Aug
Market Snapshot
Early this morning the rate markets were looking good, by 9:00 however the early gains in treasuries and mortgages were gone with both markets at 9:00 unchanged, the DJIA was off 61 points at 9:00, the 10 yr note unch and mortgages unchanged. At 9:30 the DJIA opened -75, the 10 yr note +4/32 and mortgage prices +4/32. (see below for 10:00 levels)
This is a busy week for financial markets with key economic data culminating with the August employment report on Friday. No supply this week from Treasury but come Thursday treasury will announce the amounts of more borrowing next week; issuing 3 yr and 10 yr notes next week.
China’s stock market, one of the things that has been supporting the US stock market, is cracking under corrective action. Down 7.0% last night and own 10% in the past three sessions. If that were the DJIA it would be down over 900 points. Inch by inch the US equity markets are moving closer to that well overdue correction everyone has been looking for. Once we get it the rate markets will likely improve as safe haven activity will move money to safety. Mortgage rates on a major equity market correction will slide under 5.00%l whether it will hold long under 5.00% depends on how deep a correction in stocks and how long stocks will stay down before more buying hits.
At 9:45 this morning the Chicago purchasing mgrs index, expected at 47.2 frm 43.4, jumped to 50.0; new orders component at 52.5 frm 48.0, prices pd at 50.0 frm 35.0 and employment component at 38.7 frm 35.3. On the whole it was much better than expected but not much initial reaction to it in the markets. Any index read under 50 is contraction. Once again manufacturing data beats the estimates; but who is buying? Consumers have a lock on their pocketbooks.
This Week’s Economic Calendar:
Tuesday;
10:00 July construction spending (-0.2%)
August ISM manufacturing index (50.2 frm 48.9)
July pending home sales
2:00 August auto and truck sales
Wednesday;
7:00 Weekly MBA mortgage applications
8:15 ADP August non-farm jobs estimate (-246K)
8:30 Q2 productivity revision (+6.1% frm +6.4%)
10:00 July factory orders (+1.5%)
2:00 FOMC minutes frm 8/12 meeting
Thursday;
8:30 weekly jobless claims (-8K to 562K)
10:00 ISM services sector index (48.0 frm 46.4)
Friday;
8:30 BLS August employment data ( unemployment (.6% +0.2%)
Non farm jobs (-200K, -247K in July)
2:00 Early bond and mortgage market closes (Labor Day on Monday)
The remainder of the session will be watching equities trade. The stock market looks very soft a the moment but recent volatility is such that we don’t place a lot of confidence on how the markets will finish the session.
The bellwether 10 yr note yield is now at its very best since the middle of July; mortgages following the leader. Technically the rate markets are in good shape; all of our analysis points to lower rates. Problem is however, there is a high degree of uncertainty and with volatility on the high side any sustained reversal could easily turn the markets around. Go with it and take it one day at a time in terms of trading. Re-finance prospects should be mined now as we expect a decline in rates between now and the end of Sept. Timing is based on when the equity markets actually sustain selling for more than a day or tow as has been the case all summer.
PRICES @ 10:00 AM
| 10 yr note | 101.17 +1/32 3.44% -0.5 BP |
| 5 yr note | 99.23 +3/32 2.43% -2 BP |
| 2 Yr note | 100.00 +1/32 1.00% -1 BP |
| 30 yr bond | 104.22 -7/32 4.22% +2 BP |
| Libor Rates | (London closed today) |
| 30 yr FNMA 4.5 Oct | 99.30 +4/32 (.12 BP) (+11/32 (.34 bp) frm 10:00 Friday) |
| 15 yr FNMA 4.0 Oct | 100.13 +2/32 (+8/32 (.25 bp) frm 10:00 Friday) |
| 30 yr GNMA 4.5 Oct | 100.02 +1/32 (+8/32 (.25 bp) frm 10:00 Friday) |
| 15 yr GNMA 4.0 Oct | 100.31 +1/32 (+7/32 (.21 bp) frm 10:00 Friday) |
| Dollar/Yen | 92.93 -0.49 |
| Dollar/Euro | $1.4295 -$0.0006 |
| Gold Dec | $949.60 -$9.20 |
| Crude Oil Oct | $70.25 -$2.49 |
| Goldman-Sachs Commodity Index | 454.40 -12.30 |
| DJIA | 9455.40 -88.80 |
| NASDAQ | 2001.41 -27.25 |
| S&P 500 | 1016.62 -12.31 |
“Your Partner In Success!”
Tony Frerking
Sr. Mortgage Consultant
PMZ Home Loans
1600 N. Carpenter Rd Ste. A-1
Modesto CA 95351
Methods of contact:
Direct: (209) 404-2200
Fax: (888) 345-2768
Contact Via Skype / Skype name = aplynow