Thursday, August 24, 2017

What's going on and why does it matter? Mortgage bonds opened lower this morning as the market turns cautious ahead of tomorrow's speeches by Fed Chair Yellen and European Central Bank President Draghi. Mortgage bonds are still trading near the upper end of their recent range. It seems like bond prices may be more likely to back off these levels than to break above them. On the economic calendar, the initial jobless claims numbers came out lower than expected which indicates continued strength in the jobs market. There are also some housing numbers that are scheduled to be released later this morning. The Fed is very supportive of the mortgage market today with a scheduled purchase of up to $2.125 billion of 30-year conventional mortgage bonds. What should you do about it?It's probably a good idea to lock your rate while mortgage bonds remain near the upper end of their recent trading range. ..... Economic reports that may impact mortgage rates this week: Date Report Period Prior Estimate Actual Wed 23 Aug New Home Sales Jul 610,000 610,000 571,000 Thu 24 Aug Initial Jobless Claims Week of Aug 14 232,000 238,000 234,000 Thu 24 Aug Existing Home Sales Jul 5.52M 5.57M Fri 25 Aug Durable Goods Jul 6.4% -5.7%

Tuesday, August 15, 2017

What's going on and why does it matter? Mortgage bonds opened lower this morning as tensions continue to ease between the US and North Korea. Also, NY Fed President Dudley indicated in a speech yesterday afternoon that the Fed is on track to increase short-term rates later this year if the economy continues to improve. Today's economic reports seem to confirm this, with the NY Fed "Empire State" Manufacturing Index more than doubling, and retail sales also coming in much stronger than market expectations. It seems like mortgage bond prices may fall back down to their moving averages. The Fed is scheduled to purchase up to $1.65 billion of 30-year conventional mortgage bonds today, which may help. What should you do about it?Lock your rate to be safe. . ..... Economic reports that may impact mortgage rates this week: Date Report Period Prior Estimate Actual Tue 15 Aug NY Fed Mfg. Index Aug 9.8 10.0 25.2 Tue 15 Aug Retail Sales Jul 0.3% 0.4% 0.6% Tue 15 Aug Business Inventories Jun 0.3% 0.4% Wed 16 Aug Building Permits Jul 1.275M 1.25M Wed 16 Aug Housing Starts Jul 1.215M 1.22M Wed 16 Aug Fed Minutes Jul - - Thu 17 Aug Initial Jobless Claims Week of Aug 7 244,000 240,000 Thu 17 Aug Industrial Output Jul 0.4% 0.3% Thu 17 Aug Capacity Utilization Jul 76.6% 76.7% Thu 17 Aug Manuf. Output Jul 0.2% 0.2% Fri 18 Aug U of Mich. Consumer Sentiment Aug 93.4 94.0

Friday, August 11, 2017

What's going on and why does it matter?

Mortgage bonds are continuing to trade near their highest levels of the year as tensions continue to swell between the US and North Korea. It is estimated that global stocks have lost over $1 trillion of value this week as investors sold their positions and flocked to the safety of the bond market.  Even so, keep in mind that the market quickly reversed course the last time mortgage bonds traded at these lofty levels. In today's economic news, consumer inflation (CPI) came out this morning weaker than market expectations, and two Fed policymakers are scheduled to give speeches later this morning. The Fed's mortgage bond buying activity today is limited to $475 million of 15-year conventional mortgages.

What should you do about it?

Lock your rate to be safe.

Danny Smith, CMPS

NMLS #138873

512-773-6528

www.DLSmithTeam.com

Thursday, August 10, 2017

What's going on and why does it matter?

Global financial markets remain in risk aversion mode as tensions continue to escalate between the US and North Korea. This is causing mortgage bonds to continue trading near their best levels of the year.  It's worth mentioning, however, that the rally in mortgage bonds seems to be losing strength, and that the market quickly reversed course the last time mortgage bonds traded at these lofty levels.  Even so, the Fed continues to be very supportive of the mortgage market today, with scheduled purchases of up to $1.375 billion of GNMA mortgage bonds. As for the economic calendar, wholesale inflation as measured by the PPI index came out this morning weaker than expected. There is also one Fed policymaker who is scheduled to give a speech today.

What should you do about it?

Lock your rate to be safe.

Wednesday, August 9, 2017

What's going on and why does it matter? Mortgage bonds opened higher this morning as tensions continue to escalate between the US and North Korea.  Mortgage bonds are currently trading near their best levels of the year.  Keep in mind that the market quickly reversed course the last time mortgage bonds traded at these lofty levels.  Even so, the Fed is very supportive of the mortgage market today, with scheduled purchases of up to $1.65 billion of 30-year conventional mortgage bonds. What should you do about it?Lock your rate to be safe. ..... ..... Economic reports that may impact mortgage rates this week: Date Report Period Prior Estimate Actual Tue 8 Aug JOLTS Job Openings June 5.666M 5.775M 6.163M  Wed 9 Aug Labor Costs prelim. Q2 2017 2.2% 1.2% 0.6% Wed 9 Aug Productivity prelim. Q2 2017 0.0% 0.7% 0.9% Wed 9 Aug Wholesale Inventories June 0.6% 0.6%   Wed 9 Aug Wholesale Sales June -0.5% 0.1%   Thu 10 Aug Initial Jobless Claims Week of July 31 240,000 240,000   Thu 10 Aug PPI final demand July 0.1% 0.1%   Fri 11 Aug Core CPI July 0.1% 0.2%

Friday, August 4, 2017 End-of-Day Report

The employment report this morning capped a week full of economic data that continues to paint a mixed picture of domestic growth. First, earlier in the week, we saw tepid PCE inflation and spending. Then, midweek we saw moderate ISM surveys, with strong growth but weakness in the non-manufacturing sector. Lastly, this morning the jobs growth was strong and unemployment is at a 16-year low.

Mortgages sold off in a big way initially this morning but recovered in the afternoon to finish down -14 bps for the day, and up overall for the week. Next week, Monday, Tuesday and Wednesday will be relatively slow but Thursday brings PPI and Friday the Consumer Price Index. Look for continued range-bound volatility barring any geo-political surprises, especially out of North Korean tensions.

Wednesday, August 2, 2017

Mid Day update - The ADP employment report released this morning showed weaker private payroll growth at 178k than surveyed at 190k. While still above last month’s growth of 158k, it does cast doubts about the strength of the non-farm payroll numbers to be released on Friday. The MBA's weekly mortgage application survey was also released this morning. Applications fell 2.8% last week with refinances down 3.8% and purchases down 2.0%. The average 30-year FRM rate held firm week-over-week at 4.17%.

Markets are slower today, coming off yesterday when a number of desks were seeing heavy flows due to the first business day of the month. Treasury yields are down very slightly with MBS down 4 bps now.

Opening comments 

What's going on and why does it matter? Mortgage bonds are trading at their highest levels since June, as they've been driven higher by weaker than expected economic data this week.  However, today's ADP employment numbers came out close to market expectations.  This report is normally interpreted as a sneak preview into Friday's official payroll numbers. This may cause mortgage bonds to give back some of the gains from their recent rally. The Fed is scheduled to purchase up to $1.65 billion of 30-year conventional mortgage bonds today, and this may help to stabilize the market. What should you do about it? It's probably a good idea to lock your rate while bond prices remain near the top of their recent trading range. ..... ..... Economic reports that may impact mortgage rates this week: Date Report Period Prior Estimate Actual Mon 31 Jul Chicago PMI July 65.7 60.0 58.9 Tue 1 Aug Personal Income June 0.4% 0.4% 0.0% Tue 1 Aug Core PCE Prices June 0.1% 0.1% 0.1% Tue 1 Aug Construction Spending June 0.0% 0.4% -1.3%  Tue 1 Aug ISM Mfg. PMI July 57.8 56.5 56.3 Tue 1 Aug Total Vehicle Sales July 16.51M 16.8M 16.73M Wed 2 Aug ADP National Employment July 158,000 185,000 178,000 Thu 3 Aug Initial Jobless Claims Week of July 24 244,000 242,000 Thu 3 Aug Factory Orders June -0.8% 2.9% Thu 3 Aug ISM Non-Mfg PMI July 57.4 57.0 Fri 4 Aug Non-Farm Payrolls July 222,000 183,000 Fri 4 Aug Average Earnings July 0.2% 0.3%