3 December 2009 ? Mortgage Bonds opened the day down and have continued to trend lower to a day change of -25bps. Today has been a significant news day as Chairman Ben Bernanke of the Federal Reserve testified in front of a Senate committee considering his re-nomination. In other notable news, the monthly Jobs Report will be released tomorrow. Jobless claims have been estimated at around 457,000, far short of the 480,000 expected, but tomorrow will confirm whether those numbers are valid or not. While the downward trend of jobless claims is encouraging, most economists agree that the labor market is still contracting. In addition, labor productivity numbers showed an 8.1% increase in the 3Q ? certainly a positive for the economy as employers continue to get as much out of their existing workforce as possible. The stock market has been relatively flat as the dollar continues to struggle and investors attempt to make predictions on holiday retail sales. Friday, as always, will be an important day for the mortgage and stock markets due to the weekend. Mortgage rates are still strong with 4.750% (4.799% apr) on the 30 year and 4.25% (4.334% apr) on the 15 year.

20 November 2009 –Bonds opened up nearly unchanged at positive 3 bps to a current day change of 0 bps. Of the $1.25 trillion allotted to Mortgage Backed Securities, $1.023 trillion have been purchased. The Fed announced that it will unload a record $44 billion in 2-Year notes, $42 billion in 5-Year notes, and $32 billion in 7-Year notes all next week. It is unsure how the market will react with such a significant bond issue as well as its effect on the bond market. Ben Bernanke?s speech earlier this week, declaring the Fed?s commitment to the dollar, has improved the dollar’s value but it has also pushed stocks and commodities lower. The Dow, Nasdaq and S&P 500 have all struggled for the latter part of the week and they seem to be finishing the week in the red. There is no upcoming economic news of significance and as always, it will be interesting to see how the markets open up Monday morning. Mortgage rates continue to hold strong for the time being with 4.625% (4.678% apr) on the 30 year and 4.25% (4.334% apr) on the 15 year.

16 November 2009 –Bonds opened up at a positive 3bps today to a current day change of 28bps.  Investors have patiently awaited Federal Reserve Chairman Ben Bernanke?s 12:15 EST talk concerning the economy and its future.  Bernanke?s speech highlighted the indication that most economists expect moderate economic growth in the next year, but unfortunately not enough to curb the unemployment numbers.  Many have worried about the possibility of inflation due to the recent rise of commodities such as gold and oil, but Bernanke believes inflation should remain subdued for some time.  The stock market is up nearly 1.5% in the Dow, Nasdaq and S&P 500, fueled by better-than-expected October retail sales of 1.4% versus an anticipated 0.9% rise.  The markets also took into account investor predictions of a global rebound.  Commodities continue to soar as a result of the weak dollar, but with the Fed?s announcement of it?s commitment to a strong dollar, some investors may begin to take profits from commodities.  It will be interesting to see how bonds and the stock market open up tomorrow as more of this information is absorbed and dissected.  Mortgage Rates remain strong at 4.625% (4.678% apr) on the 30 year and 4.25% (4.334% apr) on the 15 year.

10 November 2009 ?Bonds are currently at a day change of up 9bps after opening up slightly higher than yesterday. The $40 billion auction of 3-year notes yesterday was successful in strengthening mortgage bonds and the much maligned dollar. Strengthening the dollar has been the focus of foreign and domestic investors who hope to limit its decline and then use its improved standing to aid an economic recovery. There will be another auction today, starting at 1 pm EST, for $25 billion in 10-Year notes. The market, after its incredible rally yesterday, has been relatively quiet today and is currently hovering near break-even status. It has been hampered by struggling financials, including MBIA, whose shares have drop nearly 20% today. It will be interesting to see how the stock market plays out the rest of the week as investors await Ben Bernanke?s address concerning monetary policy next Monday. Mortgage rates remain strong with 4.750% (4.799% apr) on the 30 year and 4.25% (4.334% apr) on the 15 year.

9 November 2009 ?Bonds opened today at 6bps and have moved to a current day change of up 6bps. The upcoming week may not provide the same market-changing events such as the first-time home buyer tax credit extension and unemployment figures did last week. Notably, the Treasury will auction off $40 billion in 3-year notes at 1PM ET today. This auction will play a significant role in determining how pricing will shape up for the rest of the day and throughout the week. The weekend layoff did not slow down the stock market, as the Dow, Nasdaq and S&P 500 are all up nearly 1.5% during trading today. The dollar reached a 15-month low after a G-20 meeting reported that the dollar?s strength is wavering towards a medium equilibrium. Naturally, gold soared above the $1100 plateau and is showing no signs of slowing down as it and other commodities continue to be the hot picks of investors. Expect the market to continue its upward trend as more and more companies continue to report 3Q earnings. Many looming company acquisitions, such as Google?s purchase of technology provider AdMob, may help the market as well. Mortgage rates remain strong with 4.750% (4.799% apr) on the 30 year and 4.25% (4.334% apr) on the 15 year.

6 November 2009 ?Bonds opened up 12bps and have trended upwards to an impressive day change of up 31bps. The Labor Department announced that unemployment rose higher than expected. The 10.2% unemployment rate for October exceeded analysts’ predictions of a 9.9% rate.  This is the first time in 26 years that unemployment has topped the 10% threshold. That figure has certainly added to the strength of mortgage bonds today. With this announcement in mind, the stock market showed signs of heading into the red, but it has quickly recovered on the strength of company earnings and gold commodities, once again. Washington continues to take a strong stance on improving the housing sector as seen by the Fed keeping interest rates low and with Congress recently renewing the first-time homebuyer credit and the Mortgage Backed Securities program. We will look for news over the weekend to see how Bonds and the stock market will open on Monday. Mortgage Rates are still strong with 4.750% (4.799% apr) on the 30 year and 4.25% (4.334% apr) on the 15 year.

5 November 2009 ?Bonds opened up 19bps today and have remained strong well into the afternoon with a day change of up 18bps. With a day to absorb yesterday?s news that the Fed will keep interest rates near zero, mortgage bonds have bounced back significantly today. It is expected that the Mortgage Backed Securities program will remain a good investment until the end of the first quarter. The House approved an extension and expansion of the $8000 first-time home buyer credit this afternoon. This decision is certainly aimed at further stimulating real estate and aiding in its recovery. The stock market was strong yet again with the Dow Industrial Average topping 10,000 and the NASDAQ and S&P 500 up nearly 2% each. Today?s market has been fueled by the tech and health sectors, including by Cisco Systems and Qualcomm who announced their third quarter results. Friday is always a wild card day for the stock market as many investors decide whether to hold or sell their assets before the weekend. Mortgage Rates bounced back and are still strong at 4.875% (4.910 apr) on the 30 year and 4.25% (4.309 apr) on the 15 year.

4 November 2009 ?Bonds opened today 3bps up and have ceded some ground this afternoon. They ended the day down 6bps. After the highly anticipated Federal Open Market Committee meeting, the Fed announced it will keep the Fed Funds Rate low for an extended period of time. Many economists predict the rates will stay close to zero well into 2010, but they also fear that this monetary policy may bring about inflation. With rates still low, mortgage applications have risen 8.2%, the refinance index 14.5%, and the purchase index 1.8% just in the past few weeks. The number of refinances has certainly been fueled by the Fed maintaining low interest rates. As was expected, the stock market was up big today, fueled by commodities (most notably gold), a weaker dollar, and companies who reported 3Q profits. With the Fed?s announcement, expect the market to continue to gain this week and trend upwards, as it traditionally does in the month of November. Mortgage Rates are at 4.875% (4.875% apr) on the 30yr and 4.25% (4.309% apr) on the 15yr.

3 November 2009 ? Bonds opened down 19bps and have somewhat recovered to a current afternoon change of down 12bps. Wednesday marks the Fed?s two-day Federal Open Market Committee meeting. Many speculate that the Fed will leave rates at their current levels, but the meetings may indicate when the Fed plans on beginning the inevitable hiking of rates. As the Fed reduces its buying of Mortgage Backed Securities throughout the program?s remaining 22 weeks, we expect the rates to begin their rise. Of the $1.25 trillion established, nearly $977 billion have been purchased. The stock market has remained flat throughout the day with the Dow, Nasdaq and S&P 500 occasionally moving back and forth between the green and red. The highlight of the day was the acquisition of railroad operator Burlington Northern Santa Fe Corp for $26 billion by renowned financier Warren Buffet and his Berkshire Hathaway company. With the impending Fed meetings, the dollar has risen modestly as investors continue to sell risky stocks and assets. It will be interesting to see how the market performs the rest of the week as many companies continue to report 3Q results. Traditionally, November has been a strong month for investors as the holiday seasons are around the bend. Mortgage Rates do remain strong with 4.75% (4.83 apr) on the 30 year and 4.375% (4.423 apr) on the 15 year.

16 October 2009 ?Bonds opened at 3bps today and have increased to 19bps this afternoon. If this holds, we may see the bonds continue to improve in the next few days. The rates have risen sharply from previous lows.

Weaker than expected sales from GE and IBM have driven the Dow down 130 points today. Bank of America also posted its first loss of the year that came in worse than analysts predicted. As I mentioned on Wednesday, it would surprise few people if the stock market pulled back a bit – something that will help the bond market.

The New York Federal Reserve has begun to cut back on its purchases of Mortgage-Backed Securities. The New York Fed bought only $16.1 billion worth of these securities this week, down from $20 billion in the previous week. Year-to-Date, the Fed has purchased $944 billion worth of these securities. The Fed has allotted a total of $1.25 trillion for the program which is set to expire March 31st, 2010.

Consumer Sentiment was reported at 69.4, lower than expectations of 73.5. Analysts believe the drop in sentiment reflected the current trend among consumers to increase personal savings and pay down household debt.

Mortgage rates are still solid right now, 4.75% (4.83 apr) on the 30 year, 4.375% (4.423 apr) on the 15 year.