Cari Anderson's East Bay Mortgage Update for September 7th 2010
Economic News: It is going to be a quiet week for economic data. The stock market has started out lower this week due to questions over the "Stress Tests" in the European Banking Sector. Wednesday will also have the release of the "Beige Book" (released 8 times per year ahead of the Federal Open Market Committee FOMC) meeting.
Mortgage Markets: The 10 Year Note is rallying on the equity weakness this morning with the yield falling back to 2.620% and Mortgage Backed Securities are recovering a bit of last week's losses. Interest rates are a tad bit better than Friday's closing levels.
This Week's Reports: A quiet week for data. Thursday: International Trade & Jobless Claims.
Stay tuned for the Next East Bay Mortgage Update...
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Economic News: The stock market has done well this week and is poised to end a three week downturn. Much of this week's economic data was better than expected which boosted equities and hurt bonds.
Wednesday brought us the ISM Manufacturing Index for August. The numbers came in well above consensus at 56.3 and, while there is some concern with the softening of new orders, it was a solid report.
Lastly, Friday brought us the much awaited Employment Report. While the overall unemployment rate inched up to 9.6% (the government shed 121,000 jobs and 114,000 of those were census workers) there was some positive data in the report. Private industry added 67,000 jobs and there was a slight uptick in average hours worked as well as wages.
Economic News: A wild week in the markets ended with a big rally in the Stock Market and a selloff in the Bond Market. The week's economic reports included: Existing Home Sales, New Home Sales, Durable Goods Orders, Jobless Claims and Gross Domestic Product and Consumer Sentiment. Although there were a few positives in some of the data the overall picture was disappointing and the markets were looking a little bleak at the start of trading Friday. The markets began to rally shortly after Federal Reserve Chairman Ben Bernanke signaled in his Jackson Hole Wyoming speech that the FED is willing to do more to support the economic recovery.
Economic News: A quiet day with no economic reports to speak of. The rest of the week will provide a fair amount of data assisting the near term view of where things are heading. A lot of debt is scheduled to be auctioned off this week. There will be U.S. Treasury Auctions as well as a host of Municipal Bond Sales. All this together will make for a lot of supply, and competition for mortgage paper, so keep a close eye on the bond markets this week.
Economic News: There is really nothing to note in the way of economic releases today (which is probably a good thing considering the week's reports thus far). This time of year provides volatile markets due to lower volume with many participants on the sidelines enjoying the last two weeks of August. Yesterday's Jobless Claims, Leading Economic Indicators and the Philadelphia Fed Survey were not as positive as some hoped. No need to share any more negative economic news this week. Next week has a pretty decent number of important reports which has the potential to impact both the equity markets and interest rates. To borrow a quote from Rob Chrisman's 
Mortgage Markets: The yield on the 10 Year Note is steady this morning and is currently trading at 2.566%. The Mortgage Backed Securities market is steady after a bit of a choppy week. Rates remain at tremendous levels and opportunities abound in both the purchase and refinance sectors.
Economic News: While there is really nothing to speak of on the economic calendar today there were a few reports yesterday. While slipping a little in June, the Industrial Production Report showed nice gains across most sectors for the month of July. Production rose 1% in July beating expectations of a .6% increase. Capacity Utilization rose to 74.8% beating the consensus of 74.5%. The Producer Price Index (PPI) came in right on consensus for the month to month measurement while rising 4.1% year over year. Lower energy prices coupled with higher food prices contributed to the report. The PPI, less the volatile food and energy segments, rose a modest 1.5% from last year. Finally, Housing Starts rose 1.5% in July, which is good news, while the estimated annualized units came in at 546,000. The market was expecting 565,000.
Economic News: The National Association of Home Builders released their Housing Market Index numbers this morning. The index trended down to 13 and has slid down since the expiration of the tax incentives. Another item putting pressure on the Equity Markets was the overnight report of the Gross Domestic Product (GDP) of Japan being less than expected and now it appears China may surpass Japan by year end as the second largest economy in the world.
Economic News: Thursday's Jobless Claims numbers came in well above consensus at 484K which is the highest level since February. In contrast the four week moving average actually fell 118K. This morning the Consumer Price Index (CPI) data was released showing that energy led to a slight increase in inflation. Taking out the volatile food and energy segment the index only rose a muted .10%. Auto sales led the way in a rebound in the Retail Sales numbers. On a year over year comparison retail sales were 5.5% higher for the July reporting period. Finally, Consumer Sentiment came in at the high range of expectations and showed a nice gain over the July report.
Economic News: The announcement yesterday from the Federal Open Market Committee (FOMC) retained the statement that "rates are expected to remain low for an extended period". In addition, it was noted that "the pace of recovery in output and employment has slowed in recent months" but also included that growth was continuing. International Trade numbers were released this morning revealing a sharp rise in our trade deficit, reaching $49.9 Billion for the month of June, as the demand for our exports fell overseas while our appetite for imported goods rose. The Equity Markets have sold off today as a result of fear that growth in both foreign and domestic economies may be slowing. This has led to a "flight to safety" which has benefited interest rates.
Mortgage Markets: The yield on the 10 Year Note has fallen to a yield of 2.710% and the Mortgage Backed Securities market is doing well as demand is strong. Today's mortgage rates are a bit better than yesterday's closing levels.