Nashville Mortgage Rates

It was a good day in the treasury and mortgage markets.  The 10 year note, after stalling for a few days, is making another move lower on weak equity markets (through early afternoon at least) and the never-quite-finished Greek debt mess.  The 10 year note fell to 1.92%, down 6 basis points from yesterday’s close and now back under its 40-day moving average yield.

Just as there was breaking news about 2:45 CST that a Greek official was citing they would deliver the needed signed documents that EU officials had been waiting for, the Dow, which was down all day, shot back to unchanged on the report and the bond market held most of its improvements on the day.

Adding strength to the mortgage bond and treasury rally today was that January retail sales came in weaker than forecasts, up only .4% on expectations of an increase of .8%.  For the moment, it suggests consumer spending may not be strong enough to continue to propel equity markets.  Fed Chairman Bernanke said last week that the 8.3% January unemployment rate reported Feb 3 understates the weakness in the labor market since some people are leaving the workforce because they cannot find jobs, and others are taking part-time work because they cannot find full-time employment.  December retail sales were flat, now January is anemic.

Tomorrow there are a few economic reports to work through.  Unless the data meets or exceeds the estimates, equity markets will decline and support more yield declines in treasuries and to a lesser extent mortgage rates.   Happy Valentines Day and we will be sure to keep you abreast of the market with another Nashville Mortgage Rates Update very soon.

Nashville Mortgage Rates

The FOMC policy statement came early today, at 12:30 EST.  The reaction was not what we or most expected, the 10 year note yield fell from 2.06% to 1.92% within minutes; mortgage prices jumped 81 bps (huge, normal daily jumps might be 12 bps).  By 2:30, however, much of the improvement had eroded yet still better than recent levels.  The FOMC shocked and surprised markets with the comment that it would leave the Fed Funds rate alone, not until 2013 as it said in the past, but to at least the end of 2014.  No one expected that kind of extension.  As expected, the Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September.

The Fed’s policy statement and economic forecasts being revised lower will take a day or two to fully discount in the markets.  The stock market today didn’t show much positive reaction to the Fed’s decision to keep rates low through 2014.  That market didn’t appreciate that the Fed once again lowered its GDP estimates for 2012 and 2013, and it wasn’t enamored with Bernanke saying the global economies are softening.  Finally in the last 30 minutes of trading the Dow did move up some.  It will however take a few days to see how markets take it all in; my view is that although the Fed has extended its low rate timeframe, nothing else changed. Interest rates declined but at the end of the day, not much.  We had forecast the 10 year would not move above 2.15%, given the events today that appears to be an even stronger outlook.  As for another run to the lows on the 10 year at 1.80%, that isn’t likely unless Europe’s mess actually leads to defaults.

Let’s see if the rally continues for tomorrow and Friday.  Will keep you posted with another Nashville Mortgage Rates Update this week if needed.

Nashville Mortgage Rates

More pressure on U.S. interest rates today, making it one of the worst weeks in a month.  The 10 year treasury yield at 2.02% was up 15 bps (.15%) in yield this week.  Mortgage bond prices this week fell 57 bps.   The bond and mortgage markets have been vulnerable to increases in rates; the low rates had been driven by weak economic outlook due to Europe’s potential and likely recession.  That is changing for the moment, and though still a slippery slope, the present view is the U.S. will improve even with Europe headed into another recession.  Secondly, Europe’s debt issues are presently seen as less a threat than what had been the case for the last few months.

Greece held serious meetings with its creditors, and according to reports, the meetings are seen as positive and will keep it from defaulting on its debt.  As with the U.S. economy, it is another slippery slope and can change quickly pending comments and news out of any official.

The housing sector saw sales up and for the first time in a long time, supply is coming down.  With gains sweeping all regions, sales of existing homes rose 5% to a 4.610 million unit rate in December, a 3rd straight month of improvement that has drawn supply on the market to 6.2 months.  This is the lowest reading on supply since 2006.

Next week the FOMC will meet; interest rate and equity markets likely will be flat into the meeting ending on Wednesday.  Nashville mortgage rates increased about .25% on the week and might be due for a little pullback next week.  Have a great weekend.

Nashville Mortgage Rates

This week of course, it is still mostly about Europe, the saga that won’t go away, and not likely for years.  Treasury rates ended last week at 1.87%.   Mortgage rates continue to decline in the MBS market, but lenders that buy the loans have not been pricing to the MBS market, holding prices lower than the market itself.  The increased “guarantee” fees to fund the 2% Social Security tax cut (financed by home buyers and refinancers) is causing disruptions in pricing.  Some lenders have used the fee increase to increase gains from originators by setting prices much lower than MBS markets trade—over and above making the prices adjustments for the fee increases.

This week a few key economic reports that will get traders’ attention: the PPI, CPI, Philly Fed business index, housing starts and permits as well as December existing home sales and weekly jobless claims are all on tap.  U.S. interest rate markets continue to to hold well, at the same time the long end of the yield curve including mortgages is struggling to keep a positive bias.  Europe’s travails and this week’s economic data should define whether interest rates will move lower.  That said, with rate increases due to Congress using Fannie, Freddie, and FHA to finance the social security tax cut, Nashville mortgage rates are not likely to fall much more, even if U.S. treasury markets improve somewhat.  We remain skeptical on the longer term outlook for rates, as rates are likely to increase a little this year with the economy improving.  The wild card now is the Fed (Europe is always a wild card on a day-to-day basis); last week there were some who were floating the idea of another easing move from the Fed, still a minority view however.  On the 24th and 25th the FOMC meets, and likely there will be discussions on the subject.

More Nashville Mortgage Rates Updates coming your way- stay tuned!

Nashville Mortgage Rates

Another day with little movement in the bond and mortgage markets.  The 10 year note continues to find support when it runs to 2.00% as it did early this morning, although supported technically, fundamentally there is nothing new that entices traders and investors to buy.  The mortgage market is testing its resistance level when the Jan price climbs to $103.13 as did this morning.  The equity market today was better, but it too is not running with much demand.  The debate over the outlook for interest rates is intensifying recently with traders sticking to treasuries, concerned that another show will drop in Europe, while investors are being pushed to stocks by many analysts and firms believing the U.S. economy will continue to improve.  The problem with that is that the employment market is still extremely soft and the housing sector (nationally) remains in peril with prices still falling;  in our mind it is difficult to build a case for much growth.

Tomorrow there are no scheduled economic releases; at 1 pm EST the Treasury will auction $21 billion on 10 year notes.  Will bidding take it over 2.00% yield?  At 2 tomorrow the Fed will release it beige Book with details from each Fed district;  normally there is not much new in the Book, however markets do pay attention.

Stuck, no real movement in the interest rates markets although the technical outlook, while fragile, continues to hold a very slight bullish bias.  The mortgage backed security markets have out-performed treasuries recently, not much better, but a little better.  Traders who are “long” treasuries are beginning to sweat a little, the longer one stays in a position that isn’t moving, the more concern increases.  Nothing but the same old chatter from Europe, just more meetings with rose-colored comments at conclusions.  No new economic date so far this week, we won’t see any data until Thursday.

Check back later this week for the next installment of Nashville Mortgage Rates Updates.  Oh yeah, and congrats to the Crimson Tide- you were unbelievable in your win over LSU in the National Championship last night.  Wished Saban would want to go to Tennessee, but I’m sure we couldn’t afford him anyway!

Nashville Mortgage Rates

It has been another quiet day, the same as yesterday except the 10 year note yield fell to 1.85%, a new recent low.  Mortgage markets, however, not much change.  The stock market tried to rally but pared gains, wiping out a 99 point rally in the Dow, as optimism over the debt crisis fizzled after Fitch Ratings said it may downgrade ratings of European nations, citing Europe’s failure to find a comprehensive solution to the debt crisis.  It also said all investment-grade countries in the euro region rated below AAA are subject to a “Rating Watch Negative” review, which Fitch expects to complete by the end of January.

Europe is imploding and likely cannot avoid defaults of sovereign debt.  Talk is all we get from the region because talk is all it has now.  Normally sovereign debt is held by investors that seek safety and a guaranteed rate of return; no matter what Europe’s various officials do, there isn’t much chance that investors that normally buy most of the debt will come back.  That leaves the question, who will buy it once it is pared down and with likely guarantees from the EU, ECB or the IMF?  It  has taken over a year for pundits to come to that question, now that it is out there, the answer is not what most expected a year ago.

The bond market is pushing into new low yields as money continues to seek safe places.  So far the equity markets have taken the improvement in recent U.S. economic data as a sign that all is well.  After the first of the year, banks in Europe will begin to fail, debt ratings  will continue to fall, and likely the prospect of a deep recession in Europe will drag stock indexes down.  If we are correct in that assumption, U.S. bond and mortgage rates will remain very low;  The wild card likely to be played at some point next year will be an attempt to sweeten the incentive to buy that debt using guarantees and big hair cuts.  The normal buyers of sovereign debt won’t likely bite but if the pot is sweet enough hedge funds could be attracted as well as traders and investors will to increase risk for a high rate of return and in turn make U.S. rate markets higher.

Next week is the real beginning of the end-of-year holidays with Hanukkah beginning on Tuesday, and markets will close early on Friday and be closed the following Monday for Christmas.  The investment community will be closing down for the year, and volume will continue to decline as the week progresses.

Hope you have a great weekend and check back next week for another super-exciting installment of Nashville Mortgage Rates Updates!

Nashville Mortgage Rates

Treasuries and mortgage bonds rallied hard this afternoon.  At 1 PM EST, the $21 billion 10 year treasury note auction blew the doors off with very strong demand, and at 2:15, the FOMC statement added more thrust.  Over the last 3 months, Treasury borrowing has met with very strong demand, likely much of it due to the ongoing financial problems in Europe.

Some FOMC excerpts:   “the economy has been expanding modestly…strains in global financial markets continue to pose significant downside risks to the economic outlook… the Committee also anticipates that inflation will settle over coming quarters…business investment increasing less rapidly…housing sector remains depressed…unemploymnet rate will decline only gradually”.

On the FOMC statement the stock indexes declined and went negative on the day.  Overall, the statement is about what was anticipated based on recent economic reports.  Between the FOMC and the rock-solid 10 year note auction, it was the demand for the 10 year note the drove most of the rally.  With no progress from the EU last week, pushing the can farther down the road with no willingness to act aggressively, money continues to roll out of Europe and into the “safe arms” of the U.S.   Then there was disappointment that the Fed didn’t talk Quantitative Easing number 3 (QE#) as some were expecting;  we were not in that camp, but according to comments and the reaction in equities, there must have been more than a few who were. 

Not much on the board for tomorrow, just the $13 billion 30 year bond auction that is very likely to be another strong auction.   We are currently below 2.00% on the 10 year yield, and if recent history dictates, we won’t stay there long, so it wouldn’t be a bad time to lock your interest rates in before treasury yields pop back over the important 2.00% threshold.  We will keep you posted with another Nashville Mortgage Rates Update very soon…

Nashville Mortgage Rates

Not much to report today-the mortgage bond market as well as treasury market continues to trade in its well defined range, although MBSs held better than treasuries as the safety trades caused by the mess in Europe continue to be lifted on the belief there will be a short term answer on the debt issues when the EU summit begins Thursday and into Friday. That said no one should believe for a minute Europe will be out of its crisis, but for now a lot of the angst has diminished, at least until Friday.

It’s still a very fluid situation with little ability to properly anticipate what will happen next, but in the end, the EU will most likely be restructured with some countries leaving, and Germany holding the key to many of the issues facing an experiment that began in 1999 and now is unraveling in a sea of debt so large that it won’t be under control for a year or more- if then. Th EU as we have known it is about to change radically, but it will take a lot of time.

There was no data today to think about; tomorrow the only things of consequence is at 3 EST when October credit data is reported. Present thinking is credit expanded by $7.0 billion, a very small increase. We pay all attention to revolving credit as a measurement of consumers willing to take on debt; for a couple of years now, revolving credit has declined as consumers reduce debt.

We’ll have another Nashville Mortgage Rates Update on Thursday or Friday, after more is know regarding the EU decisions (or lack thereof).

Nashville Mortgage Rates

The stock market had a good day on news that weekend sales topped $52 billion, much stronger than expected;  most retail analysts were expecting this holiday season to be weaker than last year.  Based on the weekend buying, markets rallied hard, however at the end of the day we still have to go through a month of holiday buying, which leaves the question hanging out there:  did the weekend get more sales and the rest of the month be slow?  No evidence today though- online retail sales today were up a whopping 20% from a year earlier as of noon EST today, as shoppers flocked to the web for deals on so-called Cyber Monday, according to IBM.

Treasuries and mortgage backed securities (MBS) were weak this morning on the 300+ move higher in the Dow but by this afternoon, treasuries and mortgages improved nicely from morning levels, while stock indexes did their usual thing in the final hour– backing away from early levels.  Most all lenders improved mortgage rate pricing from original levels set this morning.

Financial ministers are to meet later this week in Europe in another attempt to find a way to keep the EU intact and avoid massive defaults that are increasingly more worrisome.  Last week, Germany, the best economy in Europe, couldn’t sell bonds at its auctions (total demand wasn’t enough to sell all the bills and notes the government auctioned- extremely unusual).  Nevertheless, there is some additional optimism as the week begins that the finance ministers will accomplish something—as it is said, hope springs eternal.

Selling of treasuries and MBSs Friday and this morning sent the 10 year note to 2.08% from 1.88% at last Wednesday’s close.  This afternoon, even with stock indexes strong, the 10 year rallied back to 1.95% before moving to 1.97% at 4 PM EST.  Mortgage backed securities turned with the 10 year not and rallied with most lenders improving prices from morning levels.  The rebound today kept the slightly bullish technicals intact (for treasuries and MBS).  Another reminder- we continue to be skeptical that the 10 year note can sustain a rate under 2.00% for any length of time.  The technical picture at the moment remains generally positive, but if optimism increases that Europe may dodge defaults (for now anyway), treasuries and mortgage bonds will not take it well.

Please check back later in the week for another Nashville Mortgage Rates Update post.  For archives of previous posts go HERE.

Nashville Mortgage Rates

More selling today in the equity markets today ahead of the long weekend.   Treasuries ralled with the 10 year note falling to 1.88% at one point this afternoon, with mortgage backed securities (MBS) continue to lag the decline seen in treasuries with the motivation for safety to treasuries in the face of never-ending news from Europe that in essence hasnt”t accomplished anything so far other than volatility in all global markets.

This afternoon’s $29 billion 7 year note auction was again met with strong demand as were the 2 and 5 year auctions earler this week.  Although markets will be open on Friday the hours will be shortned.  Mostly caretakers on the desks Friday;  unless there is some major news out of Europe Thursday or Friday, likely Friday’s activity will be quiet. 

Today Germany held an auction to sell bunds (German bonds)…it failed.  The auction bids fell short by 35% according to data from the Bundesbank.  That Germany couldn’t sell the bunds increased the view that the debt crisis in Europe is escalating;  the German 10 year bund yield at 2.09% and at one point up 25 bps today before settling back, but still up 17 bps after the auction.  Concern that the debt crisis will weigh on the global economic recovery was amplified by data showing European services and manufacturing output shrank for a third month, while a preliminary gauge indicate China’s manufacturing contracted by the most since March 2009.

The Fed told the 31 largest U.S. banks to test loan portfolios and trading books against a recession and a European market shock to ensure they have enough capital to withstand losses.  The Fed is likely to pressure banks to withhold paying dividends and increase capital just in case it all collapses in Europe.  The most severe test scenarios include a jobless rate of 13%, an 8% drop in GDP, and a 21% plunge in home prices.  The contagion is spreading again across Europe with Germany unable to sell its debt today.  Credit-default swaps insuring French government bonds rose 6 bps to 246, and contracts tied to Spanish debt climbed 2 bps to 488 – both are records.

Technically, the U.S. rate markets are in good shape; mortgage backed securities (MBS) though, while holding a slightly bullish trend, is continuing to struggle.  As long as the 10 year improves MBS’s will hold, but when the day comes when interest rates increase, selling in MBS’s won’t likely lag on the way down in prices.

Thanksgiving in the U.S. is a time to give thanks for what we have and to enjoy family and friends.  Many in the country will have a difficult time this year with high and long-term unemployment.  It is a time for sharing with those struggling, so let’s remember thos less fortunate this Thanksgiving. 

Another Nashville Mortgage Rates Update to be posted next week- have a great long weekend.

Nashville Mortgage Rates

The 10 year note finally broke below 2.00% to 1.95% at 2 PM CST this afternoon, while safe haven trades have kept the 10 year note from increasing, it took a break in the stock market to finally push the yield down. Also, the 2 year note swap rate is exploding- it started yesterday and gathered momentum today. As the swap goes higher, the implication is that investors are increasingly nervous over whether counter-parties can meet the terms of the swaps as Europe continues top sprial downward. In Europe there wasn’t much again today. This morning, the 10 year yield hit 2.05% as Italian yields dipped a little. This afternoon on concern Europe’s leaders are failing to contain the regions’ debt crisis as borrowing costs jumped at Spanish and French bond sales; the U.S. 10 year note saw more buying. The 10 year note now is a six week low in yield.

Weekly claims and the November Philly Fed business index was better than expected this morning and put a little selling in treasuries and mortgage bonds. The stock market this morning traded and little better until about noon EST when a comment out of Europe not to expect any big bailouts coming anytime soon for countries that are seriously constrained by excessive debt.

Equity markets also being hit by news on the Super Committee that it is at an impasse. The Committee is supposed to have a plan to cut spending by $1.2 trillion by November 23rd, five days from today. In a sense it isn’t surprising that politicians can’t agree on a plan, they haven’t agreed on anything for the last year.

Europe is dragging the global economy closer to decline everyday with the inability to do anything other than changing governments in Italy and Greece with the idea the countries will actually come up with spending cuts and revenue increases so their debts might be restructured. So far, Greece hasn’t made any progress and in Italy, they’re already squabbling over the new prime minister Monti’s appointments to his cabinet. According to reports, the European Central Bank bought more Italian government bonds, following purchases earlier today. Yields on 10-year Italian government debt fell 17 basis points to 6.84% after climbing 15 basis points earlier to 7.15%.

The 10 year note cut below 2.00% today, a good thing for mortgage rates but will it stick?  The note has done this a few times recently only to see no follow-through the following day or two. Although the main driver is Europe, it will depend on how the U.S. equity market performs. Key indexes were down yesterday (Down -190) and down again today 134 points after a low today of -229. There is little reason to expect rates to rise given the circumstances, but whether long term U.S. mortgage rates will fall much more remains a question. That said, the move today does strengthen the technical picture that has essentially been neutral for the last two weeks. 

Despite the 10 year note yield’s recent drop, mortgage backed securities haven’t moved much at all over the past week, which has kept mortgage rates from improving.  Check back next week for more market data that affects Nashville mortgage rates.  Have a great weekend.

Nashville Mortgage Rates

And another day where the stock market is controlled the bond and mortgage markets.  It isn’t a new thing, it has been that way for months.  If interest rates are to decline from here, it will likely be on the back of selling in equities.  Meanwhile, equity markets don’t appear to be weakening much even at the present levels of the indexes, as increasing numbers are climbing on board that the economy will continue to improve;  we are not in that camp, but with each run-up in inedexes, the boat we are in is becoming less populated.  Today, the 10 year note and mortgage bonds rallied when the Dow rolled over early this afternoon, but it is always the lst hour that is critical- indexes went positive about 2:30 EST and stayed up through the rest of the day.  The 10 year yield declined to 1.97% at its best today before crawling back to 2.00%, still unable to close below.

The only economic data today came at 3 EST this afternoon;  September consumer credit was expected up $5 billion, and it increased to $7.39 billion, but revolving credit declined again, the 4th month it has fallen, at -$627.1 million, it continued to confirm that consumers are not yet using their cards much.  Once again, it didn’t get any attention in market trading, consumers are still believed to be the drivers for the economy, not increasing credit with cards may be due to the outrageous rates charged by mega banks, but more likely due to consumers being cautious about the outlook for economic growth and jobs.

Tomorrow there is no data; at 1 PM the Treasury will auction $32 billion in 3 year notes.  Trade tomorrow will spin on anything out of Europe, unlikely there will be much from the region except the naming of the new prime minister and government in Italy.  The ECB saying today it will take two years to get their mess under control.  Time for the U.S. to move on and take Europe off the table on every syllable that is uttered.

Check back later this week for another Nashville Mortgage Rates Update.