Today, much like yesterday morning, we had the release of several economic numbers, some volatility, and a bond market that settled into neutral territory before pricing went out.
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.
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.
With yields near record lows and mortgage pricing at or near the best levels in some time, its fool’s gold not to lock in your Austin mortgage rates. If traders jump the sell side, we see the trade to be shallow, say .50 bps worsening to mortgage pricing as cross currents from around the globe will still be there to support fixed income products.
5 year notes hit the block at 2.605% with 39.7% going to Indirect Bidders. Bid to cover was 2.55 to 1 and the issue had a T-Rex type tail of 4 bps. To say the least, the bond market did not like it. Mortgage backs off a minimum of 20/32’s and the 10 year is off 40/32’s.
“If” the health care bill comes to a vote this week and passes, stocks could very well change their tune. Bottom line here is that most markets are neutral, waiting for something to fuel a trend change.
Borrowers are best to take advantage of any price improvement by Thursday afternoon. Technically, the buying looks suspect because it is not endorsed by any daily study turning bullish. All are neutral, telling us that all we’re doing is rattling around in the range.
What is catching trader’s eyes this morning is China and their latest release of GDP. The plus 10.7% has the Dragon breathing fire and Wall Street worried about overheating.
The U.S. economy lost 85K jobs in December, bringing the total to 7.6 million since the recession started in December 2007. Back month revisions also come into play as October job losses increased 16K while November’s posting improved by 15k. The November number now stands at plus 4K, the first positive employment growth two years.
Overall, we feel that the housing market is stabilizing but will need to content with another wave of foreclosures as homeowners remain underwater and the loan modification programs to date have been a bust.
