Market Commentary for 12/9/10

Mortgage rates improved today as mortgage bonds make gains this morning despite losing some of their earlier gains after better than expected jobless claim and wholesale inventory data was released.  The jobless claims are still quite bad at 421,000 and markets really do appear to be grasping at straws to find some optimism out there.  With such a weak underpinning to bond market optimism, and the myriad of significant and serious issues impacting the broader debt market in general (QE from most all central banks), its important to keep a very close eye on the bond market, your pipelines and your lock expirations.  Buyers have emerged (Fed Reserve) after recent massive losses, allowing mortgages to tighten with Treasuries but trade is choppy and highly volatile.  Treasuries initially up have fallen to near unchanged in the short end to slightly better in the longer end at the moment after the data releases, putting the 10-year yield around the 3.249% mark (OUCH!) which is at a 6 month high.  Today brings the final leg of this week’s Treasury auctions with $13 Billion of 30-year “long bonds” on the block—results due out around 10am.  As the headline “House Democrats did not approve the compromise tax bill in its current form” came we are seeing some bond gains.  Check out the second to last story in the “In the News Today” section—Google the story … its an interesting piece on whether the bond vigilantes of the late 80s and 90s that, some say, forced both the first President Bush and Bill Clinton to raise taxes to get budgets in line are doing the same thing to Obama. 

In the news today…     

- U.S. Initial Jobless Claims Fell 17,000 to 421,000 Last Week

- U.S. Wholesale Inventories Rose 1.9% in October, Sales Up 2.2%

- BOE Maintains Bond Plan as Economy Sustains Momentum

- Bond Vigilantes Awoken by Obama Tax Plan, Deficit, Yardeni Says

- Ron Paul, Author of ‘End the Fed,’ to Lead Panel Overseeing Fed

Reading Suggestion for Today… Cicero:  The Republic 

Take Away… Watch Those Pipelines!  Due to recent market volatility now more than ever be sure to keep track of your lock expirations!