Massachusetts Mortgage Commentary 12/14

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Tuesday’s bond market has opened well in negative territory following some surprising inflation news. The stock markets are relatively calm with the Dow down 10 points and the Nasdaq nearly unchanged. The bond market is down 13/32, which should push this morning’s mortgage rates higher by approximately .250 - .375 of a discount point.

The Labor Department gave us the news that fueled this morning’s bond selling. They said that the Producer Price Index (PPI) spiked 1.8% last month and that the core data reading rose 0.5%. Both of these readings were more than twice forecasts, meaning inflationary pressures were strong at the producer level of the economy last month. This is bad news for bonds and mortgage rates because inflation erodes the value of a bond’s future fixed interest payments, making them less attractive to investors. The result usually is bond selling and higher mortgage rates.

November’s Industrial Production data also gave us stronger than expected results with a 0.8% increase. Forecasts were calling for a 0.5% increase, indicating that manufacturing activity at U.S. factories, mines and utilities was stronger than thought. This is also bad news for bonds because it points towards a strengthening economy.

This week’s most important economic data tomorrow’s release of November’s Consumer Price Index (CPI). It is the sister report of today’s Producer Price Index, except it tracks inflationary pressures at the more important consumer level of the economy. Current forecasts call for an increase of 0.4% in the overall index and a 0.2% rise in the core data reading. The core data is watched more closely because it excludes more volatile food and energy prices, giving a more stabile reading for analysts to consider.

November's Housing Starts report will also be released tomorrow morning, but I don’t see it causing much movement in mortgage rates. This report, which is expected to show a sizable increase in starts of new homes, gives us an indication of housing sector strength and future mortgage credit demand. However, it can be considered the least important of this week’s news.

The last FOMC meeting of the year began today and will adjourn at 2:15 PM ET tomorrow. There is not much debate about what the Fed will do at this meeting with little chance of them raising key short-term interest rates. Therefore, the post meeting statement will likely be the sole source of a market reaction. This statement has the potential to have a significant influence on the markets and mortgage rates as investors look for any indication of what and when the Fed may do next. Generally speaking, the bond market would like to hear something that indicates the Fed will not be raising rates anytime soon.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com

Massachusetts Mortgage Rate Commentary 12/14/09

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Monday’s bond market has opened in positive territory despite early gains in stocks. The stock markets are reacting favorably to both international (Dubai World) and domestic (Citi) news that eased some concerns in the market. The result is the Dow up 28 points while the Nasdaq has gained 14 points. The bond market is currently up 3/32, which should improve this morning’s mortgage rates by approximately .125 of a discount point over Friday’s rates.

There is no relevant economic data scheduled for release today, but the rest of the week brings us several reports and events that are likely to cause movement in mortgage rates. Besides the five relevant economic reports that will be posted between tomorrow and Thursday morning, there also is another Federal Open Market Committee (FOMC) meeting to watch. Two of the five economic reports are considered to be of high importance, so the data should have a heavy influence on the markets and mortgage rates this week.

The first relevant report of the week is one of the two highly important ones. The Labor Department will release November’s Producer Price Index (PPI) early tomorrow morning. This index measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. If tomorrow's release reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively and drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should fair well and mortgage rates should fall. Current forecasts are showing a 0.8% increase in the overall index and a 0.2% rise in the core data.

November’s Industrial Production data is also scheduled to be posted tomorrow morning, but a little later than the PPI. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Analysts are expecting it to show a 0.5% increase in output. A smaller than expected rise would be good news for bonds, while a stronger than expected reading may result in slightly higher mortgage pricing. However, the PPI release is more important to the markets than this data is.

Overall, expect to see a pretty volatile week in the financial markets and mortgage pricing. The most important day of the week is certainly Wednesday with the CPI and the FOMC meeting both scheduled. However, we may see noticeable movement in rates tomorrow also. Please maintain contact with your mortgage professional if you have not locked an interest rate yet because we may see sizable changes to mortgage pricing more than one day this week.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...


©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com

Massachusetts Mortgage Rate Commentary 12/11/09

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Friday’s bond market has opened in negative territory following the release of much stronger than expected economic data. The stock markets have reacted fairly positive to the news with the Dow up 57 points and the Nasdaq up 6 points. The bond market is currently down 17/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point.

This morning big news was November’s Retail Sales report that showed a whopping 1.3% spike in sales. This was more than twice the latest forecast of a 0.6% jump. Also, if volatile auto-related sales are excluded, sales rose 1.2%. This reading is triple the forecast of a 0.4% increase, indicating that consumers spent much more last month than many had thought. That is bad news for bonds because consumer spending makes up two-thirds of the U.S. economy. If consumer spending is rapidly growing, fuel is being added to the overall economy. Generally speaking, weaker economic conditions create a more favorable environment for bonds and mortgage rates.

The second report of the day also gave us much stronger than expected results. The University of Michigan posted their Index of Consumer Sentiment for December late this morning. They announced a reading of 73.4 that exceeded forecasts of a 68.9 reading. This means that surveyed consumers were more optimistic about their own financial situations than was expected. That is not favorable news for bonds because consumers tend to spend more when they are more comfortable with their own finances. This leads to higher levels of spending and helps the economy to grow.

Following suit of Wednesday’s 10-year auction, yesterday’s 30-year Bond sale also was weak. Several measurements of how successful the sale goes gave us poor results. This means that investors may be losing interest in acquiring new U.S. debt. That could be a problem for mortgage rates if it continues.

Next week is pretty busy in terms of economic releases and related events. There is nothing of importance scheduled for Monday, but the rest of the week brings us data that includes two key inflation readings and the last FOMC meeting of the year. It will likely be another active week for mortgage rates, but look for details on next week’s event sin Sunday’s weekly preview.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...


©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com

Massachusetts Mortgage Rate Commentary 12/10/09

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Thursday’s bond market has opened well in negative territory following yesterday’s weak Treasury auction. The stock markets are showing gains with the Dow up 79 points and the Nasdaq up 14 points. The bond market is currently down 16/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point.

This morning’s economic news wasn’t important enough to heavily influence bond trading, but it has contributed somewhat to the early selling. October’s Goods and Services Trade Balance report showed that the U.S. trade deficit stood at a smaller than expected $32.9 billion. This data doesn’t usually directly affect bond trading, but it does influence the value of the U.S. dollar versus other currencies. A strong dollar makes U.S. securities, including mortgage-related bonds, more attractive to international investors. But today’s release was the week’s least important and has not had an impact on mortgage rates.

The Labor Department gave us some favorable news with an announcement that 474,000 new claims for unemployment benefits were filed last week. This was a higher total than was expected, but this data is not important enough to erase the negative tone in bonds since yesterday’s auction results were posted.

As mentioned already, yesterday’s 10-year Note sale did not go very well. This means that investor appetite for longer-term U.S. debt was not as strong as hoped for. This also indicates that mortgage bonds, which are considered long-term securities, may see some pressure in the near future due to a lack of buyer interest. If that is true, we can expect to see mortgage rates rise in the near future. Today’s 30-year Bond sale is not as important as yesterday’s sale was, but if we do get a strong demand from investors bond prices could rise during afternoon trading. That may lead to afternoon improvements, but I am not too optimistic it will happen today.

November’s Retail Sales report will be released early tomorrow morning. This is one of the more important reports released each month since it tracks consumer spending. Consumer spending makes up two-thirds of the U.S. economy, so any related data is watched closely. It is expected to show a 0.6% increase in sales at retail level establishments, meaning consumer spending was stronger in November than in October. Since the market is expecting an increase, it will likely take a larger than expected jump in sales for the bond market to react negatively and mortgage rates to rise. A smaller than expected increase should lead to lower mortgage rates tomorrow.

Also tomorrow is the release of December’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly. However, with the Retail Sales data report before this data, I don’t expect it to affect mortgage rates much. It is expected to show a reading of 68.9, which would be an increase from last month’s final reading.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com

Massachusetts Mortgage Rate Commentary 12/9/2009

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Wednesday’s bond market has opened relatively flat following an uneventful opening in stocks. The stock markets are mixed with the Dow up a couple of points and the Nasdaq down nearly the same. The bond market is practically unchanged from yesterday’s closing level, so I am expecting little change in this morning’s mortgage rates.

There is no relevant economic news being posted today, but we do have the first of this week’s two important Treasury auctions. The 10-year Note sale is being held today while 30-year Bonds will be sold tomorrow. Today’s sale is more important to mortgage rates than tomorrow’s is. If there was a strong demand from investors, we should see bond prices move higher after results are posted at 1:00 PM ET. This could lead to downward revisions to mortgage rates this afternoon. However, if the sale was met with a lackluster interest, there is a pretty decent possibility of seeing higher mortgage pricing later today.

October’s Goods and Services Trade Balance report will be posted early tomorrow morning. This report gives us the size of the U.S. trade deficit, but it is the week’s least important release. It is expected to show a $37.0 billion trade deficit. Unless it varies greatly from forecasts, I don’t expect it to affect mortgage pricing.

The Labor Department will post last week’s unemployment figures. They are expected to announce that 465,000 new claims for benefits were filed last week, up from the previous week. That would be considered favorable news for the bond market and mortgage rates, but the truth is that this data is not considered to be highly important because it tracks only a week’s worth of new claims. It usually takes a wide variance between the announced total of new claims and forecasts for them to have much of an impact on mortgage rates.

We do get some important economic data Friday morning when November’s Retail Sales report is released. This is one of the more important reports released each month since it tracks consumer spending. Consumer spending makes up two-thirds of the U.S. economy, so any related data is watched closely. It is expected to show a 0.7% increase in sales at retail level establishments, meaning consumer spending was stronger in November than in October. Since the market is expecting an increase, it will likely take a larger than expected jump in sales for the bond market to react negatively and mortgage rates to rise. A smaller than expected increase should lead to lower mortgage rates Friday.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com

Massachusetts Mortgage Rate Commentary 12/8/2009

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Tuesday’s bond market has opened in positive territory again following early weakness in stocks. The stock markets are showing sizable losses with the Dow down 85 points and the Nasdaq down 6 points. The bond market is currently up 11/32, which should improve mortgage rates by approximately .250 - .375 of a discount point over yesterday’s morning rates.

There is no relevant economic news scheduled for release today or tomorrow. Therefore, I am expecting the stock markets to likely be the biggest influence on bond trading and mortgage rates today. If the major stock indexes move lower we may see bond prices move higher and mortgage rates improve this afternoon.

Tomorrow does bring us the first of this week’s two important Treasury auctions. The 10-year Note sale will be held Wednesday while 30-year Bonds will be sold Thursday. Wednesday’s auction is the more important of the two events and will likely influence mortgage rates more. Results of each sale will be posted at 1:00 PM ET. If they were met with a strong demand from investors, particularly international buyers, we should see afternoon strength in bonds and improvements to mortgage pricing those days.

There is no relevant economic news scheduled for release today, tomorrow or Wednesday. October’s Goods and Services Trade Balance report will be posted early Thursday morning. This report gives the size of the U.S. trade deficit, but it is the week’s least important release. It is expected to show a $37.0 billion trade deficit. Unless it varies greatly from forecasts, I don’t expect it to affect mortgage pricing.



If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com

Massachusetts Mortgage Rate Commentary 12/7/09

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Monday’s bond market has opened in positive territory, recovering part of Friday’s sell-off. The stock markets are showing modest gains with the Dow up 20 points and the Nasdaq up 3 points. The bond market is currently up 8/32, which should improve this morning’s mortgage rates by approximately .250 of a discount point from Friday’s morning rates.

This week is fairly light in terms of the number of economic releases scheduled for release. There are only three on the agenda but one of them is considered to be very important and can heavily influence the markets and mortgage pricing. In addition, there are two Treasury auctions the middle part of the week that may hurt or help boost bond prices, depending on how strong of a demand there is for the sales. Since all of the relevant data is scheduled for release Thursday and Friday, the most movement in rates will likely be the middle or latter part of the week.

Fed Chairman Bernanke will be speaking to the Economic Club of Washington D.C. at noon today. This is not considered to be an important speech and likely will not influence mortgage rates. However, whenever he speaks publicly, the possibility does exist that his words could rattle or rally the markets. I am not concerned about this one and don’t feel there should be much attention placed on it.

There is no relevant economic news scheduled for release today, tomorrow or Wednesday. October’s Goods and Services Trade Balance report will be posted early Thursday morning. This report gives the size of the U.S. trade deficit, but it is the week’s least important release. It is expected to show a $37.0 billion trade deficit. Unless it varies greatly from forecasts, I don’t expect it to affect mortgage pricing.

Overall, expect to see a pretty volatile second half of the week with the biggest moves in mortgage pricing likely to come Wednesday or Friday. Friday’s Retail Sales report can cause a great deal of movement in rates, but Wednesday’s Treasury auction may also help determine if rates will close the week higher or lower than tomorrow’s opening levels. It will also be interesting to see if bonds extend Friday’s selling into tomorrow’s trading or if they recover some of those losses. This looks to be one of those weeks that maintaining contact with your mortgage professional would be wise.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com