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.

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.

14 October 2009 ?Today’s bonds opened down 47bps and, after staging a rally, they were pushed back down. We are currently down 37bps and are testing resistance levels. As recommended in recent posts, locking was the bias since we reached a low point in mortgage rates on 10/2/2009. While rates are up slightly, these are still phenomenal mortgage rates and they remain near all time lows.

Also, there is strong sentiment that the home buyers tax credit will be extended. The credit may also be expanded to include a broader range of home buyers in the hopes of further stabilizing the real estate market. There are still many more foreclosures to come as unemployment continues to be a problem. The long term outlook for mortgage interest rates remains stable as the economy still is in a recovery mode.

Strong earnings from JP Morgan Chase and Intel have pushed stocks higher and the DOW has exceeded the 10,000 level for the first time in over a year. Although the Bull market mode has arrived, there is always room for a reversal lower as we may see the market take its gains and retreat.

6 August 2009 ? Today the bond market opened up slightly around 6bps and are currently up 9bps. We had a slight movement down after the unemployment claims dropped, however dismal retail sales immediately turned the bonds back into the positive territory. We have had six straight weeks of decline in the moving average of jobs lost which may be an indicator of a slightly improving job market. The jobs report is due to be released tomorrow morning and again this can affect the bond market. We will be watching closely to see the impact of this report. The Dow is currently down 10. The 30 year rate remains around 5% and the 15 year around 4.625%.

5 August 2009 – Today the bond market opened down 31 bps. On Monday and Tuesday combined the bond market was down a total of 94bps. The bond market then bounced back due to a weaker ISM report (46.4 versus the expected 48). Also more job losses were reported, expectations were for job losses to come in at 350,000 and actual number was 371,000. These reports helped to correct the bond market and this was sorely needed. The bonds are now currently up 19bps for the day, which is a gain of 50bps since the open this morning. The Treasury announced a $75 billion auction next week, again too much supply versus the demand for these auctions continues to weigh on the bonds. At some point higher yields will have to be paid to continue to attract buyers and this is when we will see the mortgage rates rise. Again the 30 year fixed for the well qualified buyer would be around 5% to 5.125%. The 15 year fixed rate would be at 4.5% to 4.625%.

3 August 2009 ? Today the mortgage backed bonds opened down 28 and continued to slide and are now currently down 59 bps. Last week we had a good rally with bonds as reported in the daily update and on Friday we hit a level of resistance which basically predicted this downturn this morning. The ISM index number came out  at 48.9, which is better the expected number of 46.5. A reading over 50 would indicate the economy is getting better so while this number improved, it still does not paint a rosy picture. Former Fed Chairman Alan Greenspan commented that the recession is almost over which sparked a rally in the stock market, putting additional pressure on the bonds. Today?s 30-year rate for the well qualified buyers of single family homes with an LTV of 60% would be 5% (assumes $350,000 loan amount or greater).

29 July 2009 – Today the bonds opened up 29 bps. However by noon the bonds were up 12, which is a decrease of 9bps. By 12:15 the volatility hit that I discussed in yesterday’s update and the bonds are now down 10, which is a 31 bps drop for the day. This auction results from the Treasury were very poor, which is pressuring the bonds. This morning the weak durable order report signaled that the US economy is not out of the woods and the recovery from this recession will take time. Mortgage interest rates have risen over the past 6 months, mirroring the rallying stock market. However rates are still very good and in the low 5?s for the 30-year fixed rate and in the mid 4?s for the 15 year fixed rate.

28 July 2009 ? What a day for bonds, this morning the bonds were up 3bps, and by Noon we were flying high with Day Change up 50 bps. However as I mentioned in my daily update last week, there were treasury auctions that were taking place this week of almost 210 billion which is an extreme supply. The 2 year Treasury Note auction of 42 billion was not well received, while yesterdays 20 year went over well. With the 2 year auction not going well this has weighed heavily on the bonds and we are now up 12 bps which is a drop of 38bps. We will see a lot of volatility today and over the next few days with more auctions to follow. The 30 year rate is holding steady at 5.125% to 5.25% with 0 points, when paying 1 point which is 1 percent the consumer would be looking at a rate of 4.875% to 5% on the 30 year fixed.