Thursday, January 27, 2011
Market Update - 01-27-2011 - 7 Year Note Auction
As we suspected, the early morning trade was being sat on by traders looking to buy the auction cheap. It's one of the things money managers try to do, talk or sell the market down so they can buy auction paper at the best level possible. Check out the results; 29 billion came at a yield of 2.744% with 52.1% going to the Indirect Bidders (very good). Bid to cover a respectable 2.85 to 1 bid and like the 5 year auction, the issue priced through the screen by 1.9 bps (excellent). In other words, buyers of the issue were stacked deep and had to bid up if they wanted the paper. Give this one a solid B to B+. As a result of auction, notes, bonds, and mortgage backs have all caught a bid. 10 year note is plus 9/32's (yield 3.39%), mortgage backs up 5/32's, 30 year bond up 10/32's, and ever the Dow is plus 9.
Scott S. EggenSenior Vice President - Capital Markets
PrimeLending, A PlainsCapital Company18111 Preston Road, Suite 900Dallas, Texas 75252
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© 2011 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NV, NY, NC, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WV, WI, WY. Licensed by: AL State Banking Dept.- consumer credit lic no. MC21004; AZ Dept. of Financial Institutions- mortgage banker lic no. BK 0907334; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act- lender lic no. 4130996; CT Dept. of Banking- lender lic no. ML-13649; D.C. Dept. of Insurance, Securities and Banking- dual authority lic no. MLO13649; IL Dept. of Financial and Professional Regulation- lender lic no. MB.6760635; IN Dept. of Financial Institutions- sub lien lender lic no. 11169; ME Dept. of Professional & Financial Regulation- supervised lender lic no. SLM8285; MD Dept. of Labor, Licensing & Regulation- lender lic no. 11058; Massachusetts Division of Banking- lender & broker license nos. MC5404, MC5406, MC5414, MC5450, MC5405; MI Dept. of Labor & Economic Growth- broker/lender lic nos. FR 0010163 and SR 0012527; Licensed by the New Hampshire Banking Department- lender lic no. 14553-MB; NJ Dept. of Banking and Insurance-lender lic no. 0803658; NM Regulation and Licensing Dept. Financial Institutions Division- lender license no. 01890; ND Dept. of Financial Institutions- money broker lic no. MB101786; RI Division of Banking- lender lic no. 20102678LL and broker lic no. 20102677LB; TX OCCC Reg. Loan License- lic no. 7293; VT Dept. of Banking, Insurance, Securities and Health Care Administration- lender lic no. 6127 and broker lic no. 0964MB; WA Dept. of Financial Institutions-consumer lender lic no. 520-CL-49075. PrimeLending, A PlainsCapital Company is an Equal Housing Opportunity Lender. Posted by PrimeLending, A PlainsCapital Company at 11:41 AM
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Market Update - 01-27-2011
Bond bullish data hit the early morning tape from many fronts. First up, Weekly Unemployment Claims jumped 51K to 454K, the highest level in nearly three month. Weather factors, primarily snow storms in the South and seasonal adjustments are being blamed for the rise. Still, the moving average, which is probably a better number to key off, rose to 428K. A sign that employment is still struggling. Continuing Claims also were on the move, up 94k to 3.99 million. Although Weekly Claims are volatile, the saw tooth pattern of late is not one that shows positive growth in hiring. For the economy to get going, this should be the focus of the gang on Capitol Hill. Bond bull release number 2, Durable Goods orders. This index fell 2.5% and when we strip out transportation, the index was plus .5%. Market expectations were for gains of 1.5%. Capital Goods orders were the biggest loser, falling 6.0%. Overall, the index has worsen four of the last five months. Completing the hat trick was Pending Home Sales which rose 2.0%. The number was close to expectations but revisions lower in November and expectations of a great number, following yesterday's Existing Home Sales, just didn't happen. As we all know, it is going to be slow going in the housing industry. On balance, all of the above should have goosed our market higher, giving us a nice little rally. Not to be as the early trade had mortgage backs flat to up 1/32nd. Currently, most markets have slipped into the red as the 10 year note is off 3/32's (yield 3.44%), mortgage backs off 2/32's, and stocks off 8 points on the big board. Our thinking is that note/mortgage backs have backed up a touch to accommodate today's 29 billion of 7 year notes. Auction deadline is high noon cst. We'll give you the play by play post release.
Scott S. Eggen
Senior Vice President - Capital Markets
PrimeLending, A PlainsCapital Company
18111 Preston Road, Suite 900
Dallas, Texas 75252
-----------------
© 2011 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NV, NY, NC, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WV, WI, WY. Licensed by: AL State Banking Dept.- consumer credit lic no. MC21004; AZ Dept. of Financial Institutions- mortgage banker lic no. BK 0907334; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act- lender lic no. 4130996; CT Dept. of Banking- lender lic no. ML-13649; D.C. Dept. of Insurance, Securities and Banking- dual authority lic no. MLO13649; IL Dept. of Financial and Professional Regulation- lender lic no. MB.6760635; IN Dept. of Financial Institutions- sub lien lender lic no. 11169; ME Dept. of Professional & Financial Regulation- supervised lender lic no. SLM8285; MD Dept. of Labor, Licensing & Regulation- lender lic no. 11058; Massachusetts Division of Banking- lender & broker license nos. MC5404, MC5406, MC5414, MC5450, MC5405; MI Dept. of Labor & Economic Growth- broker/lender lic nos. FR 0010163 and SR 0012527; Licensed by the New Hampshire Banking Department- lender lic no. 14553-MB; NJ Dept. of Banking and Insurance-lender lic no. 0803658; NM Regulation and Licensing Dept. Financial Institutions Division- lender license no. 01890; ND Dept. of Financial Institutions- money broker lic no. MB101786; RI Division of Banking- lender lic no. 20102678LL and broker lic no. 20102677LB; TX OCCC Reg. Loan License- lic no. 7293; VT Dept. of Banking, Insurance, Securities and Health Care Administration- lender lic no. 6127 and broker lic no. 0964MB; WA Dept. of Financial Institutions-consumer lender lic no. 520-CL-49075. PrimeLending, A PlainsCapital Company is an Equal Housing Opportunity Lender.
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