Market Commentary for 11/30/10

o_Rates improved in trading this morning as mortgage bonds eked out some gains against Treasuries, helped by growing Euro sovereign debt fears in a flight to the relative quality of the debt peddled by our government.  Treasuries are rallying given month end buying and lack of supply (no auctions) further boosted by the Federal Reserve buyback (QE2) of $6.8 billion this morning.  Mortgages however are lagging and are not benefitting fully from these gains that pushed the 10-year yield down to 2.759% at the moment as hedge fund/money managers sell lower coupons.  Stock market indices were down significantly to start today’s session but have since pared some losses after better than expected consumer confidence and business expansion data offset worse than expected home price figures.  Tomorrow brings the start of employment data along with housing market and manufacturing figures…expect rate/price volatility.

In the news today…     

- Home Prices Fell Compared to Forecasted October Gain

- Businesses in U.S. Grow at Faster Pace Than Forecast

- Consumer Confidence in U.S. Rises to Five-Month High

- Milwaukee Purchasers Manufacturing Index for November Rose

- EU Faces More Bailouts as Irish Contagion Spreads: Is Spain Next?

- Spanish Banks Face Funding Hurdle Amid Bailout Threat … crisis looming

- Banks Resisting Fannie, Freddie Demands to Buy Back Mortgages  

- Bank of America Mortgage Morass Deepens After Employee Says Notes Not Sent

Recommended Reading….

- Atlas Shrugged by Ayn Rand

Your Takeaway for Today….

- 30 year fixed rate mortgage has a lower interest rate than a 30-year Treasury bond.  Rates will never be this low in a very long time if ever.  Motivate you recalcitrant borrowers with this knowledge and tell them that NOW is the time to lock in a historically low 30 year fixed rate mortgage before this distortion is corrected by “Mr. Market”.

Market Commentary 11/23/10

Rates are lower today as a worried world pours into the relative safety of US Treasuries this morning as a result of shelling in Korea, fears associated with the sovereign debt crisis in Ireland and a potential bank run in that nation and the other PIIGs.  Stronger than expected GDP numbers were overshadowed this morning by these events and as a result equity markets are down about 1.2% so far today.  Very poor home sales data was released today helping to underpin the equity sell off this morning and Treasury bonds are seeing strong demand in early trading helping to push down the yield on the 10 year T Bill to 2.744%.  Today’s scheduled 5 year Treasury Bill auction is expected to go well given the geopolitical tension so we will see if the falling yield trend will continue. Federal Reserve minutes from this months FOMC meeting will be released this morning around 11 am so stay tuned people. 

In the News Today:

-          - The US economy expanded at a 2.5% pace in the third quarter

-          - Existing home sales fell more than forecast in October

-          - Richmond Fed manufacturing survey due out for November

-          - Irish rescue plan now shifts focus to Portugal, Spain and overall EURO stability

-          - China’s banks report near the end of their loan quotas and begin to halt lending

-          - Freddie Mac raises mortgage fees as it attempts to staunch losses

Market Commentary for 11.22.10

Rates are lower today and bond prices are rising due to increased sovereign debt worries revolving around Ireland and other debt laden and trouble nations within the EU.  Although the US is still in very deep economic trouble and laboring under an astronomical and growing sovereign debt load of its own and actually rivaling and surpassing many of the trouble nations in Europe in that regard, market attention has whipsawed back to the mess in the EU and will serve to push the dollar higher and rates lower as investors and money managers run to relative safety (total illusion) of US government debt.  Economic data is very light today in anticipation of a heavy release of info Tuesday and Wednesday before the Thanksgiving holiday.  It would appear that the PIIG nations (Portugal, Ireland, Italy and Greece) are running into a debt wall and one by one requesting a bailout from the European Central Bank (ECB), the International Monetary Fund (IMF) and World Bank.  Ireland relented and asked the ECB for the bitter bail out pill this morning with Italy, Portugal and Spain teetering on the brink.  The cost will be massive for the ECB and will continue to push investors back into dollar denominated assets until the US has another negative economic or geopolitical headline event herding the sheep investors back into the EURO.  What a mess!  Treasury prices moved higher off the news with mortgage bonds following suit.  Both seem to be holding fairly well so far this morning but given the last few days of incredible market volatility we shouldn’t be surprised by anything that this market may throw at us. 

Economic News Today:

-          - Treasuries rallied, as Moody’s appears ready to downgrade Ireland after ECB bailout plan acceptance

-          - US commercial real estate prices jumped most on record

-          - Portugal reiterates commitment to debt repayment as social unrest rises

-          - Irish bonds rise as its government requests ECB/IMF emergency bailout funds