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Mtg rate update, State Bond Program

By mary taylor

Mortgage and Lending with Wells Fargo Home Mortgage 461452

December 03, 2010 04:14 AM

What a roller coaster week - rates went up on Wed - down a bit today - I wouldn't gamble for too much longer if at all. The advice from the experts is to "lock on price gains - rates unlikely to be lower).

Below are various commentaries - and also info on Oregon State Bond - great program for first time buyers - I used to do a ton of these - and with rates at 3.875 (or 4.25% with 3% concession) you can't go wrong!

Thanks - I look forward to being of assistance to you and your clients.

From "Rate Alert"

What a ride! we talked about market volatility yesterday remaining extreme over the next week or so; today's Nov employment report set it up. A huge miss on estimates from analysts and economists; as we always note, trying to predict employment is difficult if not impossible. The Nov unemployment rates was widely expected to be unchanged, it jumped 0.2% to 9.8% the highest in months. Total non-farm job growth widely believed to have increased 140K were up just 39K; private non-farm jobs were expected up 145K, we got only 50K. Oct non-farm jobs were revised from 151K to +172K and Sept non farm jobs revised from -41K to -24K. The better revisions to Oct and Sept were a glimmer of a bright spot but the Nov data shocked markets. Manufacturing jobs dropped by 13,000 in November, the most in three months, economists had projected an increase of 5,000. Employment at service-providers increased 54,000. The number of temporary workers rose 39,500. Construction companies subtracted 5,000 workers and retailers let go 28,100 workers.

No matter how its sliced, the employment report has thrown a wet blanket over al the recent more positive economic data that had sent equity markets exploding this week and interest rates up. With job markets still soft the US economy isn't likely to sustain any substantial growth. Looking for anything positive from the data this morning, the upward revisions in Oct and Sept is about it.

Prior to the 8:30 employment report mortgage prices started down 15/32 (.47 bp) frm yesterday's generally unchanged prices; the 10 yr note yield was trading at 3.04% +4 bp. By 9:15 the 10 yr note yield had rallied back to 2.93% -7 bp and mortgage prices +24/32 (.75 bp) frm yesterday's close. Stock indexes got hit, at 9:15 the DJIA traded -55 points. At 9:30 the DJIA opened -40, 10 yr +17/32 at 2.93% -7 bp and mortgage prices +12/32 (.65 bp) frm yesterday's close.

Alan Greenspan on CNBC earlier this morning said the US economy may not improve but stagnate at low growth for a long time.

Two more data points at 10:00; Oct factory orders, expected down 1.2% were down 0.9%. The Nov ISM services sector index was about in line at 55.0 frm 54.3; the new orders component at 57.7 frm 56.7, prices pad at 63.2 frm 68.3, and employment component at 52.7 from 50.9. Any index over 50 is considered expansion. The reaction to the 10:00 data points has cut the early price gains in half from what we marked at 9:30. At 10:05 mortgage prices were 10/32 (.31 bp) lower than at 9:30.

The dollar being hit hard this morning on the weak employment, sending gold up and aiding the equity markets frm serious selling.

Keep your head about you today; the bond and mortgage markets remain weak and bearish; already the rate markets have given back a lot of the initial gains on the reaction to the employment report. We hear from many that there remains a belief out there that mortgage rates will decline back to recent lows; a huge mistake in thinking in my view. Interest rates are headed higher, markets may bounce a little but any improvements in prices are considered selling opportunities by traders we chat with. Expect the potential of high volatility over the next week or two. Already we are turning our focus to next week's Treasury auctions, $66B of 3s, 10s and 30s. The employment data this morning is already old news.