Fed to Hold Rates Down for Now - 09/30/09 04:53 PM
Several Fed officials have delivered speeches this week. Today, Fed Vice Chairman Kohn maintained a similar theme to the other speakers. He suggested that low inflation and unused capacity in the economy will allow the Fed to keep the fed funds rate low for quite a while. When it's time to remove stimulus, the Fed might have to raise rates relatively quickly, and it may have to begin raising rates while unemployment remains high. The primary source of disagreement among Fed officials right now is how soon they expect to need to raise rates.
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September 30th Mortgage Market Wrap-up - 09/30/09 04:51 PM
MBS prices are down -3/32 (FNMA 30-yr 4.5 at 101.25), above the initial price level at -4/32, and at the high for the day. Despite weaker than expected Chicago PMI manufacturing data, MBS prices stayed in a range today. The Dow is down 40 points. Tomorrow will be a busy day with Personal Income, Jobless Claims, Construction Spending, ISM Manufacturing, and Pending Home Sales. In addition, the Treasury will announce the size of upcoming Treasury auctions.
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Economic News Seesaws MBS Prices - 09/29/09 03:57 PM
The Case-Shiller housing price index fell 13.8% in July when compared to July '08, which was a much smaller decline than expected, and MBS prices fell on the early morning news. Later at 10:00 et, the Conference Board announced that consumer confidence in September was measured at 53.1. A measure of 57 was expected. MBS prices rose on the news. Consumer confidence is considered a good gauge for consumer spending and with confidence lower than expected, spending will likely be lower as well.
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September 29th Mortgage Market Wrap-up - 09/29/09 03:55 PM
MBS prices are even (FNMA 30-yr 4.5 at 101.34), above the initial price level at -5/32. MBS prices fell early after better than expected home price information was announced and then recovered mid-morning on weaker than expected Consumer Confidence.  Second quarter Final GDP will be released tomorrow at 8:30 and the Chicago PMI will be released at 9:45.
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Septmeber 28th Mortgage Market Wrap-up - 09/28/09 04:20 PM
MBS prices are +7/32 (FNMA 30-yr 4.5% at 101.34), above the initial price level at +2/32. No economic data was released today. today was a one of the rare days when it was a good day for both mortgage prices and stock prices as the Dow rose over 100 points to close at 9789. September Consumer Confidence will be released tomorrow at 10:00 et.  
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Fed Leaves Rates Steady - 09/28/09 11:53 AM
As expected, the Fed made no change in the fed funds rate on Wednesday. Although there was much disagreement about what the statement would say, in general it contained the minimum number of surprises. The Fed offered its most optimistic view on the economy since the recession began, yet officials believe that slack in the economy will keep inflation low. Fed officials continue to expect the fed funds rate to remain at exceptionally low levels "for an extended period."
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September 25th Mortgage Market Wrap-up - 09/25/09 03:55 PM
MBS prices are up +6/32 (FNMA 30-yr 4.5 at 101.12), above the initial price level at +1/32. August Durable Orders were weaker than expected, while Consumer Sentiment came in above the consensus forecast. August New Home Sales rose slightly to the highest level since September 2008, but fell short of the consensus forecast. Inventories of unsold new homes fell to a 7.3-month supply from a 7.6-month supply in July. The Dow is down 40 points to 9,665. For the week, MBS prices rose about +19/32.
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Fed Purchases Extend into 2010 - 09/25/09 09:33 AM
The Fed purchased $23.0 billion in agency MBS during the weekly period ending September 23, from $25.5 billion the prior week. Freddie Mac reported that average mortgage rates were flat in the week through September 24, with 30-yrs hitting 5.04%, from 5.04% the prior week.  Per Fed minutes, although the amount to be purchased will not be increased, the purchaes will extened into the new year.
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September 24th Mortgage Market Wrap-up - 09/25/09 09:28 AM
MBS prices are up +9/32 (FNMA 30-yr 4.5 at 100.30), above the initial price level at +4/32, and at the high for the day.  Weaker than expected Existing Home Sales lifted MBS markets. August Existing Home Sales fell 2.7% to an annual rate of 5.10M units, below the consensus of 5.35M units. First-time homebuyers accounted for 30% of total sales. Sales were concentrated in lower-priced homes. Inventories of unsold homes fell to an 8.5-month supply from a 9.3-month supply in July. The results for the 7-yr Treasury auction were stronger than average and helped push MBS prices higher. The bid-to-cover ratio was … (1 comments)

Septemeber 23rd Mortgage Market Wrap-up - 09/23/09 03:43 PM
MBS prices are up +2/32 (FNMA 30-yr 4.5 at 100.62), above the initial price level at -5/32, and near the high for the day. No-one issued a reprice, either way. No economic data came out today. MBS prices dropped to a low of -12/32 following the 5-yr auction, but they later moved higher after the Fed announcement. The results for the 5-yr Treasury auction were weaker than average. The bid-to-cover ratio was 2.40, and foreign investors purchased 45% of the total. The Dow is down 80 points at 9748 (but it did exceed 9900 closer to that magic 10,000 mark briefly today!!!). Tomorrow, Jobless Claims … (0 comments)

Fed Mute on Program Changes - 09/23/09 03:41 PM
As expected, the Fed made no change in the fed funds rate. While there was much disagreement about what the statement would say, in general it contained the minimum number of surprises. Notably, the end date for the $1.25 trillion MBS purchase program was moved from the end of this year to the end of the first quarter of next year, while the total quantity of purchases will not change. The Fed will gradually scale back the level of weekly purchases to minimize disruptions to MBS markets. Fed officials continue to expect rates to remain at exceptionally low levels "for an … (0 comments)

Fed to Release Comments Tomorrow - 09/22/09 04:29 PM
Tomorrow, there will be a 5-yr auction at 1:00 et. The Fed announcement will be released around 2:15 et. No change in rates is expected, but the Fed's announcement may contain important information on the timing of future rate hikes and the status of the MBS purchase program. The statement may have a large impact on MBS prices.  The FHFA reported that July average home prices rose 0.3% from June, and were 4.2% lower than one year ago.
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September 22nd Mortgage Market Wrap-up - 09/22/09 04:27 PM
MBS prices are up +4/32 (FNMA 30-yr 4.5 at 100.59), above 9:45 et pricing of -1/32. No economic data came out today. The results for the 2-yr Treasury auction were close to average overall. The bid-to-cover ratio was a high 3.23, and foreign investors purchased 45% of the total. MBS prices moved higher late in the session as investors began to take positions ahead of tomorrow's Fed announcement. The Dow is up 50 points at 9829.
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September 21st Mortgage Market Wrap-up - 09/21/09 03:30 PM
MBS prices are flat (FNMA 30-yr 4.5 at 100.44), below the initial price level at +4/32. Leading Indicators came in close to expectations and had little impact. In the middle of the session, MBS prices moved lower on light volume. The Dow is down 50 points to 9778. Tomorrow, there will be a 2-yr auction at 1:00 et.
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This Week's Economic News - 09/21/09 12:15 PM
The biggest economic news this week will be Wednesday's FOMC meeting. No change in rates is expected, but the Fed's announcement may contain important information on the timing of future rate hikes and the status of the MBS purchase program. Data from the housing sector will come out on Thursday and Friday with Existing Home Sales and New Home Sales. Durable Orders, an indicator of economic activity, and Consumer Sentiment will be released on Friday. In addition, the Treasury will auction a record $112 billion in 2-yr, 5-yr, and 7-yr Treasuries on Tuesday, Wednesday, and Thursday.
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Inflation Remains Ally of Low Interest Rates - 09/18/09 03:18 PM
The economy is currently experiencing moderate economic growth with low inflation. In a speech on Tuesday, Fed Chief Bernanke indicated that the recession is "very likely over". Retail Sales and Industrial Production showed nice increases this week. Housing Starts, Building Permits, and Homebuilder Sentiment also moved higher. Meanwhile, there have been few signs of inflation in the short-term. For example, Core CPI rose at a modest 1.4% annual rate, the lowest annual rate since February 2004. Tame inflation readings have helped mortgage rates stay at low levels.
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September 18th Mortgage Market Wrap-up - 09/18/09 03:16 PM
MBS prices are down -7/32 (FNMA 30-yr 4.5 at 100.18), below the initial price level at -1/32.  No economic data came out today, but MBS markets drifted lower. The Dow is up 30 points at 9817. For the week, MBS prices fell about -8/32.  A wide range of major economic data released during the week and comments from the Fed reinforced the consensus outlook for the economy. Economic growth appears to be on track for gradual improvement, while inflation is not a concern in the short-term. With few surprises this week, mortgage rates ended the week nearly unchanged.
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Mortgage Rates Continue Downward - 09/17/09 04:38 PM
The Fed purchased $25.5 billion in agency MBS during the weekly period ending September 16, from $18.8 billion the prior week. Freddie Mac reported that average mortgage rates fell in the week through September 17, with 30-yrs hitting 5.04%, from 5.07% the prior week.  The Dow was down 10 points. No economic data will be released tomorrow.
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September 17th Mortgage Market Wrap-up - 09/17/09 04:37 PM
MBS prices are up +11/32 (FNMA 30-yr 4.5 at 100.26), above the initial price level at +2/32, and at the high for the day. A wide range of economic news came out today. Housing Starts and Jobless Claims came in close to expectations. The Philly Fed index exceeded the consensus forecast, but the most closely watched components were weaker. The Treasury will auction a record $112 billion in 2-yr, 5-yr, and 7-yr Treasuries next week. Investors were prepared for even higher levels, and MBS prices rose after the news.
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Inflation Tame as Housing Index Moves Forward - 09/16/09 03:54 PM
As expected, Core CPI rose at the lowest annual rate since February 2004, and Industrial Production matched the consensus increase. The Dow was up 100 points to a new high for the year at 9791. Tomorrow, Housing Starts, Jobless Claims, and Philly Fed will be released. The Treasury will announce the size of upcoming Treasury auctions as well.The September NAHB Housing Market Index increased for the third straight month to its highest level since May 2008. According to the NAHB, low mortgage rates, high levels of affordability, and the first-time homebuyer tax credit helped lift sentiment.
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Inflation Tame as Housing Index Moves Forward - 09/16/09 03:52 PM
As expected, Core CPI rose at the lowest annual rate since February 2004, and Industrial Production matched the consensus increase. The Dow was up 100 points to a new high for the year at 9791. Tomorrow, Housing Starts, Jobless Claims, and Philly Fed will be released. The Treasury will announce the size of upcoming Treasury auctions as well.The September NAHB Housing Market Index increased for the third straight month to its highest level since May 2008. According to the NAHB, low mortgage rates, high levels of affordability, and the first-time homebuyer tax credit helped lift sentiment.
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September 16th Mortgage Market Wrap-up - 09/16/09 03:49 PM
MBS prices are down -2/32 (FNMA 30-yr 4.5 at 100.41), below the initial price level at +2/32. It was a very volatile session and all sorts of repricing took place. Two days of major inflation and economic growth data, along with news from the Fed, created a lot of disagreement today among investors about both the economic outlook and future Fed actions.  Early rumors that several Fed officials were now more inclined to raise rates pushed MBS markets lower, but investors later disregarded the possible news.
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Fed Head Asserts Recession May Be Over - 09/15/09 03:54 PM
Fed Chief Bernanke indicated that the recession is "very likely over" in a speech today, but he also pointed out that the recovery may be very gradual. The Dow is up 50 points to a new high for the year at 9683. Tomorrow, CPI (Consumer Price Index) and Industrial Production will be released.  Many tiimes the inceases in the Producer Price Index are not passed along to the consumers.  Therefore we are hoping for a tamer CPI number tomorrow.
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September 15th Mortgage Market Wrap-up - 09/15/09 03:50 PM
MBS prices are down -1/32 (FNMA 30-yr 4.5 at 100.47), above the initial price level at -6/32. MBS prices dropped early after the release of today's strong economic data and then held in a range. Retail Sales rose at the fastest monthly pace since January 2006, and PPI (the Producer Price Index) increased more than expected.
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September 14th Mortgage Market Wrap-up - 09/14/09 04:53 PM
MBS prices are down -9/32 (FNMA 30-yr 4.5 at 100.50), below the initial price level at -5/32, and well below the high for the day at -1/32. No economic data came out today. President Obama stated his support for financial regulatory reform. The Dow is up 20 points. Tomorrow, PPI, Retail Sales, and the Empire State index will be released at 8:30 et.
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This Week's Economic Events - 09/14/09 10:37 AM
The most significant economic data this week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Tuesday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Wednesday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail Sales will be released on Tuesday. Retail Sales account for about 70% of economic activity. Industrial Production, another important indicator of economic activity, will be released on … (0 comments)

Economic Summary - 09/11/09 05:09 PM
The Beige Book reported that economic activity is stabilizing or rising in 11 of the Fed's 12 regions.
The Fed's Evans suggested that it's too early for the Fed to tighten credit
The value of the US dollar dropped to its lowest level of the year
The Fed purchased $19 billion in agency MBS during the week ending 9/9
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Strong Demand for Treasuries Buoys Mortgage Bonds - 09/11/09 05:02 PM
In a light week for economic data, the Treasury auctions had the greatest influence on mortgage markets. Strong auction results, particularly for the 30-yr Treasuries, helped mortgage rates move lower during the week.
 In recent months, mortgage rates have been heavily influenced by concerns about the enormous amount of debt the government needs to issue to fund the budget deficit. While recent Treasury auctions have seen stronger than average demand, investors remained cautious ahead of this week's large supply of government debt. The risk is that investors will require higher yields to continue purchasing an expanding supply of bonds. Longer-term Treasuries … (0 comments)

September 11th Mortgage Market Wrap-up - 09/11/09 04:58 PM
MBS prices are up +1/32 (FNMA 30-yr 4.5 at 100.78), below the initial price level at +4/32. MBS prices reached a high of +9/32 before falling off to nearly flat on the day.  Consumer Sentiment rose to 70.2, above the consensus forecast of 67.5. The Dow is down 25 points. For the week, MBS prices rose about +21/32
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Mortgage Rates Improve Slightly - 09/10/09 04:02 PM
The Fed purchased $18.8 billion in agency MBS during the weekly period ending September 9, from $25.7 billion the prior week. Freddie Mac reported that average mortgage rates fell in the week through September 10, with 30-yrs hitting 5.07%, from 5.08% the prior week.  The Dow was up 80 points today to an 11-month high. Tomorrow, the Trade Balance and Jobless Claims will be released.
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September 10th Mortgage Market Wrap-up - 09/10/09 04:00 PM
MBS prices are up +13/32 (FNMA 30-yr 4.5 at 101.09), above initial price level at +8/32.  Today's Jobless Claims and Trade Deficit reports had little impact. MBS markets were helped by very strong demand for the 30-yr auction. The bid-to-cover ratio was 2.92 and foreign buyers purchased 47% of the total. White House economists released a report showing that the $787 billion stimulus program has saved or created one million jobs and added about 2.3% to second quarter GDP since its inception in February. Treasury Secretary Geithner stated that the financial sector is healthier and that many government rescue programs are no … (0 comments)

Fed Not Ready to Tighten Credit - 09/09/09 05:19 PM
Separately, the Fed's Evans suggested that it's too early for the Fed to tighten credit. The Dow is up 50 points. Tomorrow, the Trade Balance and Jobless Claims will be released at 8:30 et. There will be a 30-yr auction at 1:00 et.  For the day mortgage rates were nearly unchanged with the 30 year fixed rate hovering right over the 5.25% level.
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September 9th Mortgage Market Wrap-up - 09/09/09 05:16 PM
MBS prices are up +4/32 (FNMA 30-yr 4.5 at 100.69), above the initial price level at -1/32. It was a quiet session. Demand was about average for the 10-yr auction. The bid-to-cover ratio was 2.77 and foreign buyers purchased 55% of the total. The Fed's Beige Book reported that economic activity is stabilizing or rising in 11 of the Fed's 12 regions, which was a significant improvement from the prior survey. Business spending was behind most of the increase, while consumer spending generally remained "soft".
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Treasury Auctions Atop This Week's Economic Menu - 09/08/09 04:09 PM
Treasury auctions may have the greatest impact on mortgage rates next week. There will be $70 billion in 3-yr, 10-yr, and 30-yr auctions on Tuesday, Wednesday, and Thursday. It will be a light week for economic data. The Fed's Beige Book will be released on Wednesday, and the Trade Balance will come out on Thursday. Import Prices and Consumer Sentiment are scheduled for Friday.
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September 8th Mortgage Market Wrap-up - 09/08/09 04:06 PM
MBS prices are up +2/32 (FNMA 30-yr 4.5 at 100.56), above the initial price level of unchanged. MBS prices reached a high of +10/32. No economic data came out today. Demand was very strong for the 3-yr auction, leading to a rally in MBS markets. The bid-to-cover ratio was 3.02 and foreign buyers purchased 54% of the total. The Dow is up 50 points. Tomorrow, the Fed's Beige Book will be released at 2:00 et. There will be a 10-yr auction at 2:00 et
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Are Fannie and Freddie Mac Going to Be Replaced? - 09/04/09 02:09 PM
The future of Fannie Mae and Freddie Mac made the headlines this week when the Mortgage Bankers Association (MBA) released its restructuring proposal. While the MBA suggested the elimination of the two agencies, it would replace them with new entities which would perform many of the same functions, with many of the same people. Its plan would maintain a government guarantee of principal and interest for MBS investors. The two agencies have played a pivotal role in keeping mortgage rates low and in expanding homeownership, and the MBA proposal would retain these benefits. It's very early in the process, and the … (1 comments)

Unemployment Rate Turns Upward - 09/04/09 02:06 PM
The important monthly Employment report showed mixed results. Against a consensus forecast for a loss of -225K jobs in August, the economy lost -216K jobs. This was the smallest level of monthly job losses since August 2008 and was far below the monthly average of -691K seen during the first quarter of the year. The biggest surprise in the data came from the Unemployment Rate, which jumped from 9.4% to 9.7%, the highest level since 1983. The unexpected increase was mostly due to previously discouraged workers returning to the labor pool to look for jobs. Average Hourly Earnings, a proxy for … (1 comments)

September 4th Mortgage Market Wrap-up - 09/04/09 02:04 PM
MBS prices are down -8/32 (FNMA 30-yr 4.5 at 100.50), below the initial price level at unchanged.  MBS markets rose early after today's Employment data, but later fell when the stock market rallied. The Dow is up 75 points. For the week, MBS prices rose about +11/32.  Investor sentiment about the economic recovery fell this week, and the stock market declined. Expectations for slower economic growth are favorable for bond markets, including mortgage-backed securities (MBS), and mortgage rates ended the week a little lower.
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30 Year Rates Fall Slightly - 09/03/09 04:18 PM
The Fed purchased $25.7 billion in agency MBS during the weekly period ending September 2, slightly up from $25.4 billion the prior week. Freddie Mac reported that average mortgage rates fell in the week through September 3, with 30-yrs hitting 5.08%, from 5.14% the prior week for loans up to the conforming limit of $417,000..
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September 3rd Mortgage Market Wrap-up - 09/03/09 04:15 PM
MBS prices are down -4/32 (FNMA 30-yr 4.5 at 100.75), at the initial price level of -4/32. Today's economic data came in close to expectations. The Treasury announced that it will auction $70 billion in 3-yr, 10-yr, and 30-yr securities next week. As expected, the European Central Bank (ECB) made no change in interest rates. The Dow rose 60 points. Tomorrow, the Employment data will be released at 8:30 et. MBS markets will close early around 2:00 et.
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Fedd Unsure of Future Inflation - 09/02/09 04:48 PM
The FOMC minutes from the August 12 Fed meeting contained few surprises. Fed officials perceived lower downside risks for the economy. They were somewhat divided over the threat of higher future inflation. There was little discussion about whether the Fed should end the MBS purchase program before buying the full $1.25 trillion.
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September 2nd Mortgage Market Wrap-up - 09/02/09 04:47 PM
MBS prices are up +7/32 (FNMA 30-yr 4.5 at 100.88), above the initial price level at +4/32. A high of +11/32 was reached. Today's economic data had little impact. The Dow fell 30 points. Tomorrow, Jobless Claims and ISM Services will be released. In addition, the Treasury will announce the size of upcoming Treasury auctions.
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Home Sales Rise to 2 Year High - 09/01/09 04:12 PM
July Pending Home Sales rose for the sixth straight month, climbing 3% to the highest level since June 2007. The index was 12% higher than one year ago. The ISM national manufacturing index rose to 52.9, also the highest level since June 2007. Readings above 50 indicate an expansion in the sector. July Construction Spending fell -0.2%.
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September 1st Mortgage Market Wrap-up - 09/01/09 04:10 PM
MBS prices are up +6/32 (FNMA 30-yr 4.5 at 100.66), above the initial price level at -1/32. MBS prices reached a low of -5/32 and a high of +7/32.  Today's economic data came in stronger than the consensus forecasts, and the initial reaction was the expected decline in MBS prices. The stock market later turned sharply lower, however, which produced a rally in MBS markets. The Dow fell 180 points. Tomorrow, Productivity, Factory Orders, and the FOMC minutes will be released.
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