The latest news regarding the Euro zone’s debt crisis was again good news. Spain announced sharp austerity programs to cut its budget deficits and the EU aims to seek further power over member country budgets. In a nutshell, the news added more of a boost to global stocks after opening higher.
Technically, the stealth rally has taken us to major resistance, right at the low yield mark of 3.67%. A break and close below 3.67% is needed to confirm the upside move and project that further gains (lower yields better mortgage pricing) is in the cards. With most oscillators now neutral to bullish, the only fly in the ointment is growing overbought conditions on the chart. Seems like a good day to take advantage of the best Austin mortgage pricing in quite some time.
Let me set the record straight on the availability of USDA funds. First of all, USDA has NOT been reallocated and will run out of money soon. Locking in a loan does NOT guarantee a borrower will receive USDA money. Mortgage companies and loan officers telling borrowers and REALTORS that THEY have guaranteed USDA money is plain and simple not true. The only way to guarantee a loan from USDA is to have USDA approve the loan and issue the certificate.
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.
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.
Technically, the rally we’ve seen the past couple of days has improved the charts, turning the trend to neutral from bearish. The key here is neutral not bullish, telling us that continued upside (better mortgage pricing) will be a challenge.
With 15 minutes to go in cash Treasury/MBS trading, the market is going out on the lows (highest yields/worst mortgage pricing) of the day. Fed Governor Hoenig’s dissent looks to us like an interest rate protest or maybe it’s the first vote/trial balloon.
Treasury Secretary Geithner is medium rare as the House Oversight Committee is grilling him on AIG. Undisclosed documents, backroom deals, maybe a cover up coordinated with Sir Bernanke, and the counter parties all paid off at par (by the taxpayers) are the hot topics.
Bonds, notes, and mortgage backed securities are doing quite well given the plus 100 point gain on the big board. 10 year notes off 7/32’s (yield 3.70%) and MBS off 3/32’s tell the tale of the tape. Technically, a series of higher highs and higher lows are developing on the chart. This is typical of bullish price action and will help to limit the downside (selling).
Closing levels on FNMA 4.5% securities are back to opening levels. The grind higher has created a good, not great bullish signal on daily 10 year note charts.
