Phoenix Mortgage Interest Rates Moving Today?

Looks like a choppy day ahead for Phoenix interest rates; I will continue to float interest rate locks to start but our finger is on the trigger based on the technicals.

Treasuries and mortgages (interest rates) opened weaker this morning after a strong rally yesterday for treasuries, taking the 10 yr note rate to its lowest in two months. At 8:00 the 10 yr -7/32, DJIA -16. At 8:30 the 10 yr -12/32 3.38% +5 BP, mortgage prices -8/32, DJIA -6. At 9:00 10 yr -12/32 3.38% +5 BP, mortgage prices -4/32 and the DJIA -13. At 9:30 the DJIA opened -26, 10 yr note -8/32 and mortgages at 9:30 -2/32.

Oct PPI out at 8:30, a good report for the inflation outlook. The overall PPI increased 0.3%, estimates were for +0.5%; the core excluding food and energy -0.6% against estimates of +0.1%. Yr/yr overall PPI +1.9%, the core yr/yr +0.7%; both lower than ion Sept. On the knee jerk the 10 yr recovered fro a moment then made new lows (price); mortgages tried to catch a bid but they too were printing new lows in the very early activity.

Looking back to yesterday; interest rate markets were rock solid most of the day with double digit price gains, a few lenders re-priced about 2:00 reflecting the improvement from morning prices. Interest Rates looked very strong until Dallas Fed Pres Fisher said he expected mortgage interest rates to widen over treasuries in the period ahead. That did it; heavy selling exploded in mortgages and all the gains were erased within 30 minutes. Later in the afternoon mortgage interest rates made another attempt to regain footing but going into the end of the day (5:00) mortgages once again were hit by selling leaving mortgage prices only 2/32 better than at 9:30 yesterday morning after being up 10/32 from morning pricing levels. This was a quick retreat for interest rates.

The economy has lost 15 million jobs so far; 876K jobs have been lost since July. Big numbers, the unemployment rate increased 0.4% from Sept to Oct to 10.2%. Banks still are reluctant to lend and remain vulnerable to further pressures. Yesterday Meredith Whitney, one of the premier bank analysts, said she thinks bank stocks are over-valued, causing bank stocks to slip on her comments. She added her name and reputation to the view of a double dip recession ahead; not looking for a re-test of the lows in the stock indexes but still a W on the economic recovery. Continued uncertainty, with the Fed cheer leading while many very reputable analysts are sounding bearish. The result for the bond market is an increase in volatility; rates at these low levels require continued verbal support, any comments to the contrary will set up selling keeping long term interest rates confined to tight ranges. In our view, unless consumers begin to spend the economic recovery will be slow and likely drag on through next year; bullish outlooks continue to ignore the fact that consumers account for 70% of GDP growth and concentrate on the idea the economy can recover as a jobless recovery.

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