Text book trading here as this baby is tracking the down trend line like a hunting dog. Good news is that we are at good support mentioned this morning. Play defense, Austin mortgage borrowers, as the light at the end of the tunnel is not the other side.
Today there will be a vote in the House on the Fair Trade Act which basically will designate China as a currency manipulator. The next step is for the bill to be sent to the Senate. It is not expected to pass in the Senate, at least before the November 2 elections and the November G-20 meeting (Korea Nov 11-12).
The Mortgage Bankers Association's weekly survey showed purchase loan applications UP 1% from the week before, refinance applications UP 6%, and Austin mortgage rates at record low levels
What we do know is that the bond market is anticipating additional accommodation via treasury/MBS purchases or others forms of stimulus. We may, in fact, have gotten a little ahead of ourselves (Austin interest rates too good) so be careful.
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.
The Mortgage Bankers Association reported demand for purchase mortgages was down 5.7% last week from the week before. Analysts felt the decline showed that the federal tax credits ending in April took away from future sales.
Stocks are up a hand full, mortgage backs up 2/32’s, and the 10 year note is trading at 3.81%, all positive elements. At least for today. We’ll call the market neutral/bullish yet still feeling the need to keep both hands on the wheel.
With stocks near unchanged and a basket of economic uncertainty, best to not throw caution to the wind. Bernanke's mandate for low interest rates well into the future, coupled with a staggering deficit, falling dollar, 3 trillion in health care costs on the docket, and taxes for both individuals and small business destine to rise in 2010 will create difficult challenges and unintended consequences. With the Fed policy a given, we expect to see a floor under the bond market, supporting both treasury and mortgage back security pricing. Buying sponsorship (upcoming auctions) and year end book closings will be the challenge (liquidity issues).
While a number of Fed Governors are pounding the rate rising drum, the policy statement continues to favor low rate, easy money well into 2010. What they would like to do is communicate an upcoming transition period. One that would produce a soft landing instead of going cold turkey. With their focus on employment and inflation, it would seem that rates will remain low until the unemployment picture stabilizes and then starts to improve.
mortgage applications surged 17% according to the Mortgage Bankers Association, gold is trading above $1000.00 (inflation fear), and Consumer Credit fell by a record 21.6 billion. Stocks keep on creeping, up 30 points on the big board and as I mentioned, Austin mortgage pricing is hanging in there but commands your attention.
