Phoenix Mortgage Broker -FHA Mortgage, VA Loan and USDA Loan Interest Rate Update

Monday October 5, 2009

Begin the day by floating; technically the rate markets remain bullish but with added underlying volatility. As long as the 10 yr note manages to hold under 3.25%/3.28% yield the technical outlook will remain bullish for the mortgage market in the near term.

The bond and mortgage markets opened a little better this morning after a volatile session last Friday on the larger decline in Sept job losses than expected. At 8:30 the 10 yr note +5/32, mortgages +2/32, the DJIA index futures +20. At 9:00 the 10 +9/32, mortgages +4/32 and the DJIA +18. At 9:30 the DJIA opened +21, 10 yr +10/32 3.18% -4 BP, mortgage prices at 9:30 +5/32. (see below for 10:10 levels) These are good signs for any FHA, VA or USDA loan

This week is headlined with more borrowing from Treasury, today its one yr bills (no problem for markets) and at 1:00 Treasury will auction $7B of 10 yr inflation-indexed notes. It really gets underway tomorrow and through Thursday with $71B of notes to be sold. Recent strong demand for treasuries is expected to continue so we are not experiencing any price declines in the treasury market. For three months now demand for the record borrowing from Treasury has been exceptionally strong surprising many; now it is taken as gospel the demand will continue from domestic and foreign investors. No inflation fears out there and we believe investors behind the scenes are increasingly concerned the economic recovery will not be a V but a W, expecting stocks to trade back lower. So far however the stock market stands tall with only minor setbacks as investors continue to step on any declines in the key indexes. Investors are extending duration by stepping into the long end of the curve; amazing how strong the bond market are given the recent decline in rates over the last few weeks.

Monitor Arizona FHA, VA and USDA loan interest rates by bookmarking this site.

Friday’s larger decline in job losses (-263K) has prompted Pres Obama to think about another stimulus package. A huge mistake according to former Fed chief Greenspan, once considered the best Fed chief ever before the economy caved in. Greenspan was on ABC’s “This Week” yesterday pointing out that only 40% of the $787B stimulus plan passed last spring has been put in place; he warns Obama to hold off and let the rest of the stimulus plan work. “We are in a recovery and I think it would be a mistake to say the September (unemployment) numbers alter that significantly,” he said. Still, to stop unemployment from rising the economy needs to add jobs at a rate of “more than 100,000 a month,” the former Fed chief said, adding he is “particularly concerned” about the number of people unemployed for six months or longer. The BLS report said 5.44 million people have been unemployed for 27 weeks or longer, a 9% increase over August.

At 10:00 the Sept ISM services sector report, the overall index was expected to have increased to 50.0 frm 48.4 (50 is pivot from contraction to expansion). The services sector overall index increased to 50.9; new orders component at 54.2 frm 49.9, prices pd declined to 48.8 frm 63.1 and employment component increased to 44.3 frm 43.5. Any index under 50 is considered contraction, over 50 expansion. No initial movement on the report.

This week the economic calendar has little to chew on, but what there is is significant in the running debate on the future of the economy. Only two more series to draw focus.

Tuesday;

1:00 $39B 3 yr note auction

Wednesday;

7:00 MBA weekly mortgage applications

1:00 $20B 10 yr note auction ($20B)

2:00 Sept Treasury budget statement (N/A)

3:00 August consumer credit (-$9.5B from -$21.6B in July)

Thursday;

8:30 weekly jobless claims (-9K to 540K)

10:00 August wholesale inventories (-1.0%)

1:00 30 yr bond auction ($12B)

Friday;

8:30 Aug trade deficit ($33B)

Friday the rate markets fell to their lowest levels since last April on the employment report, but by the afternoon the rally reversed and yields increased slightly on the session. The bellwether 10 yr note fell to 3.10% and mortgages slid under 5.00% before both ended the day a little higher in rate—but not much. Still an extremely uncertain economic outlook; although the stock market is betting on continued and quick economic recovery, the bond market appears to be betting the other way with demand for long term debt very strong. The recent decline in rates has most market thinkers scratching heads to explain the strong demand while equity market gurus are scratching heads wondering why the equity markets haven’t rolled over in a long awaited and expected correction.  Arizona FHA, VA and USDA loans have seen significant improvement in interest rates.

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