If yesterday's MBS trading is any indication, this could prove is an interesting week as for the first time in two weeks, credit market investors won’t be dealing with a new round of massive incoming supply from Uncle Sam. Look for the trend trajectory of mortgage prices over the next five business days to be most influenced by Wednesday’s April Retail Sales figures and the trading action in the stock markets.
There's some debate in my capital market circles regarding the sustainability of the recent upturn in the underlying trend of the retail sales numbers and the lowing of the CPI (cause of gas prices). Some argue that the better-than-expected series of monthly retail sales data is more a function of the “Circuit City effect” – a one-time event where consumers run out to buy items at sharply discounted prices from stores going out of business. Other analysts (one being a good friend of mine) are concerned that the impact of temporary factors like tax rebate and fiscal stimulus checks has created a false picture of activity in the retail sector. I happen to disagree and leaning toward the prior analysis.
Mortgage investors will look to Wednesday’s April Retail Sales report to help sort things out. A report that matches or exceeds the consensus estimate will be viewed as an indication that the recent bounce in consumer confidence may be sustainable – a view that will tend to be mortgage interest rate unfriendly. A round of weaker-than-expected sales numbers will likely create a chill in the stock markets – sending stock prices lower to the direct benefit of steady to perhaps fractionally lower mortgage interest rates.
Economic Calendar
Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis
Mon. May 11, before the end of the day
The Fed will be conducting the first of a three-day outright purchase of Treasury obligations. This event proved to be highly positive for lower mortgage interest rates.
Tue. May 12, before the end of the day
This is the second-day of a three-day Treasury purchase operation by the Fed. Normally I would suggest this event prove to be at least a slight positive for the prospect of steady to perhaps fractionally lower mortgage interest rates. But given yesterday's massive rally, I am a little more hesitant to call anything higher.
Wed. May 13, 8:30 a.m. ET
Apr. Retail Sales
Ex. Auto
0.0% vs. last -1.2%
+0.2% vs. last -0.9%
If the actual numbers match or exceed the consensus estimate this report will tend to be mortgage interest rate unfriendly. In the unlikely event that either of the two components of this report proves to be weaker than expected -- look for equities and interest driven vehicles to creep fractionally lower.
Wed. May 13, 8:30 a.m. ET
Mar. Business Inventories
-1.0% vs. last -1.3%
This old stale bit of macro-economic news will likely do nothing more than take up space on this week’s calendar.
Wed. May 13, before the end of the day
The Fed will make one more foray into the credit markets as they wrap up a three-day operation of direct purchases of Treasury obligations (part of their $300 billion effort keep the lid on consumer and business interest rates).
Thurs. May 14, 8:30 a.m. ET
Initial jobless claims for the week ended 5/9
Up 9,000
The census around first-time jobless benefit claims are expected to post a very small increase. Should this be accurate, look for this data to have little, if any meaningful impact on the fixed income market today.
Thurs. May 14, 8:30 a.m. ET
Apr. Producer Price Index
Core Rate
+0.1% vs. last -1.2%
+0.1% vs. last 0.0%
The modest expected rise in the headline producer price index will not likely create much concern among investors. More importantly the core rate, a value excluding the volatile food and energy components, likely remained extremely low.
Fri. May 15, 8:30 a.m. ET
Apr. Consumer Price Index
Core Rate
-0.1% vs. last -0.1%
+0.1% vs. last +0.2%
Given the much larger issues in the market, this data will likely exert little, if any influence on the direction of mortgage interest rates today. Gasoline prices slumped in March resulting in a drop in headline consumer inflation. Excluding the volatile food and energy components, core inflation at the consumer level remained near multi-month lows.
Fri. May 15, 9:15 p.m. ET
Apr. Industrial Production &
Capacity Utilization
-0.6% vs. last -1.5%
68.8 vs. last 69.3
The continued massive decline in the manufacturing sector is expected to have unabated during the month of April. This data will likely have little, if any influence on the direction of market interest rates today.
Have a productive week.
Tuesday, May 12, 2009
Tuesday, April 28, 2009
Remember the Misdirection Play in Football?
That's what the US economy will be showing most of us over the next several weeks. Consumer sentiment will most likely improve for no other reason than Americans in our every here-and-now attitude don't like dealing with prolonged stresses. All the while large public companies (mostly banks) will be looking at another round of funding to keep their bloated balance sheets afloat. I believe we'll have one last sinking ship before this economy turns some time in 2010'.
Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis
Tue. April 28, 9:00 a.m. ET
First day of a two-day Fed meeting
Tue. April 28, 10:00 a.m. ET
Apr. Consumer Confidence
30.0 vs. last 26.0
While welcome – the expected uptick as mentioned above in the consumer confidence index will likely take a distant back-seat to this afternoon’s big 5-year note Treasury auction.
Tue. April 28, 1:00 p.m. ET
Treasury auctions $35 bil. of
5-year notes
The yield on this security is just a whisper below 2.0% -- a level likely high enough to draw solid bids from both domestic and foreign investors. If so, this event will tend to be supportive of steady lower mortgage note rates.
Those of you floating your mortgage pipelines will be pleased. You should expect a heavy discount in investor rate sheets today.
Wed. April 29, 8:30 a.m. ET
1st estimate of Q1
Gross Domestic Product
-5.0% vs. last -6.3%
It is broadly expected GDP will post its first back-to-back quarterly decline in more than 50 years. That’s the bad news. The good news is that the pace of decline is abating – with a large part of the Q1 drop driven by inventory reduction. The massive inventory reduction expected for Q1 will likely set the stage for an improvement in the manufacturing sector in the second half of the year. A GDP reading of -5.0% is already priced into the fixed income markets. It will likely take an unexpected reading of -4.8% or better to put any upward pressure on interest rates.
Wed. April 29, 1:00 p.m. ET
Treasury auctions $26 bil. of
7-year notes
The result of this auction will likely exert a significant amount of pressure on the trend trajectory of mortgage interest rates for the balance of the week. A well bid auction will tend to support steady to lower bond & mortgage note rates while a poorly bid auction will probably lead investors to nudge those rates a small increment higher.
Wed. April 29, 2:15 p.m. ET
The Fed releases its post-meeting statement
No change to short-term interest rates
The Fed’s post-meeting statement will probably not be upbeat about the economy’s near-term prospects, which remain clouded by continued deterioration in the labor market. There is only a minuscule chance the Fed might choose to expand its plans to purchase mortgage-backed securities or Treasury obligations. Overall, this meeting will likely be a non-event with respect to its impact on the trend trajectory of mortgage interest rates.
Thurs. April 30, 8:30 a.m. ET
Initial jobless claims for the week ended 4/25
Up 2,000
This time around first-time jobless benefit claims are expected to post a very small increase. For most investors it is still too early to conclude the worst of this recession’s employment erosion is behind us. Look for this data to have little, if any meaningful impact on the mortgage market today.
Thurs. April 30, 8:30 a.m. ET
Q1 Employment Cost Index
+0.4% vs. last +0.5%
It is highly likely the sharp job losses of the past three months have resulted in a virtually non-existent increase in the employment cost index. Investors will likely give this data little more than a passing glance.
Thurs. April. 30, 8:30 a.m. ET
Mar. Personal Income
Spending
PCE Index
-0.2% vs. last -0.2%
-0.1% vs. last +0.2%
0.0% vs. last +0.2%
If, as expected, the spending and personal consumption expenditure index (one of the Fed’s favorite measures of inflation at the consumer level) match or fall below the fore casted values this report will be supportive of steady to fractionally lower rates.
Fri. May 1, 10:00 a.m. ET
Mar. Factory Orders
-0.8% vs. last +1.8%
This stale data will likely have no impact on the equity markets.
Fri. May 1, 10:00 a.m. ET
Apr. Institute of Supply Mgmt.
38.0 vs. last 36.3
The modest expected uptick in manufacturing is not likely strong enough to cause much, if any concern among market watchers.
Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis
Tue. April 28, 9:00 a.m. ET
First day of a two-day Fed meeting
Tue. April 28, 10:00 a.m. ET
Apr. Consumer Confidence
30.0 vs. last 26.0
While welcome – the expected uptick as mentioned above in the consumer confidence index will likely take a distant back-seat to this afternoon’s big 5-year note Treasury auction.
Tue. April 28, 1:00 p.m. ET
Treasury auctions $35 bil. of
5-year notes
The yield on this security is just a whisper below 2.0% -- a level likely high enough to draw solid bids from both domestic and foreign investors. If so, this event will tend to be supportive of steady lower mortgage note rates.
Those of you floating your mortgage pipelines will be pleased. You should expect a heavy discount in investor rate sheets today.
Wed. April 29, 8:30 a.m. ET
1st estimate of Q1
Gross Domestic Product
-5.0% vs. last -6.3%
It is broadly expected GDP will post its first back-to-back quarterly decline in more than 50 years. That’s the bad news. The good news is that the pace of decline is abating – with a large part of the Q1 drop driven by inventory reduction. The massive inventory reduction expected for Q1 will likely set the stage for an improvement in the manufacturing sector in the second half of the year. A GDP reading of -5.0% is already priced into the fixed income markets. It will likely take an unexpected reading of -4.8% or better to put any upward pressure on interest rates.
Wed. April 29, 1:00 p.m. ET
Treasury auctions $26 bil. of
7-year notes
The result of this auction will likely exert a significant amount of pressure on the trend trajectory of mortgage interest rates for the balance of the week. A well bid auction will tend to support steady to lower bond & mortgage note rates while a poorly bid auction will probably lead investors to nudge those rates a small increment higher.
Wed. April 29, 2:15 p.m. ET
The Fed releases its post-meeting statement
No change to short-term interest rates
The Fed’s post-meeting statement will probably not be upbeat about the economy’s near-term prospects, which remain clouded by continued deterioration in the labor market. There is only a minuscule chance the Fed might choose to expand its plans to purchase mortgage-backed securities or Treasury obligations. Overall, this meeting will likely be a non-event with respect to its impact on the trend trajectory of mortgage interest rates.
Thurs. April 30, 8:30 a.m. ET
Initial jobless claims for the week ended 4/25
Up 2,000
This time around first-time jobless benefit claims are expected to post a very small increase. For most investors it is still too early to conclude the worst of this recession’s employment erosion is behind us. Look for this data to have little, if any meaningful impact on the mortgage market today.
Thurs. April 30, 8:30 a.m. ET
Q1 Employment Cost Index
+0.4% vs. last +0.5%
It is highly likely the sharp job losses of the past three months have resulted in a virtually non-existent increase in the employment cost index. Investors will likely give this data little more than a passing glance.
Thurs. April. 30, 8:30 a.m. ET
Mar. Personal Income
Spending
PCE Index
-0.2% vs. last -0.2%
-0.1% vs. last +0.2%
0.0% vs. last +0.2%
If, as expected, the spending and personal consumption expenditure index (one of the Fed’s favorite measures of inflation at the consumer level) match or fall below the fore casted values this report will be supportive of steady to fractionally lower rates.
Fri. May 1, 10:00 a.m. ET
Mar. Factory Orders
-0.8% vs. last +1.8%
This stale data will likely have no impact on the equity markets.
Fri. May 1, 10:00 a.m. ET
Apr. Institute of Supply Mgmt.
38.0 vs. last 36.3
The modest expected uptick in manufacturing is not likely strong enough to cause much, if any concern among market watchers.
Tuesday, April 21, 2009
Bank of America warns' as it posts first-quarter profit of $2.81 billion
There were a several interesting quotes which came from BofA's 1st quarter release yesterday afternoon. I thought I should share some of the more noteworthy comments.
"Credit is bad and we believe credit is going to get worse before it will eventually stabilize and improve." Chief Executive Ken Lewis said during a conference call with analysts, noting that the bank continues to face challenges. "Whether that turn is later this year or in the first half of 2010, I'm not going to hazard a guess."
"Like it or not, capital markets is now a core business for Bank of America, and that has more volatile returns than other businesses."
"Bank of America is no longer exclusively a retail bank and there can be more fluctuations."
This week's economic calendar
Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis
There's nothing to mention until Thursday.
Thurs. April 23, 8:30 a.m. ET
Initial jobless claims for the week ended 4/18
Up 23,000
The out sized drop in last week’s first-time claims for jobless benefits probably reflected the impact of the Good Friday holiday closing of the government’s employment offices. This time around first-time claims are expected to post a rather sharp move to the upside. This week’s data is also being gathered during the survey period for the April non farm payroll report. Becuase of this, I expect a notable increase in the weekly initial jobless claims number which should support fractionally lower mortgage/fixed income interest rates.
Thurs. April 23, 10:00 a.m. ET
Mar. Existing Home Sales
Down 0.6%
The pace of the decline for existing home sales continues to soften – suggesting to some analysts that the housing sector may be within months of reaching a meaningful bottom. Affordability is at its best levels in more than 17-years and 30-year mortgage rates are within a whisper of their record lows. Look for this report to have little influence on the mortgage market until/unless the pace of sales shows positive gains.
Thurs. April 23, first half of the trading day
As usualy, expect the Fed will be an active participant in the credit market. Most of the purchase will be centered around treasuries with maturities ranging from 3- to 10-years. The continued Fed presence in the credit market tends to be supportive of steady to fractionally lower mortgage rates.
Thurs. April 23, 1:00 a.m. ET
Treasury auctions
5-year inflation-indexed securities
The relative short term together with the “adjustable” feature of this security will likely make it very appealing to a broad spectrum of investors. This event will not influence the direction of rates.
Fri. April 24, 8:30 a.m. ET
Mar. Durable Goods Orders
Ex-transportation
-1.5% vs. last +3.5%
-1.2% vs. last +3.7%
These figures will likely draw little more than a passing glance from market participants.
Fri. April 24, 8:30 a.m. ET
Mar. New Home Sales
+0.8%
Big price concessions from builders and historically low mortgage interest rates likely combined to nudge the pace of new home sales fractionally higher. That’s nice – but mortgage investors will likely give this data little more than a passing glance.
Mon. April. 27
"Credit is bad and we believe credit is going to get worse before it will eventually stabilize and improve." Chief Executive Ken Lewis said during a conference call with analysts, noting that the bank continues to face challenges. "Whether that turn is later this year or in the first half of 2010, I'm not going to hazard a guess."
"Like it or not, capital markets is now a core business for Bank of America, and that has more volatile returns than other businesses."
"Bank of America is no longer exclusively a retail bank and there can be more fluctuations."
This week's economic calendar
Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis
There's nothing to mention until Thursday.
Thurs. April 23, 8:30 a.m. ET
Initial jobless claims for the week ended 4/18
Up 23,000
The out sized drop in last week’s first-time claims for jobless benefits probably reflected the impact of the Good Friday holiday closing of the government’s employment offices. This time around first-time claims are expected to post a rather sharp move to the upside. This week’s data is also being gathered during the survey period for the April non farm payroll report. Becuase of this, I expect a notable increase in the weekly initial jobless claims number which should support fractionally lower mortgage/fixed income interest rates.
Thurs. April 23, 10:00 a.m. ET
Mar. Existing Home Sales
Down 0.6%
The pace of the decline for existing home sales continues to soften – suggesting to some analysts that the housing sector may be within months of reaching a meaningful bottom. Affordability is at its best levels in more than 17-years and 30-year mortgage rates are within a whisper of their record lows. Look for this report to have little influence on the mortgage market until/unless the pace of sales shows positive gains.
Thurs. April 23, first half of the trading day
As usualy, expect the Fed will be an active participant in the credit market. Most of the purchase will be centered around treasuries with maturities ranging from 3- to 10-years. The continued Fed presence in the credit market tends to be supportive of steady to fractionally lower mortgage rates.
Thurs. April 23, 1:00 a.m. ET
Treasury auctions
5-year inflation-indexed securities
The relative short term together with the “adjustable” feature of this security will likely make it very appealing to a broad spectrum of investors. This event will not influence the direction of rates.
Fri. April 24, 8:30 a.m. ET
Mar. Durable Goods Orders
Ex-transportation
-1.5% vs. last +3.5%
-1.2% vs. last +3.7%
These figures will likely draw little more than a passing glance from market participants.
Fri. April 24, 8:30 a.m. ET
Mar. New Home Sales
+0.8%
Big price concessions from builders and historically low mortgage interest rates likely combined to nudge the pace of new home sales fractionally higher. That’s nice – but mortgage investors will likely give this data little more than a passing glance.
Mon. April. 27
Thursday, April 16, 2009
I wish I were this smart...
Check out this insightful commentary by Steve Forbes. Think, he too ran for president. CNBC got what their paid for this interview.
Steve Forbes: How The Fed Can Save Economy
Posted By:CNBC.com
Steve Forbes offered CNBC his insights into the markets, the economy — and what the government is doing wrong. "There certainly seems to be a bottoming out" in equities and other markets, Forbes said. "But the key thing is getting the credit markets truly working again," he cautioned.
Without credit improvement, no real and sustainable recovery can happen, he told CNBC's Maria Bartiromo.
"It you're prime credit, double-A, triple-A, those handful [of entities], you're able to borrow in this market. But others are still having a real hard time." What must the government do — if anything?
"The Federal Reserve should be pumping out a lot more liquidity, most especially in the mortgage market," the president and CEO of Forbes, Inc. declared. He believes the Obama administration must create an environment of eased regulations and lower-capital gains taxes that would spur investors to "aggressively buy" mortgage-backed securities.
http://www.cnbc.com/id/30232495
Steve Forbes: How The Fed Can Save Economy
Posted By:CNBC.com
Steve Forbes offered CNBC his insights into the markets, the economy — and what the government is doing wrong. "There certainly seems to be a bottoming out" in equities and other markets, Forbes said. "But the key thing is getting the credit markets truly working again," he cautioned.
Without credit improvement, no real and sustainable recovery can happen, he told CNBC's Maria Bartiromo.
"It you're prime credit, double-A, triple-A, those handful [of entities], you're able to borrow in this market. But others are still having a real hard time." What must the government do — if anything?
"The Federal Reserve should be pumping out a lot more liquidity, most especially in the mortgage market," the president and CEO of Forbes, Inc. declared. He believes the Obama administration must create an environment of eased regulations and lower-capital gains taxes that would spur investors to "aggressively buy" mortgage-backed securities.
http://www.cnbc.com/id/30232495
Tuesday, April 14, 2009
It's TRUE!!!
On several occations over the last 3 months I have found the following statement is indeed a fact: There are only 24 hours in a work day.
This weeks Economic Report(s)
Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis
Tue. April 14, 8:30 a.m. ET
Mar. Producer Price Index
Core Rate
+0.1% vs. last +0.1%
+0.1% vs. last +0.2%
The modest expected rise in the headline producer price index can be attributed almost exclusively to the rise in energy prices during the month. Excluding the more volatile food and energy components, core inflation at the producer level probably remained extremely benign. Most investorswill give this data little more than a passing glance.
Tue. April 14, 8:30 a.m. ET
Mar. Retail Sales
Ex. autos
+0.2% vs. last -0.1%
-0.1% vs. last +0.7%
A sharp acceleration in the nation’s unemployment rate has no doubt taking a toll on retail sales. This data will be nothing more than an exercise in defining the degree of weakness in the retail sector. If the actual numbers match or exceeds the consensus estimate this report will tend to be mortgage interest rate neutral to slightly friendly. In the unlikely event either of the two components of this report proves to be stronger than expected look for perhaps a mid-day rally in stocks and things like mortgage interest rates to creep fractionally higher.
Tue. April 14, 10:00 a.m. ET
Feb. Business Inventories
-1.0% vs. last -1.1%
This old stale bit of macro-economic news will likely do nothing more than take up space on this week’s calendar.
Wed. April 15, 8:30 a.m. ET
Mar. Consumer Price Index
Core Rate
+0.2% vs. last +0.4%
+0.2% vs. last +0.2%
Gasoline prices crept higher in February, contributing to the increase in headline consumer inflation. Excluding the more volatile food and energy components, core inflation at the consumer level continued its multi-month trend to lower levels. This data will likely exert little, if any influence on the direction of mortgage interest rates today.
Wed. April 15, 9:15 a.m. ET
Mar. Industrial Production &
Capacity Utilization
-1.0% vs. last -1.5%
69.6 vs. last 70.2
The massive decline in the manufacturing sector is expected to have continued unabated during the month of March. This data will likely have little, if any influence on the direction of mortgage interest rates.
Thurs. April 16, 8:30 a.m. ET
Mar. Housing Starts &
Building Permits
-5.6%
-2.4%
The housing market is still months away at best. The expected decline in these two measures of housing activity will come as no surprise -- and therefore their impact on the trend trajectory of mortgage interest rates will probably be negligible.
Thurs. April 16, 8:30 a.m. ET
Initial jobless claims for the week ended 4/11
Down 3,000
Today’s figures will likely draw little more than a passing glance from market participants.
Fri. April 17
Mon. April 20
This weeks Economic Report(s)
Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis
Tue. April 14, 8:30 a.m. ET
Mar. Producer Price Index
Core Rate
+0.1% vs. last +0.1%
+0.1% vs. last +0.2%
The modest expected rise in the headline producer price index can be attributed almost exclusively to the rise in energy prices during the month. Excluding the more volatile food and energy components, core inflation at the producer level probably remained extremely benign. Most investorswill give this data little more than a passing glance.
Tue. April 14, 8:30 a.m. ET
Mar. Retail Sales
Ex. autos
+0.2% vs. last -0.1%
-0.1% vs. last +0.7%
A sharp acceleration in the nation’s unemployment rate has no doubt taking a toll on retail sales. This data will be nothing more than an exercise in defining the degree of weakness in the retail sector. If the actual numbers match or exceeds the consensus estimate this report will tend to be mortgage interest rate neutral to slightly friendly. In the unlikely event either of the two components of this report proves to be stronger than expected look for perhaps a mid-day rally in stocks and things like mortgage interest rates to creep fractionally higher.
Tue. April 14, 10:00 a.m. ET
Feb. Business Inventories
-1.0% vs. last -1.1%
This old stale bit of macro-economic news will likely do nothing more than take up space on this week’s calendar.
Wed. April 15, 8:30 a.m. ET
Mar. Consumer Price Index
Core Rate
+0.2% vs. last +0.4%
+0.2% vs. last +0.2%
Gasoline prices crept higher in February, contributing to the increase in headline consumer inflation. Excluding the more volatile food and energy components, core inflation at the consumer level continued its multi-month trend to lower levels. This data will likely exert little, if any influence on the direction of mortgage interest rates today.
Wed. April 15, 9:15 a.m. ET
Mar. Industrial Production &
Capacity Utilization
-1.0% vs. last -1.5%
69.6 vs. last 70.2
The massive decline in the manufacturing sector is expected to have continued unabated during the month of March. This data will likely have little, if any influence on the direction of mortgage interest rates.
Thurs. April 16, 8:30 a.m. ET
Mar. Housing Starts &
Building Permits
-5.6%
-2.4%
The housing market is still months away at best. The expected decline in these two measures of housing activity will come as no surprise -- and therefore their impact on the trend trajectory of mortgage interest rates will probably be negligible.
Thurs. April 16, 8:30 a.m. ET
Initial jobless claims for the week ended 4/11
Down 3,000
Today’s figures will likely draw little more than a passing glance from market participants.
Fri. April 17
Mon. April 20
Monday, April 6, 2009
HARP Program - Our Government's Next BIG Idea
This week, the Big 4 Mortgage Servicers/Investors (BofA, Citibank, Wells Fargo and Chase) release their varations of our governmment's
Making Home Affordable Program. The GSE's (Fannie Mae & Freddie Mac) have seperate versions of this program. Freddie Mac Relief Refinance MortgageSM and the Fannie Mae DU Refi PlusTM.
The concept behind these programs are to support potential borrowers who are under water on their home loans compared to their equity. Homeowners who might benefit from this action are the almost 50% of the homeowners who have loans secured by either GSE.
Some of the highlights are as follows:
Max LTV/CLTV -
105% LTV
Unlimited TLTV/CLTV
Loan Amount
Payoff of the first mortgage balance, including accrued interest
Actual closing costs, financing costs, pre-paids, and escrows
The borrowers may not receive any cash at closing
Note: No limit on closing costs, financing costs, pre-paids and escrows.
Example:
Payoff amount: $352,006
Actual closing costs, etc.: $3,672
Maximum loan amount: $355,678
I could go on but with most of the government's misguided programs, there's a kicker. Mortgage Insurance, which is required for the home loan where the Loan to Value is above 80% on the first mortgage would usually typify this potential client. Homeowners who are under water with the equity of their home loans usually had put down more than 20% (or took out a second). Either way, both GSE programs are currently not available for loans with MI; altough they may be offered at a later date.
So don't get too excited about the "latest" offering from our federal government.
This week's short economic calendar
Mon. April 6
Tue. April 7, 1:00 p.m. ET
Treasury sells $6 billion of
10-year inflation indexed securities
The “adjustable” feature of these securities should draw solid investor demand. If so, this will be a non-event in terms of its impact on the trend trajectory of fixed income interest rates.
Wed. April 8, 10:00 a.m. ET
Feb. Wholesale Inventories
-0.6% vs. last -0.9%
This old tidbit of macro-economic news will likely do nothing more than take up space on this week’s calendar.
Wed. April 8, 1:00 p.m. ET
Treasury sells estimated
$34 billion of three-year notes
The relative short-life of this security will likely result in a well bid offering. If so, this event will have little, if any impact on the direction of mortgage interest rates.
Wed. April 8, 2:00 p.m. ET
Minutes of the Federal Open Market Committee March meeting
Market participants will peruse this document for details surrounding committee members’ decision to commit $300 billion to the direct purchase of Treasury obligations as well as expanding their purchase of mortgage-backed securities by $750 billion. It will be an interesting read -- but in the end it will not likely influence the direction of interest rates.
Thurs. April 9, 8:30 a.m. ET
Initial jobless claims for the week ended 4/4
Down 9,000
Here's the report of the week. Further erosion in the employment sector is broadly anticipated by investors and has already been deeply priced into the current market. If this report proved lighter than anticipated, those still engaged with the equity markets in this shortened week may see a substaintial mid-morning rally in equities and a free fall in bonds, mortgage prices, ect.
Thurs. April 9, 1:00 p.m. ET
Treasury sells estimated
$18 billion of 10-year notes
This offering will likely require strong support from the Fed to keep the yield from skipping noticeably higher. A poorly bid auction here will almost certainly put some upward pressure on interest rates.
Thurs. April 9, 2:00 p.m. ET
The mortgage market will close early today for the Good Friday Holiday
Fri. April 10
The mortgage market is closed today for the Good Friday Holiday
Mon. April 13
Making Home Affordable Program. The GSE's (Fannie Mae & Freddie Mac) have seperate versions of this program. Freddie Mac Relief Refinance MortgageSM and the Fannie Mae DU Refi PlusTM.
The concept behind these programs are to support potential borrowers who are under water on their home loans compared to their equity. Homeowners who might benefit from this action are the almost 50% of the homeowners who have loans secured by either GSE.
Some of the highlights are as follows:
Max LTV/CLTV -
105% LTV
Unlimited TLTV/CLTV
Loan Amount
Payoff of the first mortgage balance, including accrued interest
Actual closing costs, financing costs, pre-paids, and escrows
The borrowers may not receive any cash at closing
Note: No limit on closing costs, financing costs, pre-paids and escrows.
Example:
Payoff amount: $352,006
Actual closing costs, etc.: $3,672
Maximum loan amount: $355,678
I could go on but with most of the government's misguided programs, there's a kicker. Mortgage Insurance, which is required for the home loan where the Loan to Value is above 80% on the first mortgage would usually typify this potential client. Homeowners who are under water with the equity of their home loans usually had put down more than 20% (or took out a second). Either way, both GSE programs are currently not available for loans with MI; altough they may be offered at a later date.
So don't get too excited about the "latest" offering from our federal government.
This week's short economic calendar
Mon. April 6
Tue. April 7, 1:00 p.m. ET
Treasury sells $6 billion of
10-year inflation indexed securities
The “adjustable” feature of these securities should draw solid investor demand. If so, this will be a non-event in terms of its impact on the trend trajectory of fixed income interest rates.
Wed. April 8, 10:00 a.m. ET
Feb. Wholesale Inventories
-0.6% vs. last -0.9%
This old tidbit of macro-economic news will likely do nothing more than take up space on this week’s calendar.
Wed. April 8, 1:00 p.m. ET
Treasury sells estimated
$34 billion of three-year notes
The relative short-life of this security will likely result in a well bid offering. If so, this event will have little, if any impact on the direction of mortgage interest rates.
Wed. April 8, 2:00 p.m. ET
Minutes of the Federal Open Market Committee March meeting
Market participants will peruse this document for details surrounding committee members’ decision to commit $300 billion to the direct purchase of Treasury obligations as well as expanding their purchase of mortgage-backed securities by $750 billion. It will be an interesting read -- but in the end it will not likely influence the direction of interest rates.
Thurs. April 9, 8:30 a.m. ET
Initial jobless claims for the week ended 4/4
Down 9,000
Here's the report of the week. Further erosion in the employment sector is broadly anticipated by investors and has already been deeply priced into the current market. If this report proved lighter than anticipated, those still engaged with the equity markets in this shortened week may see a substaintial mid-morning rally in equities and a free fall in bonds, mortgage prices, ect.
Thurs. April 9, 1:00 p.m. ET
Treasury sells estimated
$18 billion of 10-year notes
This offering will likely require strong support from the Fed to keep the yield from skipping noticeably higher. A poorly bid auction here will almost certainly put some upward pressure on interest rates.
Thurs. April 9, 2:00 p.m. ET
The mortgage market will close early today for the Good Friday Holiday
Fri. April 10
The mortgage market is closed today for the Good Friday Holiday
Mon. April 13
Tuesday, March 3, 2009
"We're Almost There"...
Dow 6500. I should post some of the comments I received when I made that statement back in December. Perhaps not. As the futures look to rebound this morning I thought I would encourage many of you to step back from the ledge. Should we actually reach the 6500 level not all is lost. Keep in mind, the meek run in a corner and hide or jump. Stay the course
This economy will rebound. It'll take some time see me in 2010. We have all taken lumps. Fiscal lumps, credibility lumps, business lumps. Lumps. Leadership is key through these difficult time. Develop your strategy (trading, buying, business, personal) and stay with it. Migrating from one concept to another will only get you in trouble. Stay wise.
This week's economic indicator(s)
Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis
Mon. Mar. 2, 8:30 a.m. ET
Jan. Personal Income
Spending
PCE Index
-0.2% vs. last -0.2%
+0.4% vs. last -1.0%
+0.1% vs. last 0.0%
Further erosion in the employment sector has undoubtedly taken a toll on personal incomes. Rising energy prices likely nudged the spending component of this report fractionally higher. The personal consumption expenditure index, one of the Fed’s favorite measures of inflation pressure at the consumer level, is expected to remain benign. This collective body of data is already priced into the mortgage market rendering these numbers essentially toothless with respect to their influence on the trend trajectory of fixed interest rates.
Mon. Mar. 2, 10:00 a.m. ET
Feb. Institute of Supply Mgmt.
33.8 vs. last 35.5
Market participants are well aware that the manufacturing sector is under pressure as last week’s durable goods orders report showed demand has contracted for six consecutive months while inventories continue to rise.
Tue. Mar. 3, 10:00 a.m. ET
Fed Chairman Bernanke testifies on the Economic Outlook and the Federal Budget Situation to the Senate Budget Committee
Mr. Bernanke spoke to both chambers of Congress last week. I would not expect much (if anything) different here. There will be a Q&A session to follow his formal comments which will be monitored by investors – but few expect this event to generate much, if any noticeable movement in the markets.
Wed. Mar. 4, 10:00 a.m. ET
Feb. Institute of Supply Mgmt.
Service Index
41.0 vs. last 42.9
This broad barometer of economic activity is expected to show business conditions remained challenging in February. No market changes here.
Thurs. Mar 5, 8:30 a.m. ET
Revised Q4 Productivity &
Unit Labor Costs
+1.5% vs. last +3.2%
+3.4% vs. last +1.8%
Declining productivity and rising unit labor cost will likely be slightly unsettling for mortgage investors. Should we have some unsettling numbers here, equities may fall and fixed income, say mortgage levels will move fractionally higher.
Thurs. Mar. 5, 8:30 a.m. ET
Initial jobless claims for the week ended 2/28
Down 17,000
Further erosion in the employment sector is broadly anticipated by investors and has already been deeply priced into the mortgage market. Today’s figures will likely draw little more than a passing glance from investors as they await tomorrow’s much more important February nonfarm payroll report.
Thurs. Mar. 5, 10:00 a.m. ET
Jan. Factory Orders
-3.5% vs. last -3.9%
This old stale bit of macro-economic news will likely do nothing more than take up space on this week’s calendar.
Fri. Mar. 6, 8:30 a.m. ET
Feb. Nonfarm Payrolls
Jobless Rate
Average hourly earnings
-648,000
7.9% vs. last 7.6%
+0.2% vs. last +0.3%
Mortgage investors are keenly aware the labor market has fallen off of a cliff. A really nasty series of numbers have already been priced into the market here -- which means this report will likely have little, if any meaningful impact on the trend trajectory of interest rates if the actual numbers reasonably approximate the consensus estimate.
This economy will rebound. It'll take some time see me in 2010. We have all taken lumps. Fiscal lumps, credibility lumps, business lumps. Lumps. Leadership is key through these difficult time. Develop your strategy (trading, buying, business, personal) and stay with it. Migrating from one concept to another will only get you in trouble. Stay wise.
This week's economic indicator(s)
Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis
Mon. Mar. 2, 8:30 a.m. ET
Jan. Personal Income
Spending
PCE Index
-0.2% vs. last -0.2%
+0.4% vs. last -1.0%
+0.1% vs. last 0.0%
Further erosion in the employment sector has undoubtedly taken a toll on personal incomes. Rising energy prices likely nudged the spending component of this report fractionally higher. The personal consumption expenditure index, one of the Fed’s favorite measures of inflation pressure at the consumer level, is expected to remain benign. This collective body of data is already priced into the mortgage market rendering these numbers essentially toothless with respect to their influence on the trend trajectory of fixed interest rates.
Mon. Mar. 2, 10:00 a.m. ET
Feb. Institute of Supply Mgmt.
33.8 vs. last 35.5
Market participants are well aware that the manufacturing sector is under pressure as last week’s durable goods orders report showed demand has contracted for six consecutive months while inventories continue to rise.
Tue. Mar. 3, 10:00 a.m. ET
Fed Chairman Bernanke testifies on the Economic Outlook and the Federal Budget Situation to the Senate Budget Committee
Mr. Bernanke spoke to both chambers of Congress last week. I would not expect much (if anything) different here. There will be a Q&A session to follow his formal comments which will be monitored by investors – but few expect this event to generate much, if any noticeable movement in the markets.
Wed. Mar. 4, 10:00 a.m. ET
Feb. Institute of Supply Mgmt.
Service Index
41.0 vs. last 42.9
This broad barometer of economic activity is expected to show business conditions remained challenging in February. No market changes here.
Thurs. Mar 5, 8:30 a.m. ET
Revised Q4 Productivity &
Unit Labor Costs
+1.5% vs. last +3.2%
+3.4% vs. last +1.8%
Declining productivity and rising unit labor cost will likely be slightly unsettling for mortgage investors. Should we have some unsettling numbers here, equities may fall and fixed income, say mortgage levels will move fractionally higher.
Thurs. Mar. 5, 8:30 a.m. ET
Initial jobless claims for the week ended 2/28
Down 17,000
Further erosion in the employment sector is broadly anticipated by investors and has already been deeply priced into the mortgage market. Today’s figures will likely draw little more than a passing glance from investors as they await tomorrow’s much more important February nonfarm payroll report.
Thurs. Mar. 5, 10:00 a.m. ET
Jan. Factory Orders
-3.5% vs. last -3.9%
This old stale bit of macro-economic news will likely do nothing more than take up space on this week’s calendar.
Fri. Mar. 6, 8:30 a.m. ET
Feb. Nonfarm Payrolls
Jobless Rate
Average hourly earnings
-648,000
7.9% vs. last 7.6%
+0.2% vs. last +0.3%
Mortgage investors are keenly aware the labor market has fallen off of a cliff. A really nasty series of numbers have already been priced into the market here -- which means this report will likely have little, if any meaningful impact on the trend trajectory of interest rates if the actual numbers reasonably approximate the consensus estimate.
Subscribe to:
Posts (Atom)
