Phoenix Mortgage Broker -  Daily Interest Rate Update    Thursday October 1, 2009

I am starting today by floating; not willing to hold overnight however unless mortgage prices improve from morning pricing levels. We very rarely hold any positions in the market leading into employment reports.

At 8:00 this morning the stock index futures were trading weaker and supporting the rate markets; 10 yr note +4/32 and mortgages +3/32. At 8:30 economic data added more strength to the 10 yr and therefore mortgages; 10 yr +8/32 at 3.28% and mortgages +4/32, the DJIA -38. At 9:00 the 10 yr note was still unable top crack resistance, sitting at 3.28% +6/32, mtgs at 9:00 +2/32 and the DJIA index traded -16. At 9:30 the DJIA opened -26, 10 yr at 3.25% +16/32 and mortgage prices +4/32. (see below for 10:10 levels)

Weekly jobless claims were up more than expected, +17K to 551K against estimates of +7K; continuing claims at 6.09 mil, down a little from last week. The four-week average is at 548,000 — down nearly 25,000 from this time last month and the lowest level since early in the year. Continuing claims fell 70,000 to 6.090 million and show slight month-to-month improvement with the four-week average at 6.155 million vs. 6.220. A gradual improvement but not as swift as what equity markets want to see; however trade in the pre-open improved slightly from prior to 8:30.

August personal income increased 0.2% against estimates of +0.1%; personal spending was expected to be +1.0% but was up 1.3%. August income, originally reported unchanged was revised to +0.2%. Yr/yr income -2.6%. Personal spending yr/yr -0.3%. Spending in August is largely attributed to back to school spending.

At 10:00 Sept ISM national manufacturing index, expected to have improved to 53.5 frm 52.9 in August, hit at 52.6.

August construction spending increased 0.8% against forecasts of -0.2%, but July spending was revised to -1.4% frm -0.2%.

Finally today, the last of the scheduled data; August pending home sales, estimates were for +1.0%, as reported pending sales increased 6.4%. Pending home sales are contracts signed but not yet closed, the lag between existing home sales and pending home sales is due to the time it is taking to get to the closing table.

All of the economic releases this morning have put a strong bid in the rate markets; the 10 yr note broke its resistance and is now projected to fall to 3.10% on a technical basis, but won’t get there unless the stock market rolls over which looks more likely now than anytime in the past two months.

Bernanke is testifying this morning at 9:00 at the House Committee on Financial Services on regulatory reform. Likely nothing that will have any direct market impact.

At 11:00 Treasury will officially announce the amounts of next week’s auctions; likely in the $75B area for 3 yr, 10 yr notes and 30 yr bonds.

Beleagured BofA CEO Ken Lewis announced he will retire at the end of the year. He has been harassed by Congress and NY Atty General Cuomo for months about the acquisition of Merrill Lynch at the onset of the financial crisis, many calling for his head. Led by the likes of Barney Frank, a politician with the largest ego trip ever seen; and followed by Cuomo, the second biggest egomaniac. Frank’s chairmanship of the House Financial Services Committee is the worst consequence of a Democratic controlled House given his attack on the mortgage industry while sweeping away the real culprits, Wall Street and rating agencies that put lipstick on the sub-prime pig and sold them around the world to investors that only saw a AAA rating on the junk.

A very positive move in treasuries this morning, pushing mortgage rates lower. The 10 yr has actually cracked the resistance at 3.28%, a level that has been difficult to break through, we want a close below it however and that will depend on how equity markets trade the rest of the day and tomorrow’s employment report. If the 10 breaks 3.28% on the close the next target is 3.10% and will take mortgage rates down another 15 basis points from current levels. As previously noted, the bond and mortgage markets are bullish, but we need a close under the resistance to drop rates further. Mortgage rates are now on the way to their lowest levels in years.

Tomorrow’s employment report will dominate trade the remainder of the day. Always a hard one to estimate, usually sets off increased volatility. Recent data on the economy has been weaker than expected on almost all releases, putting the stock market in a vulnerable position. If non-farm job losses tomorrow are over 200K it may be enough to finally nail the equity markets. We believe recent treasury buying as equity markets were improving is large investors setting up safety moves when the stock market does give up in a corrective move lower.

This is very favorable news this morning for FHA, VA and USDA loans. Do you need to improve your credit score to get the best rates? I can help restore your credit

Visit this site to apply for an Arizona Home Loan Need to know your mortgage payment?

Visit the best online Mortgage Calculators here.

Buy AZforeclosures homes for $100 Down For more information call my office at (602) 291-4362

Bookmark and Share