Phoenix Mortgage Broker Interest Rate Update – Thursday, September 24, 2009

Apply Here for an Arizona Home Loan

I am floating rate locks again to start the day. The equity markets hold the key to break rates into new recent lows (yields). Lower stock indexes today are critical to improving mortgage rates; if we get a lower close in the indexes the 10 has a good chance to re-test resistance at 3.28% and mortgage rate to decline 10 to 15 basis points.

No trending movement in the rate markets, just chop with the 10 yr and mortgages trading in a 10 basis point range for the past two weeks. Yesterday, one of the more volatile days in months, drove the 10 yr to 3.52% momentarily, then back to close at 3.41%, covering the entire trading range on the note in the last couple of weeks, mortgages also churning with no real changes.

At 8:00 this morning the 10 yr was unchanged, mortgages were +2/32 frm yesterday’s close. At 8:30 weekly jobless claims were expected to be up 5K to 550K, as reported claims declined 21K; continuing claims also dropped, from 6.26 mil last week to 6.138 mil. The reaction pushed the 10 down 4/32 and mortgages at 8:45 down 2/32. Stock indexes were flat prior to the claims data but increased 31 points on the DJIA. At 9:00 the DJIA futures was +10; 10 yr note +1/32 and mortgages +2/32. At 9:30 the DJIA opened +49, 10 yr +2/32 and mortgages +3/32. (see below for 10:10 levels)

August existing home sales at 10:00 were expected to be up 2.0%, they fell 2.7% to 5.10 mil units against 535K expected. Prices fell 12.1% annualized, inventory levels at a 8.5 month supply, the lowest level in 2 yrs. Government tax credits for first-time buyers and foreclosure-induced price declines are helping the housing market recover from the worst slump since the Great Depression. Not any initial reaction to the report n the bond market, the equity markets however, went negative after being up 60 points on the DJIA earlier.

G-20 meeting begins today in Pittsburg at 6:00 PM and concludes at 4:00 PM tomorrow with a press conference; however nothing will come of it in terms of market movement. Leaders of the G-20 nations have to confront $9T of global debt created to keep the financial systems from complete collapse. Their next challenge will be to reduce the resulting debt before it sparks higher bond yields and erodes their governments’ creditworthiness. The International Monetary Fund says G-20 debt will reach 82.1% of gross domestic product in 2010, almost 20 percentage points more than two years ago and the equivalent of about $37 trillion. US debt is now 84% of GDP, a level that markets have yet to fully understand as it impacts global growth.

Yesterday’s action in the stock market, closing lower than the previous day after making a new multi-month high earlier in the day, may have a significant impact on the near term outlook in the equity markets. A new high, then closing lower than the previous day, is a technical key reversal. Whether it is meaningful depends on today’s trading, a lower close will add to the view stocks may finally be setting up for a major correction. Many times a key reversal pattern leads to a change in direction, but there has to be a lower close today to add conviction and confirm the reversal yesterday. Significant for the rate markets; to drive mortgage rates lower the bullish bias in equities has to be shaken.

One more auction to go through today; $29B of 7 yr notes at 1:00. Yesterday’s 5 yr was not as good as we hoped, the rate was slightly higher than where it traded ion the WI (when issued) market earlier in the day, demand was decent however.

Apply Online for a Phoenix FHA Mortgage or USDA Loan

View the best online Mortgage Calculators

For more information on Phoenix Mortgages or Real estate, contact my office at (602) 291-4362

Bookmark and Share