Karl Menzer Tooele Utah Real Estate Lender's Blog

The Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Wed, 30 Jul 2008 12:24:04 -0700

Wednesday, July 30, 2008

Let's start with the bad news and work our way to good. Mortgage applications dropped 14.1% to levels not seen since 2000, with purchase applications down 7.8%. This is understandable in our ever tightening loan market. With rates up and concerns on inflation being the biggest reason, the best action is to have rates go down and hope the inflation hype relaxes. On to the good news. Today we had a set of positive signs for investors for both the bond and stocks. This month's ADP jobs report came in with an expected gain of 9,000 jobs instead of the expected loss of 60,000 jobs. Boosting the bond was President Bush signing of the legislation into law in order to help the floundering mortgage industry. Not to be outdone the Fed extended their emergency funding program, which was supposed to end in September, to January 2009. Bonds initially dropped this morning with the news, but has since recovered into positive territory and may even give us a price change for the better today. Keep a sharp eye on oil today as it may drive down the market. Rates are about the same as yesterday, which are near a 1 year high, so fingers crossed for improvement in the Bond.

As always, if anything changes I will let you know.

Karl Menzer

435-849-0212

The Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Tue, 29 Jul 2008 13:17:59 -0700

Tuesday, July 29, 2008

When bad news goes good... bonds took a slight nosedive today after investment bank Merrill Lynch said late Monday it would take a $5.7 billion write-down and sell off $30 billion in mortgage backed securities (MBS) this quarter.... At 1/5^th their face value. They are doing this, along $8.5 billion through the issuance of new stock, just to bring the write-down to only $5.7 Billion. If I were an investor I would dump all I had in MBS and get in line for this fire sale. Also in the bad, good, and ugly, S&P/Case-Shiller Home Price Index dropped again for the 22^ND consecutive month. The silver lining here is that it didn't drop as much as last time, therefore we must be nearing the end of this slump. With oil prices down, consumer confidence rose nearly a point in July, when it was expected to once again drop. More of that its darkest before the dawn mentality. Let's hope so, but not at the expense of a solid interest rate. I suggest locking today even though most of the losses were before pricing came out. We have a lot of financial information out this week, so expect volatility in the market.

As always, if you have any questions, please don't hesitate to contact me.

Karl Menzer

435-849-0212

Http://www.buyatooelehome.com

The Daily Bond

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Mon, 28 Jul 2008 13:49:34 -0700

Monday, July 28, 2008

Today is a sure float day... for now. With a number of economic reports due out this week, today's happy bond day is due to the sad stock day. Thankfully oil is in a holding pattern even though there was a small bombing issue on one of the pipelines. What is really giving a boost today is not only the approval of the new housing bill, but that the president is also expected to sign it. The latest addition will not only extend the ability for the Federal government to lend money to Freddie and Fannie, but also buy stock when needed. We have once again moved back above the level of support, and with the strong support for Freddie and Fannie, we should see the levels stay that way barring any major news.

As always, if you have any questions, please don't hesitate to call or e-mail.

Karl Menzer

435-849-0212

The daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Tue, 22 Jul 2008 12:47:10 -0700

Lock. Lock. Lock. Did I mention that you should have your clients lock today? With Oil below $127, gold down more than $17 today and stocks only on a modest gain, it would sound like a great day for the bond market. Unless of course more bad media came out today on the 2 big Mac's today. Which Treasury Secretary Henry Paulson did today when he told congress that they needed to pass funding for them before it's too late. You know I have been occasionally called a doom and gloom guy (talking to you Steve), but even would I know better than to spew out something that doom worthy. Also making the news today is Wachovia Corp. which lost $8.86 billion in the second quarter and decided to exit the wholesale mortgage market and slash over 6,300 jobs. With the newly emphasized worry on Fannie and Freddie, bonds look like a bad investment to many today. There is much more on the plate today bringing it down, but the main point is that when rates go up, more and more clients lose the ability to qualify for a home. What may have just worked at 6.5% may not at 7%. It's a great time to buy, we just need to educate them and tell them to turn off the TV.

Karl Menzer

435-849-0212

http://www.buyatooelehome.com

The Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Mon, 21 Jul 2008 13:02:49 -0700

Monday, July 21, 2008

Someone find a pulse on the bond. After last weeks tumble, the bond is laying flat today hoping for some better news. With banks posting better than expected losses (that right a good loss), and Junes Leading Economic Indicators dropping only .1%, investors are having a hard time buying anything today. Ading wet wood to the fire Forty-five percent of economists believe the economy will either not grow or will come in at a small 1% pace in the last six months of this year, according the National Association for Business Economics just released. With last month's number revised down to .2%, a storm threatening Texas, and nuclear talks with Iran breaking down over the weekend, oil may be the winner today. I still recommend locking, but keep a keen eye out for a quick reaction right before closing. The investors have a large amount to digest today.

Karl Menzer

435-849-0212

The Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Fri, 18 Jul 2008 13:55:11 -0700

Wednesday, July 16, 2008

The one thing you can count on when you take time off is that whatever can go wrong will. Earnings reports have been coming out this week, and as expected the losses were major. The interesting part is that they were not as major as expected. Today was no exception. Citigroup came out today reporting their losses $2.5 Billion for the last quarter, beating analysts' estimates of $3.6 billion. With the losses less than expected, investors believe the wave of mortgage defaults are on the wane and the end of the mortgage mess is near. Remember investors are betting on the future not the present. Another future investment is also worth mentioning is oil, which has really taken a beating after reserved were way up. Both of these have had a real strong effect on the bond, dropping us past all levels of support. In short, when you get em, lock em as the bonds are being battered hard by the news.

Karl Menzer

435-849-0212

The Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Wed, 16 Jul 2008 13:19:36 -0700

Wednesday, July 16, 2008

yea, it's been a lock day. Most of the market news making the DOW shooting up was based not on companies reporting record profit, but rather loosing less than expected. I am a big fan of finding the silver lining in mushroom cloud that has been the market lately, and it seems that the rest of the market is taking the same approach today. Big Ben is on the hill again today making sure that everyone knows Freddie and Fannie are not going to fail or be taken over by the government. Also making the news today is crude inventories rose 3 million barrels for the week when they were expected to drop 3 million. A good sign that society as a whole may have hit the breaking point when it comes to fuel prices. These factors have caused a selling spree in not only oil, but bonds and even precious metals even though the consumer prices rose drastically last month. With the mixed news, don't be surprised on a selloff late in the day. If your clients are still floating today, it may be best to wait and see if the market turns and bonds improve.

Karl Menzer

435-849-0212

The Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Mon, 14 Jul 2008 12:15:54 -0700

Monday, July 14, 2008

Latre Friday had some major market moving news come out after the markets closed, which followed through the weekend with fed meetings. Late Friday Indymac officially imploded and fell under the umbrella of the federal government. That Whole FDIC insured sticker on the window came into play and clients with more than $100,000 are now wondering what to do. Over the weekend the Federal Reserve and white house both set down plans on how to shore up the Freddie/Fannie issue, leading to an initial gain and then downturn in stocks. Add to that Bush ending lifting the ban on offshore drilling and we have a stagnant oil market. The hope today is that the bond market will be the big winner and so far it has been. The only concern is the chance of a turn in any of the markets will drop the bond like it did on Friday. So far the bond has been hovering around 40-50 Bp up today. With investors still trying to digest all the news over the weekend (and some wondering if they are FDIC insured), I expect the real rally to happen later in the day. Keep a close eye out as this is going to be a fun ride. Until then, lets float in hope of better rates.

Karl Menzer

435-849-0212

Daily Bond report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Fri, 11 Jul 2008 14:30:37 -0700

Friday, July 11, 2008

And so it goes again. The bond started off on a very good note today up almost 60Bp toucing the 100 & 200 day moving average. All signs pointed to yes today and then... Treasury Secretary Henry Paulson came out this morning with a short and not too sweet speech about how they were going to do something about Freddie and Fannie's financial crises. The not too sweet part was not explaining the when and how of it. This initially hurt the Dow bringing it down well over 200 points and putting it below 11,000 for the first time in 2 years. The bond held ground most of the day, but trading took a turn for the worse about an hour and a half ago under fears that the government may just step in and take over the whole thing as opposed to the recent bailouts we have seen. Let's remember that the FNMA part of that bond is after all Fannie Mae. Although it is likely we will see a really soon, we are firmly in the lock em' as you get em' mode.

Karl Menzer

Pre-daily Bond

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Fri, 11 Jul 2008 11:05:22 -0700

If you have a pulse odds are you have heard the Freddie fannie news. The bond has just turned negative. Although it may be short lived, if you have an accepted contract, i would have your clients lock to be safe. More to come in the bond report.

Karl Menzer

The Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Thu, 10 Jul 2008 11:31:37 -0700

Foreclosures are up, the dollar is gaining strength, and John Mayer admitted to a fling with a fan. Hey in this emotional market, anything can change the tide. The biggest market movers today are Retired St. Louis Fed President William Poole's comments on how Freddie and Fannie are basically done and the government is propping them up (your retired dude act it), and Treasury Secretary Henry Paulson's testimony before the House Financial Services Committee basically stating the exact opposite of what Willy said. No wonder the bond is bouncing around today. The DOW is on a tech rally so we need to keep an eye for a selloff on one sector or another. Great gains or losses in the Stock market today will decide the bonds movement. Now if we can just keep the retired Feds quiet...

As always if you have any questions, please don't hesitate to call.

Karl Menzer

435-849-0212

Http://www.tooelehomeloans.com

The Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Wed, 09 Jul 2008 14:34:24 -0700

Wednesday, July 09, 2008

Iran would test a missile that would reach Israel? Really?... Although I don't see the surprise, investors did and retreated from the Dow today. They initially moved to oil, but then the Bond Gods shined down and gave us a massive drop in the Dow and oil seemed to settle. Finally, the market is moving like it is supposed to do. When worries arise, the bond is the safety net everyone climbs under. Although the FNMA 5.5% is only up 42 Bp, the real test is that it passed the 50 day moving average. Without much meat in any economic news this week, global threats, recession fears, and banking issues are going to be the big market mover. As long as the FED reassures investors that they will do what it takes to help the mortgage crisis, the bond should hold. We have a long way to go till 5.5%, but 6.125% on a 30 yr FHA will keep my clients happy. Although most are calling it a strong float day, I prefer the word cautious, as emotions, like small children, are given to tantrums.

Karl Menzer

435-849-0212

Weekly Trends in the Real Estate Market

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Tue, 08 Jul 2008 14:18:31 -0700

JOB MARKET

Weekly Jobless claims Jumped 16,000 from the previous week, along with beating estimates by 24,000. Unemployment nationally stayed the same, but with the number of layoffs announced this week it is expected to take a small rise in July. A sure sign that oil is hurting the auto industry and banking is still in the slumps, just take a quick look at the headlines and you will see companies like GM and Indy Mac dramatically reducing their workforce. Locally, we are still way below the nation with 3.2% unemployment and a job growth of 1.4% in Utah. A strong sign that we are still in pretty good shape.

BOND MARKET

Remember when bonds go down rates go up

Fannie and Freddie Mac started off with worries, this week over fears that they needed to raise some fat cash to cover rising defaults. With the reassurance that they are in good standing mortgage backed securities (bonds) should be in better shape. For those who missed the implode-o-meter, Indy Mac has stopped accepting any new loans, a strong sign that we are far from over this mess. With the recent run of comments from the FED board, both that we are not near the end of this mess, and the commitment that they are going to step up and help more, investors have a lot to digest before deciding what to do next.

HOUSING MARKET

Existing home sales rose slightly in May. It may only be 2% but you take the good news when you can get it. Median home prices did however drop to $208,600. Something expected with the tremendous growth in the past few years. Not to be outdone, pending home sales (under contract) fell 4.7% in May. Take into account that some of those will fall through, and June ain't lookin' to purty. Statewide, our median sales price is holding much better at $235,500. Sales may be down, but with prices holding when sales do pick up we should be in a better position than most.

CURRENT RATES

As of July 7^th

30yr Fixed Average 15d 6.38%

15yr Fixed Average 15d 6.00%

Source Freddie Mac

ONE LAST THOUGHT

Coming soon to a lender near you...RETURN OF THE SISA... Yes it sounds too good to be true.... And it is. What I have been seeing is that although you can "State" the income. Most Lenders (all) are requiring a 4506T to be signed by the borrower. This form allows the lender to pull tax records for the past 2 years to see if the numbers match the "stated" income. In the past it was a formality used only when the borrower went into default. Now however, most lenders (all) are using the form to get copies of taxes. If they don't match, the loan gets dropped. In short, you can state the income, but they better be able to prove it.... Isn't that called Full Doc? To really kill the buzz over it, the LTV is maxed out at 80%, and expect rates to be higher. It is kind of like the FHA secure program... sounds good on paper but not worth much more than that.

Number of lender who have shut their doors over this: 266

Karl Menzer

435-849-0212

Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Tue, 08 Jul 2008 14:14:49 -0700

The late fear yesterday was that both Fannie Mae and Freddie Mac were in trouble and needed to raise some fast cash to stay afloat. With mortgage backed securities starting with FNMA, although the market was primed for better rates, no one seemed to be able to get past that. It almost made the fact that Indy Mac was shutting its lending side seem trivial. Today the news (and bonds) is better. With the Fed coming out stating that they would do whatever it would take to fix this and Freddie and Fannie both saying that it was overstated, rates are seeing something that they haven' seen in a while.... A re-price for the better. The NAR also came out stating that pending home sales dropped 4.7% and are now not expecting the market to recover until 2009, something re-iterated by California Federal Reserve President Janet Yellen. Really giving a boost to us today is oil's slip of over $9 a Bbl in the past 2 days. It seems that Iran really isn't ready to go to war. As I Type, The FNMA 5.5% is up 73 Bp for the day. Lets keeps our fingers crossed.

Karl Menzer

435-849-0212

The daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Mon, 07 Jul 2008 12:02:17 -0700

Monday, July 07, 2008

Look up, look down, look all around.... Most of us remember how the last line goes, and it is about the same with mortgage backed securities today. The bond was down as much as 38 Bp when I started writing this article today... then it rebounded up 17 Bp, and now it is up 7 Bp for the day and 31 Bo since rate sheets came out. Without any major economic news today, the bond is taking the lead form the DOW and oil today. With the down giving up its earnings today and oil (thankfully) below $140, it looks (for the moment) like investors are still worried about upcoming 2Q earnings reports. Keeping the positive, the dollar gained some strength on currencies, also helpful in bringing down the cost of oil. We bounced off the level of support on the bond today, which is a good sign for rates staying in the same range for the time being. We are still in a lock mode though with the market as volitile as it is. As always, if anything changes, I will be sure to let you know.

Karl Menzer

435-849-0212

The Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Tue, 01 Jul 2008 13:08:37 -0700

Tuesday, July 01, 2008

For those of you who had the joy of living through the punk rock scene in the 80's you may remember a band called FEAR that had this lovely little ditty called "let's have a war". It seems like today the main market mover is the fear of just that. With Israel more comfortable pushing for war, while Bush is still in office, with Iran over the threat of nuclear weapons, like the ones that Israel has, oil is once again taking center stage. Add to this of a signed military budget that resembled more of WW II than a small conflict, and we have seen oil reach new record territory. Thankfully, for us, the DOW seems to be taking most of the brunt of this today, allowing the bond to remain flat for now. The big concern isn't about if rates will go up, but when. Let's stay in lock mode for now as any bargain basement shopping on the Dow today will come at the expense of the bond. 6.25% is what is available on a 30 yr FHA today. As always, if you have any questions, please don't hesitate to call, e-mail, fax, send smoke signals, etc.

Karl Menzer

Http://www.karlmenzer.com

The Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Mon, 30 Jun 2008 14:42:16 -0700

Monday, June 30, 2008

Bonds have remained flat for most of the day. Currently the FNMA 5.5% 60 yr is down 6 Bp for the day and has been between -6 and +12. With investors looking at a $162 billion war spending bill marked for a volatile region, oil is where the eyes are today With oil passing a $143 a Bbl today, bonds are going to be hard pressed to make any major gains. The only potential mover out today was the Chicago PMI, which once again came in under 50 (showing contraction in the economy). With this number coming in close to estimates, it had little effect to the market. I would suggest locking for the short term and keeping a close eye on oil to see which way the speculators are going to send the market.

Looks like 6.25% is right there

Karl Menzer

435-849-0212

The Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Fri, 27 Jun 2008 12:32:13 -0700

Friday, June 27, 2008

After yesterdays massive selloff of stocks yesterday, it looks as if the bond market is trying it's best to turn positive. A good sign of just how hard this is proving to be, although the DOW dropped over 300 points, the bond struggled to gain little more than 25 Bp. The bond is once again trying to pass 25 Bp for the day, and given the volatility of the news out there, one jump in the stock market and all gains the bond made in the past 4 days are lost. With inflation now above the worrisome 2% the fed likes, and consumer sentiment once again at a 28 year low, the only factor holding bonds back now is the lack of confidence in the banking industry. Speaking about banking, most stated income loans aren't really stated. Lenders are requiring a 4506t on all stated loans and as per the unnamed account reps they are pulling tax records on most (all) loans. If the information doesn't match, the loan is denied. The bond is up 31 Bp for the day, and 29 Bp from when pricing came out. Look for better rates in the afternoon, but keep a wary eye out for a sudden change.

6.375% is what FHA is offering on a 30 yr Fixed. Keep your fingers crossed for improvements.

Karl Menzer

435-849-0212

The Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Tue, 24 Jun 2008 15:07:05 -0700

Tuesday, June 24, 2008

As what is becoming the norm with the market and rates, bonds came off their high of the day and dropped into negative territory before bouncing back to being up 25 Bp for the day. Making the market move erratically today is a mixture of housing numbers, consumer confidence, and deciphering what the Fed said. The Standard & Poor's/Case-Shiller home price index fell 15.3% in April (yes it is June), the fastest rate since it started being tracked. Not to be beaten by bad news, consumer confidence fell to a 15 year low of 50.4, smashing estimates of 57%. Had I not been in college then with a bad hairdo, I may have remembered it. Finally on to Big Ben Bernanke, who with all the wisdom of a government official, stated that we are on the brink of a recession. With inflation on the rise, and the economy still in turmoil, the question isn't if they are going to have to raise rates but when. Let's face it, whatever they do today won't really reflect for at least 6 months. Although we are at risk of Stagflation, rushing into another rate change will just leave us in mass confusion. We bounced off support today, and are still holding in a lock pattern.

Karl Menzer

435-849-0212

The Daily Bond

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Fri, 20 Jun 2008 15:15:24 -0700

Friday, June 20, 2008

We started the day off well enough and even had the option of a re-price for the better. With Oil down from its high of the day, and all the major Indices also down, it would be safe to say today is a float day.... But it is not. The Bond is still having a hard time recapturing the momentum needed to push rates down. Currently the bond is up only 3Bp for the day but down 250Bp from when pricing came out. With companies like Citigroup and Washington mutual talking more write-down's and layoffs, and bond insurers losing their AAA ratings today, it's a wonder that bonds are not lower. Let's face it, as long as the mortgages are still tanking at historic levels, the Security that normally comes out of mortgage backed securities just isn't there. Let's keep locking them as soon as we can for now. If we do get a good day, it is more than likely going to be short lived.

Karl Menzer

435-849-0212

The Daily Bond Report

Karl Menzer Tooele Utah Real Estate Lender (karlmenzer.com) — Thu, 19 Jun 2008 12:17:44 -0700

Thursday, June 19, 2008

It's another mattress day today as the bond, oil, and the Dow are all struggling to be positive. Making market news today are Mays Leading Economic Indicators, Jobless claims, and the Fed Philly Survey. The LEI, which measures 10 different aspect of the economy and trying to predict how well (or bad) we will do over the next 6 months, came in up .1% in May. Although it is an improvement, it isn't enough to really boost confidence in the market. Initial Jobless claims beat expectations (bad) coming in at 381,000 for last week. Normally a bond rallying number, this week's claims did show a drop of 6,000 from last week, leaving little to help out the market. With the June Philly survey showing another contraction and beating expectations by coming in down 17.1%, we may actually be seeing some help in the bond market in more of staving off losses from investors wanting to buy low on the DOW, which is struggling to stay above 12,000. I would recommend locking rates on any purchase contracts today when you can on worries that investors may pull from the bond and move them into what they may see as cheap stocks. As always, if anything changes, I will let you know.

Karl Menzer

435-849-0212