Here's To a New Week

Current trend Direction: Sideways

Advise your Clients:  Locking

Current Price of FNMA 4.0% Bond: $98.47, -6bp

Bond markets are trading near unchanged levels this morning, after economic data revealed that inflation remains tame here in the States.

The Commerce Department reported today the Core Personal Consumption Expenditure (PCE), rose by 0.1% in January, in line with estimates and up only slightly from 0.0% in December.  The Core PCE year-over-year rose by 0.8%, again up just slightly from the previous reading of 0.7%.  The report also showed that Personal Incomes jumped by a pretty juicy 1.0%...but we have to remember that this number is a bit skewed, as a large chunk of the increase came from the reduction in Social Security payments workers get this year as part of the recently passed Tax Package.

If you filled up the tank in your vehicle this weekend, you may have noticed gas prices have crept up in recent days due to the unrest in the Middle East and North Africa - but at least oil has somewhat backed off the highs of last week.  Continued high oil prices would hurt economic recoveries struggling to keep traction all over the world.  

There are no Treasury auctions this week, but POMO marches on…the Fed, through its Permanent Open Market Operations, will purchase of $5B -$7B worth of 2013-2015 maturities.

Chicago PMI was reported at 71.2, which was much better than expectations of 67.5.  And the best reading since July of 1988. 

Looking ahead - the big data point for this week will be the February Jobs Report coming on Friday morning, where it is expected that 180,000 jobs will be created with all gains coming from the private sector.  We will discuss this more later in the week, but we may just see an upside surprise on Friday.

For now, the Bond is trading right at a layer of resistance.  Prices could move higher here as the Middle East uncertainty continues to buoy the Bond market - but the ride will be volatile and short lived if it happens.  Even though inflation numbers aren't showing in our reports as evidenced this morning - inflation is most certainly growing.

Happy HUMP-DAY

Yea....The week's half way complete!
So what's on the doc-it for today? Well it was a good day to lock in the rate. LeaderOne Financial has the lowest mortgage rates in Overland Park, but today, rates went up all across the board.
However, when people talk about mortgage rates and yes, so many people love to talk about mortgage rates b/c they're so fun they usually discus only the negative " rates are going up, rates are going up" Well yes, the rates are going up. BUT, to put things into perspective, mortgage rates in Kansas and Missouri are at 5.0%!!! This is still lower than a year ago, and yes still lower than the early 2000's. I'm just saying that people shouldn't panic about rates moving over the 5% mark. Okay enough about the LeaderOne and Home Loans......

....So I went to my usual Wednesday networking group, Breakfast At Eight Club and hoped to listen to a very informative discussion about commercial real estate. Instead, the speaker read a three page, self-typed publication about the Mayor Mark Funkhouser. Not too many people really paid attention, and I was left a little disappointed.

So, I'm not sure if I told anyone this oh wait i think i have one follower, but my friends and I all become hockey fans (Blackhawk fans to be exact) over night. Dont ask me how, but I have no clue why this came about, since none of my friends play hockey or even watched it before last week. Now, one of my friends, Jacob Tunnel, is buying Blackhawk merchandise on ebay. Exhibit A.) Chicago t-shirts. Exhibit B.) starter jackets..... Exhibit C.) I just bought an old-school SEGA Genesis just so I can play NHL '95 Probably the best game ever made. 

I don't really know what the point of this was, but I'm about to leave work to throw back a couple of cold ones and watch my new favorite hockey team, The Chicago Blackhawks.

Market Wrap

CLOSING TECHNICAL SIGNAL: Technically – Mortgage Bonds are very oversold and they are ripe for a reversal higher. Japanese Candle charting theory also suggests that as losses get between 6 and 9 consecutive days, like we have experienced, the sell off is overextended and poised for a reversal. MARKET WRAP: Mortgage Bonds had their monthly coupon rollover after the close of trading today. The effect of this rollover was minus 31bp points for the 4% coupon. Therefore, while the Bond quote for today shows minus 112bp closing at 96.44, the minus 31bp rollover adjustment must be accounted for. This means that pricing actually closed down 81bp on the day. We will be switching over to the 4.5% coupon on Thursday. The fall today was due to continued inflation pressures and economic optimism and as money continues to move into the Stock markets. The Dow jumped 71.52 to end at 12,233.15 for its 7th straight gain and its longest winning streak in nearly 7 months. The S&P 500 Index rose 5.52 to 1,324.57 while the Nasdaq rose 13.06 to 2,797.05. Oil settled at $87.80/barrel down 64 cents. There are no economic reports tomorrow. The Treasry will sell $24B 10-yr notes tomorrow.(MMG)

Mortgage Rates Take a Dive

this post is not intended to scare anyone....
Mortgage rates have increased 1/2 point today.
the 30 year fixed is now at 5.375%
the reason: Fed Fund Futures now see a 100% chance of an interest rate hike in December 2011.

Cabin Fever

Well another day of subzero temps. It's -12 degrees, I think that's a 14 year record for Overland Park.
Our driveway is completely untouched since I haven't had the willpower to shovel it. This makes it hard for Molly's car to escape the garage, so the only car that can get out is the tahoe. But it doesn't really matter, because I still can't leave.... Molly has class at UMKC everyday and the state of Missouri doesn't clean their roads, so she takes my car. Leaving me stranded at home, thus creating cabin fever.
Sorry this isn't or shouldn't be big deal. I should love the fact I really don't have to go anywhere.

So while I overstimulate myself with social media and pretend to work, I wanted to let my one follower...  Molly Hartley, know what's going on in my world of mortgages.


Anyway, now for today's mortgage news.

The Short of it.......

The current trend direction: Sideways to Lower

Risks Favor:  Locking later today ahead of Jobs Report

Current Price of FNMA 4.0% Bond: $98.28, -16bp  

Early this morning mortgage bonds took a beating. Now they look like they're fighting back trying to take back the early losses.

The Reason Why.........

The day before a big Jobs Report…and there is a whole lot happening.  This morning's issue is particularly long, but we think there are some very important points to understand and share with those you are working with.  So grab a cup of coffee…and let's get started.

Despite the ongoing turmoil in Egypt, rising commodity prices and growing inflation fears in Europe ripped through the Bond markets yesterday, and put a dent in Bond prices again so far this morning.  Bonds opened lower this morning and are below support levels that have previously held since the end of December - not a good technical signal.  

As we have job data on our minds looking ahead to tomorrow, today's report on Initial Jobless Claims showed a decline of 42,000 in the latest week to 415,000, which was below the 425,000 expected, and reversed most of the increase from the previous week.  Continuing Claims, which reflect the number of people already receiving unemployment compensation, declined 84,000 to 3.93 Million.  The 4-week moving average, which smooths out any anomolies in the data, came in at 430,500, a slight increase from the previous week's revised average of 429,500.  States reported 3.65 Million people claiming EUC (Emergency Unemployment Compensation) benefits, a decrease of 130,413 from the prior week.  So we see that the trend of Claims continues to improve overall…but still not by enough to put much of a dent in the high Unemployment Rate. 
(sourced from MMG)