Friday, December 30, 2011
Daily Commentary by Larry Baer 12.30.2011
Daily Commentary by Larry Baer: With no major economic data on tap the trend trajectory of mortgage interest rates will likely be most strongly influenced by trading action in the stock market during this holiday shortened trading day. Higher stock prices will tend to drag mortgage interest rates higher while falling stock prices will probably prove supportive of steady to perhaps fractionally lower mortgage interest rates.
Looking ahead to next week the first three trading days will see mortgage investors reacting to the Institute of Supply Management's December Manufacturing Index on Tuesday followed by the November Factory Orders on Wednesday and the tandem of weekly jobless claims and the Institute of Supply Management's Service Sector Index on Thursday. All four reports are expected to be mortgage market neutral. Things heat up on Friday with the release of the December Nonfarm Payroll figures. Most analysts anticipate the economy created 150,000 more jobs than it lost during the last month of the year while the national jobless rate tick higher to 8.7% from 8.6% as more job seekers returned to the labor market. If the actual numbers closely approximate the consensus estimate look for mortgage interest rates to remain essentially unchanged. A headline number of 165,000 or more and/or a national jobless rate of 8.5% or less is likely to cause mortgage investors to react by pushing mortgage interest rates aggressively higher from current levels. While this latter outcome is certainly possible - at this juncture it does not appear very probable.
One last look back - and then it is on to the future. I wish you and yours a wonderful new year filled with abundance, joy, and treasured moments. May 2012 be your best year yet!
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
Thursday, December 29, 2011
Daily Commentary by Larry Baer 12.29.2011
Daily Commentary by Larry Baer: It is s-l-o-o-w going in the mortgage market this morning. Trading volume is very light and activity is sporadic.
Treasury debt obligations and agency eligible mortgage-backed securities continue to benefit from the effects of "flight-to-quality" flows of capital out of euro-zone countries into the relative safe-haven of dollar-denominated assets. The European debt crisis is far from over and it has the potential to spiral into an even bigger mess over the first half of the new-year. As long as the condition exists -- the prospects for steady to perhaps fractionally lower mortgage interest rates ahead will remain fairly solid. That is not to say mortgage rates won't bounce around some - just the range of the bounce as measured from low to high won't likely amount to much (I'm thinking in terms of 12.5 to 25.0 basis points or so in note rate).
The Labor Department released a report earlier this morning showing new claims for government unemployment benefits rose a stronger-than-expected 15,000 during the week ended December 24th. Mortgage investors largely shrugged off this data reasoning that the jump in jobless claims last week probably says more about the statistical volatility related to the data during this time of year rather than anything really substantive about the current condition of the job market.
For the balance of this holiday shortened week the trend trajectory of mortgage interest rates will likely be most strongly influenced by trading action in the stock market. Higher stock prices will tend to drag mortgage interest rates higher while falling stock prices will probably prove supportive of steady to perhaps fractionally lower mortgage interest rates.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
Friday, December 23, 2011
Daily Commentary by Larry Baer 12.23.2011
Daily Commentary by Larry Baer: Trading activity continues to dwindle as mortgage market participants make their final preparations for the upcoming three-day Christmas Holiday.
U.S. consumer spending was soft in November and a gauge of business investment plans fell for a second month, pointing to some loss of momentum in the economy as the year ends.
The Commerce Department said this morning consumer spending ticked up 0.1 percent after rising by the same margin in October. Economists had expected spending, which accounts for two-thirds of U.S. economic activity, to rise 0.3 percent. While the report suggest some slowing in overall activity, it is unlikely to change perceptions that economic growth will top 3 percent in the current quarter after a 1.8 percent pace in July-September. Against this backdrop the few mortgage investors still at their desks elected to nudge mortgage interest rates a little higher before winding up this holiday shortened trading day.
Looking ahead to next week -- the trend trajectory of mortgage interest rates will likely be most strongly influenced by trading action in the stock market. Higher stock prices will tend to drag mortgage interest rates higher while falling stock prices will probably prove supportive of steady to perhaps fractionally lower mortgage interest rates. For what it is worth - my technical models are flashing signals suggesting the stock market will likely put in a multi-day top in a range between 12,200 and 12,300 on or before Friday, December 30th. If my assessment proves accurate, the downward correction in stock prices will very likely prove to be a mortgage market friendly event.
For centuries men and women everywhere have kept an appointment with Christmas. Christmas has always been recognized as a time of spiritual thanksgiving and fellowship, feasting, giving and receiving, a time of fun and laughter, and home. All of us at Market Alert sincerely hope you and yours enjoy the very best of another "old fashioned" Christmas season this year.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
Thursday, December 22, 2011
Daily Commentary by Larry Baer 12.22.2011
Daily Commentary by Larry Baer: Trading activity continues to dwindle as mortgage market participants make their final preparations for the upcoming three-day Christmas Holiday.
Today's economic news was neutral to slightly mortgage interest rate friendly. The downward revision to the government's final estimate of third-quarter economic activity from the prior reading of 2.0% to 1.8% encouraged a few mortgage investors to nudge mortgage interest rates lower. The slight improvement in note rates will probably be short-lived as calmer, cooler heads use the rally in the mortgage market as a selling opportunity.
The consensus estimate among economist calls for economic growth to sputter along near the 2.0% level in 2012 before blossoming into a very strong expansion in 2013, 2014 and 2015 with annual growth of about 3.5% to 4.0%. If that assessment proves accurate, 30-year conforming mortgage interest rates should be expected to drift under the 5.0% level for most of the coming year.
The Labor Department reported this morning the number of Americans standing in line to file first time claims for government jobless benefits fell by 4,000. The usefulness of this data in measuring labor market conditions will be significantly diminished through the remainder of the year because of holiday volatility. Even so, while job growth is still too weak to power a self-sustaining expansion -- it is expected to pick up in the months ahead. Businesses have the cash to hire; they just need the confidence to do so. While rising employment should prove to have a positive impact on the prospects of improving mortgage demand - it will probably come at the cost of slightly higher note rates.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
Wednesday, December 21, 2011
Daily Commentary by Larry Baer 12.21.2011
Daily Commentary by Larry Baer: It has been an exceptionally slow trading day in the mortgage market so far.
Mortgage investors showed little reaction to a report from the National Association of Realtors indicating existing home sales improved a better-than-expected 4.6% on a month-over-month basis in November. The November gain was watered-down considerably by amendments the Realtors group made to data from 2007 to 2010 that resulted in a downward revision of 14.3% for the period. The annual revision showed the housing recession was deeper than previously thought. On the brighter side, the report showed the number of unsold homes on the market at the end of November represented a 7.0 month's supply at the current sales pace - the lowest mark for this measurement since February 2007.
In a separate report, the Mortgage Bankers of America released their Mortgage Application Survey for the week ended December 16, 2011. The MBA said application traffic for mortgage originators slowed by 2.6% from the previous week. The refinance index fell 1.6% even as mortgage rates were mostly lower. The purchase index slumped 4.9%, but remains well above its three-month moving average.
The contract rate for 30-year fixed-rate conforming mortgages finished at 4.08%, down 4 basis-points from the prior week's level and down by 15 basis-points from a month ago. Refinance requests accounted for eight-out-of-every-ten applications taken last week.
Uncle Sam will wrap up a $99 billion borrowing spree with the sale of $29 billion of 7-year notes this afternoon. The auction will conclude at 1:00 p.m. ET and I'll post results on my website as soon as possible once the final gavel falls.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
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