Update: The Mortgage Bond Market is up a bit today, testing the resistance of the 25 day moving average. This resistance has turned the bond back everyday so far this week and with no economic reports due to be released today it is likely the same will happen. Since we are positive, we can very carefully FLOAT watching for thing to possibly go south if the bond fails once again to break resistance.
Here is today's Market Snapshot from RateAlert.com:
Another quiet start for the markets this morning with no economic data and no news. Earnings continue to be reported and most are beating the Street estimates, nevertheless futures trading on the key indexes is weaker, pointing to a weaker open in equities at 9:30. At 9:00 the DJIA -15, the 10 yr note +5/32 and mortgages +1/32 (.03 bp) frm yesterday's close. At 9:30 the DJIA opened +9, 10 yr at 9:30 +5/32 at 3.78% -2 bp and mortgage prices +5/32 (.15 bp) frm yesterday's close.
The MBA today released its Weekly Mortgage Applications Survey for the week ending April 16, 2010. The Market Composite Index increased 13.6% on a seasonally adjusted basis from one week earlier. The Refinance Index increased 15.8% from the previous week and the seasonally adjusted Purchase Index increased 10.1% from one week earlier. The unadjusted Purchase Index increased 11.0% compared with the previous week and was 5.2% lower than the same week one year ago.
The four week moving average for the seasonally adjusted Market Index is down 3.1%. The four week moving average is up 2.0% for the seasonally adjusted Purchase Index, while this average is down 5.9% for the Refinance Index. The refinance share of mortgage activity increased to 60.0% of total applications from 58.9% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.0% from 6.3% of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.04% from 5.17%, with points increasing to 0.98 from 0.91 (including the origination fee) for 80% loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.34% from 4.45%, with points increasing to 0.98 from 0.80 (including the origination fee) for 80% loans. The average contract interest rate for one-year ARMs decreased to 6.95% from 7.02%, with points increasing to 0.28 from 0.27 (including the origination fee) for 80% loans. The survey covers over 50% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.
The fall-out over the G/S SEC suit is speeding financial reform in Washington. Republicans and Democrats appear to be closing the gap between them; Dems are considering dropping the $50B fund to bailout any future "too big to fail" firms that hit the wall. Republicans have opposed it on the grounds it sets up a condition that banks have a free pass in case they make more stupid and illogical mistakes that almost crashed the global financial system. Republican Senator Richard Shelby of Alabama said he and the measure's Democratic author, Banking Committee Chairman Christopher Dodd of Connecticut, are close to an agreement on the legislation. "I believe that we're going to get us a bipartisan bill," Shelby told reporters yesterday in Washington. "We're probably conceptually together on 85 percent" of the bill. The first hurdle is a measure before the Senate Agriculture Committee today that seeks to regulate the $605B over- the-counter derivatives market. Among other things, it would require banks such as JPMorgan Chase & Co. and Bank of America Corp. to choose between trading swaps and their core business of holding deposits.
The bellwether 10 yr note is trying to cut below its technical resistance at 3.80%, trading at 3.78% this morning and hitting up against its key 40 day moving average at 3.77%. A break and close below the 40 day average would suggest further decline to 3.65%----although we doubt that will occur unless stock markets roll over on renewed concerns about the economic recovery----and that doesn't appear likely.
Remember all the angst over the concerns mortgage rates would spike when the Fed stopped purchasing MBSs at the end of March? As we noted in mid-March and a few more times since, the Fed's extraction would not likely have any immediate impact on mortgage interest rates. It hasn't happened, mortgage rates have remained very stable in relation to the 10 yr and 5 yr treasury notes. Mortgage rates last week were the lowest in over a month and will continue to move in tandem with the 10 yr note (as is always the case). The spread, or differential between the yield n the 10 yr and mortgages, has remained about where it has been for months. Those that insist that mortgage rates are independent of the treasury market continue to mislead.
Should be another very quiet day today with no news or data directly impacting markets.