Monthly Archives: September 2009

Best bet is to be watchful of the market into the Friday Employment Report

September 30, 2009

Volatile trade in both stocks and MBS has markets moving once again. Stocks were off over 100 points on higher than expected ADP jobs estimates and a sour Chicago Purchasing Managers report. Mortgage backs opened to the down side, off 2/32’s for much of the morning. That has all changed as stocks have now gone positive (up 16 points on the Dow) while mortgage backs are feeling the pressure, down 5/32’s. Spreads between MBS and Treasuries have also widen, akin to throwing salt in the wound. Best bet is to be watchful of the market into the Friday Employment Report. Continue reading →

The week ahead is shaping up to be a barn burner

September 28, 2009

The week ahead is shaping up to be a barn burner. Month end, Quarter end, and the Employment Report for September are just a few of the events that could rock our world. Continue reading →

Inside Lending: Austin Mortgage Market Update

September 28, 2009

>> Austin Mortgage Market Update INFO THAT HITS US WHERE WE LIVE Well, it had to happen. After a four-month winning streak, Existing Home Sales dropped in August by 2.7% to an annual sales pace of 5.10 million. This offsets … Continue reading →

Technically we have a bullish breakout and most studies favor continued upside (better Austin mortgage pricing)

September 25, 2009

“In my view, if policy makers insist on waiting until the level of real activity has plainly and substantially returned to normal – and the economy has returned to self-sustaining trend growth – they will almost certainly have waited too … Continue reading →

We could be seeing the beginning of a nice correction in stocks. That my friends would put a little more giddy up in our Austin mortgage pricing

September 25, 2009

Cash seeking a return and/or shelter from our wicked world once again is running to Treasuries. The trade however has been on both sides of unchanged due to all of the above. Stocks have moved from red to green and back to red again, currently off 19 points on the Dow. The 10 year note is up 5/32’s, trading at 3.35%. That level is significant as referenced in yesterday’s Market Update. Any close below 3.36% will shift the advantage to the bulls. Given the “outside day down” on the S & P chart Wednesday, along with continued pressure yesterday and today, we could be seeing the beginning of a nice correction in stocks. Continue reading →

Fed Extends MBS Purchase Program

September 25, 2009

Favorable news from the Fed, weaker than expected economic data, and strong demand for a record $112 billion in Treasury auctions helped mortgage markets this week. While the daily price movements were often large, mortgage rates ended the week just a little lower. Continue reading →

FOMC made no mention of an exit strategy, instead talking about keeping Austin mortgage rates low for an extended period of time

September 24, 2009

With the FOMC dust settled, a couple of points are worth mentioning. First up, the FOMC made no mention of an exit strategy, instead talking about keeping Austin mortgage rates low for an extended period of time. Number two was the statement about continuing the purchase of Treasuries and MBS and extending the period until the end of Q1, allowing for a wind down period. Seems obvious that they are more concerned about housing and the economy versus inflation and deficits. One reason for the accommodative policy may be the building inventory due to future delinquency and foreclosures, estimated to be 7 million units. This is what we call “shadow inventory”, not yet on the books but in the pipeline nonetheless. That number is huge, representing an entire year of sales. We shall see. Continue reading →

No change in rates, longer term inflation in check, and low level of interest rates for an extended period of time

September 23, 2009

No change in rates, longer term inflation in check, and low level of interest rates for an extended period of time. They will also continue to buy Treasuries and MBS. Market are volatile but holding, albeit at lower levels. MBS off 9/32’s Continue reading →

40 billion of 5 year notes hit the auction block with a not so hot response

September 23, 2009

40 billion of 5 year notes hit the auction block with a not so hot response. Indirect bidding wasn’t bad at 48% but the issue produced a 3 bps tail. Give this one a C. The lack luster auction gave traders a reason to go palms out (turn sellers), taking the 10 year note down 12/32’s in a nano second. Mortgage backs followed suit, falling 8/32’s in the same time period. Market jitters are in play as the Fed is 45 minutes away. Buckle up! Continue reading →

Fed is walking a tight rope, trying to sound confident and optimistic while still keeping the training wheels on the economy

September 23, 2009

Rumor mill bantering is talking about the Fed using “Reverse Repos” to drain dollars out of the system, taking away excess reserves. In general, this exercise is nothing new if explained in the proper context to the market. If it is labeled a policy change, the market will feel that this is the beginning of a shift in policy, one towards tightening/removal of accommodation. English translation would means higher interest rates. This kind of shift would cause forced selling in both bonds and stocks and not treat us mortgage types well. We believe it is a little too early in the recovery cycle for this type of policy change, given our current level of unemployment along with a number of other fragile components of the economy. No doubt the Fed is walking a tight rope, trying to sound confident and optimistic while still keeping the training wheels on the economy. Continue reading →