Todd Crampton

Todd Crampton

US Home Loan Demand Rises as Rates Stay Near Lows

November 10th, 2010

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The Mortgage Bankers Association reports that its mortgage application index rose 5.8 percent for the week ended November 5. Refinance requests rose 6 percent as interest rates hovered near historic lows, while the purchase index gained 5.5 percent. “The increases in purchase applications we have seen over the past couple of weeks align with the better-than-expected news from October’s employment report and other data indicating some improvement in the economy’s growth prospects,” said MBA’s Michael Fratantoni.

 

Reuters (11/10/10) Haviv, Julie

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Money Market Recap and Forecast

November 8th, 2010

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The big but not surprising announcement from the Fed last Wednesday was met with surprising calm.  The Federal Open Market Committee announced it would purchase $600 billion worth of U.S. Treasury securities into the middle of next year to lower borrowing costs for individuals and businesses in order to kick-start the economy.

With regard to interest rates, the Fed reiterated that rates will be kept at “exceptionally low levels for an extended period of time.”

While the announcements pulled stocks out of negative territory, the 10-year note yield, which moves in the opposite direction of price, rose by three basis points.  This may have been a reaction to the Fed stating that it would buy fewer 10-year notes and 30-year bonds and more short-term debt.

But the markets got over it on Thursday with the major stock indexes closing at 2-year highs and the 10-year yield dropping 14 basis points.  The FOMC announcement ignited rallies in the foreign markets overnight, and the U.S. markets jumped at opening.  Commodity prices rose, as questions regarding the Fed vanished.

In addition, Treasuries got a boost from first-time unemployment claims for the week ended Oct. 30.  After falling below 450,000 last week for the first time in almost a year, they rose to 457,000 — far more than expected. 

The 3rdquarter productivity and costs numbers were also bond-friendly.  Productivity rose 1.9% versus a 1.8% 2ndquarter decline, while labor costs fell 0.1% as opposed to the previous 1.3% increase.  High productivity and low costs are good news for inflation watchers.

Friday’s employment report showed that the private sector added 159,000 new jobs, but the net increase was only 151,000 due to the loss of 8,000 government jobs.  The unemployment rate remained at 9.6%.

After an initial flurry of selling in the bond markets, by mid-morning they recovered, with the yield on the 10-year at 2.50%, just one basis point higher than Thursday’s close.

Two economic reports came out Monday.  The ISM index on October manufacturing conditions rose unexpectedly to 56.9 from 54.4 in September, igniting a sell-off in 10-year notes.  Any number above 50 shows sector expansion, but in the bigger picture, the ISM index has a long way to go before manufacturing can be called healthy,

Monday’s other release was inflation-friendly.  Personal spending in September was up by a less-than-expected 0.2% versus a 0.5% increase in August.  Personal income, however, fell by 0.1% — the largest decline since July 2009.  A 0.2% increase was predicted.  The core PCE, a major inflation indicator, came in flat, after rising 0.1% in August.

The markets were reasonably quiet on Election Day as no economic news was scheduled.  The 10-year note yield did, however, drop by four basis points to 2.59%.

The Mortgage Bankers Association reported that, for the week ended Oct. 29, purchase apps rose 1.4%.  However, applications to refinance declined for the third straight week, falling 6.4%.

This week there are few economic reports on the table.  But that doesn’t necessarily mean the markets will take a break.  Global events can have a big impact on trading.

What we know is that there are no reports due Monday, and wholesale inventories for September is the only indicator slated for Tuesday.  They are expected to rise 0.6%, as opposed to a 0.8% increase in August.  This report, however, is rated D- when it comes to influencing trading.

On Wednesday the trade balance for September will be released, and while it can impact trading on occasion, this will not likely be one of those times.  Analysts see the deficit shrinking to $46.2 billion from $46.3 billion.

Import and export index prices for October will also be reported and most likely ignored.  They both rose 0.3% in September.

First-time jobless claims for the week ended Nov. 6 is the only report on the docket for Thursday.  It could be a market mover — or not.

Friday’s University of Michigan preliminary consumer sentiment survey for November, however, can impact markets.  Treasury traders watch consumers’ opinions to determine if they are in a spending mood, which would boost the economy.  It hit 67.7 at the end of October, but no one is making predictions yet.

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What’s new at Frost Mortgage in Farmington

October 19th, 2010

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Frost Mortgage’s resources carry lots of benefits for you as a home shopper in the Farmington, New Mexico, area. Our team is constantly locating and creating great new information you can use.

Every Monday, for instance, Frost puts out a Market Recap that will give you the latest from the financial markets. We’re consistently finding great articles like “New FHA Changes Means Lower Closing Costs” that will help you be aware as you look for your next home.

Watch this blog, too! We’ll be relaying some of the best content from Frost and adding some of our own. If you have things you’d like to see, just use the “contact” button at the top of this page to let us know. We welcome your questions.

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