotten Gyros did the trick.

Weekly Unemployment Claims rose 24K, much higher than analysts had expected

The market was greeted with a slew of economic data this morning, some too hot, some too cold, and some just right.

Weekly Unemployment Claims filled the too cold category as the rose 24K, much higher than analysts had expected. The plus 484K reading is the highest level seen since the snowstorms in late February.  Blame has been laid on Easter and Cesar Chavez day.  Wonder what will happen to next week’s numbers since April 20^th is National Cuckoo day.

The New York State Empire Manufacturing Index was also released, up 9 points to 31.86. The print above 30 has happened only twice in the last four years.  Looks like manufacturing is getting better in the big apple, switching from a draw down in inventories to a rebuild.  Let’s see if its sustainable.  Industrial Production for March hit the screen up only .1% as utility output fell sharply but was countered by strong mining and manufacturing.  The index continues to point out that we still have plenty of slack in the economy.

Batting cleanup today was the Philly Fed Survey which rose 1.3 points to 20.2. The index was mixed as new orders were up over 4 points but shipments dropped 8 points.  The numbers were disappointing, a bit of a head scratcher when you look at the divergence between Philly and NYC.

Bond, note, and mortgage back pricing has been a game of crack the whip, initially dipping on the Empire news, making a comeback on Weekly Unemployment Claims, only to dip again on the Philly Fed news.  Currently, we’re on the comeback trail as the market has rallied for no particular reason.  After being down as much as 6/32’s this morning (MBS), the market is back to unchanged.  With cross currents and divergences a plenty, the tactical bias is to stay defensive on the market.  Traders look to sell strength but also buy weakness as we see the range (10 year note) between 3.82% and 3.92%.

Happy tax day!

This is where the battle of bulls and bears will take place and the weapon of choice seems to be the 30 year bond auction outcome

Just a quick update as early morning gains are starting to fade.  At one time we had mortgage backs plus 5/32’s on the heels of a jump in Weekly Unemployment Claims (plus 18K to 460K).  Stocks were also supportive as both the big board and the Naz opened in the red.  Stocks have cut their losses in half and now the focus has turned to today’s 30 year bond auction.  With the when issued pre-auction price trading right at 4.75%, valuation seems reasonable but worries about Indirect bidders is front and center.  The average for this auction has been 40% taken by the Indirect types.  Last month’s auction however was a disaster with only 23.9%.  Technically, we’re right up against the down trend line.  This is where the battle of bulls and bears will take place and the weapon of choice seems to be the 30 year bond auction outcome (12:00 cst).  Just a heads up as traders are getting a touch nervous.

The trend is changing and even though we don’t like it, a “new normal” for Austin mortgage rates is in the works

The morning after continues towards the path of least resistance, that being higher yields and worsening Austin mortgage pricing.  Certainly the economic fundamentals of a recovering economy, continiously evolving fiscal policy which we feel is more borrowing and less monetary stimulus, and a reluctance of our foreign partners to take on our debt/risk are the heavy weights in this move to higher yields.

In this current enviornment, markets are more complex than ever and the flow of money with it’s associated risk can be powerful and detrimental.  The trend is changing and even though we don’t like it, a “new normal” for Austin mortgage rates is in the works.

The large channel dating back to last year, which gave us a series of lower highs and lower lows in yield has now been breached.  Phase two was the triangle formation that was trapped between 3.29% and 3.81%, winding itself tighter and tighter headed for a breakout.  That breakout happened yesterday and if you remember our comments a couple of weeks ago, our bias carried a high probability of that breakout leading to higher yields.  Wished we were wrong.

Damage done, it’s time to move on and get back to business.  Earlier today, Weekly Unemployment Claims fell 14K to 422K.  Continuing Claims also fell.  Both are not indicative of a trend but a better reflection of improving weather across the country and government consensus hiring.  Bill Gross, often refered to as the “bond god”, is talking about how he’s bearish on bonds and feels that stocks are a better buy.  He also commented that he expects to see the 1 year TBill rate at 1.25% to 1.50% within a year.  Today’s rate is .41%.

Currently, the 10 year note is off 14/32’s (yield 3.87%), mortgage backs are off 16/32’s, and stocks are on fire, up 100 points on the big board.   With the upward trend gaining momentum, the 10 year note is on a clear path towards 4.0% plus.  Best case on any rebound/reflex rally is back to 3.75%/3.77%.

We all know why the trend is higher but here’s some of the factors that could stop the selling and improve Austin mortgage pricing:

• One would be a good 7 year note auction today (12:00 cst).
• Two is month-end buying by hedge funds and money managers to extend duration.
• Three being weaker than expected Employment Report next week.  The market is looking for a gain of 200K.

Markets like this are very dangerous.  They can travel to higher yields beyond where you think they can.  They can stay over sold for long periods of time.  The bottom will not be put in until the last person sells.  On the bright side, markets do not go down forever, it just feels like it.  Hang in there.