Friday, January 22, 2010
I moved my blog to my new website http://www.davidkimmer.com
I moved my blog to my new website. To view my blog please follow this link http://www.davidkimmer.com and click on "View My Blog" on the right side of the page.
Wednesday, January 20, 2010
Daily Commentary by Larry Baer 1/20/2010
Commentary: The Commerce Department reported this morning that housing starts fell 4.0% in December. Most investors shrugged the slump in home construction off - noting that much of the country was in the grips of a major cold snap during the month -- making the digging of footings and the pouring of concrete almost impossible. Even though builders were not at their construction sites they were busy - filing new building permits. Building permits soared 10.7% higher in December - strongly suggesting home builders will be very busy once the spring thaw begins.
The Mortgage Bankers of America chimed in with their standard Wednesday report regarding loan demand for the past week. The MBA said their figures showed overall mortgage loan demand surged 9.1% higher. The increase was driven by a 10.7% increase in refinance requests, while home purchase demand rose 4.4%. The contract rate for 30-year fixed rate mortgages finished at 5.0%, down 13 basis points from the prior week level.
A separate report from the Labor Department showed producer prices rose 0.2% last month as food prices rose, leading the overall index to its largest year-over year gain since October 2008. The more important core rate of inflation at the wholesale level (a value stripped of the more volatile food and energy components) was unchanged in December -- effectively counterbalancing the headline gain in the produce price index. Mortgage investors gave the bit of inflation news nothing more than a passing glance and a disinterested yawn this morning.
Much of today's price improvement is likely due to positive mortgage investor reaction regarding the news that Scott Brown, a Republican, had defeated Democrat Martha Coakley in the political race to fill the vacant Massachusetts Senate seat left by the late Senator Edward Kennedy. Partisan politics aside - most mortgage investors are keenly aware that without filibuster-proof control of the Senate by one party, approval for new programs - such as an overhaul of the healthcare system - which could require heavy government spending -- will be harder to obtain. The "so what" factor here is straightforward. Uncle Sam is the mortgage market's biggest competitor in terms of attracting capital from both global and domestic investors. The possibility that the capital demand coming from Uncle Sam may be diminished in coming months tends to be supportive of at least steady mortgage interest rates.
It is likely mortgage investors will take at least a passing glance at tomorrow's December Leading Economic Index presented by the private Conference Board. The Conference Board's Leading Indicator Index is intended to forecast likely economic conditions three to nine months in the future. If, as expected, the index posts a gain of 0.7% or higher, it will have fully reversed the decline seen during the Great Recession - a condition that will almost certainly exert some upward pressure on mortgage interest rates.
With nothing else to capture their attention during the run-up to Thursday's release of the Leading Economic Index - look for mortgage investors to take their interest rate directional cues from trading activity in the stock markets. Rising stock prices will tend to drive mortgage interest rates higher -- while falling stock prices will tend to be supportive of steady to perhaps fractionally lower mortgage interest rates.
Be patient . be disciplined . and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
The Mortgage Bankers of America chimed in with their standard Wednesday report regarding loan demand for the past week. The MBA said their figures showed overall mortgage loan demand surged 9.1% higher. The increase was driven by a 10.7% increase in refinance requests, while home purchase demand rose 4.4%. The contract rate for 30-year fixed rate mortgages finished at 5.0%, down 13 basis points from the prior week level.
A separate report from the Labor Department showed producer prices rose 0.2% last month as food prices rose, leading the overall index to its largest year-over year gain since October 2008. The more important core rate of inflation at the wholesale level (a value stripped of the more volatile food and energy components) was unchanged in December -- effectively counterbalancing the headline gain in the produce price index. Mortgage investors gave the bit of inflation news nothing more than a passing glance and a disinterested yawn this morning.
Much of today's price improvement is likely due to positive mortgage investor reaction regarding the news that Scott Brown, a Republican, had defeated Democrat Martha Coakley in the political race to fill the vacant Massachusetts Senate seat left by the late Senator Edward Kennedy. Partisan politics aside - most mortgage investors are keenly aware that without filibuster-proof control of the Senate by one party, approval for new programs - such as an overhaul of the healthcare system - which could require heavy government spending -- will be harder to obtain. The "so what" factor here is straightforward. Uncle Sam is the mortgage market's biggest competitor in terms of attracting capital from both global and domestic investors. The possibility that the capital demand coming from Uncle Sam may be diminished in coming months tends to be supportive of at least steady mortgage interest rates.
It is likely mortgage investors will take at least a passing glance at tomorrow's December Leading Economic Index presented by the private Conference Board. The Conference Board's Leading Indicator Index is intended to forecast likely economic conditions three to nine months in the future. If, as expected, the index posts a gain of 0.7% or higher, it will have fully reversed the decline seen during the Great Recession - a condition that will almost certainly exert some upward pressure on mortgage interest rates.
With nothing else to capture their attention during the run-up to Thursday's release of the Leading Economic Index - look for mortgage investors to take their interest rate directional cues from trading activity in the stock markets. Rising stock prices will tend to drive mortgage interest rates higher -- while falling stock prices will tend to be supportive of steady to perhaps fractionally lower mortgage interest rates.
Be patient . be disciplined . and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
Tuesday, January 19, 2010
Daily Commentary by Larry Baer 1/19/2010
Commentary: The coming week's economic calendar doesn't offer much of substance for mortgage investors to chew-on during the coming four-day holiday shortened trading sessions. There are no scheduled government debt auctions and members of the Federal Open Market committee have entered their "period of silence" in front of their two-day meeting next week.
It is likely mortgage investors will take at least a passing glance at Thursday's December Leading Economic Index presented by the private Conference Board. The Conference Board's Leading Indicator Index is intended to forecast likely economic conditions three to nine months in the future. If, as expected, the index posts a gain of 0.7% or higher, it will have fully reversed the decline seen during the Great Recession - a condition that will almost certainly exert some upward pressure on mortgage interest rates.
With nothing else to capture their attention during the run-up to Thursday's release of the Leading Economic Index - look for mortgage investors to take their interest rate directional cues from trading activity in the stock markets. Rising stock prices will tend to drive mortgage interest rates higher -- while falling stock prices will tend to be supportive of steady to perhaps fractionally lower mortgage interest rates.
Be patient . be disciplined . and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
It is likely mortgage investors will take at least a passing glance at Thursday's December Leading Economic Index presented by the private Conference Board. The Conference Board's Leading Indicator Index is intended to forecast likely economic conditions three to nine months in the future. If, as expected, the index posts a gain of 0.7% or higher, it will have fully reversed the decline seen during the Great Recession - a condition that will almost certainly exert some upward pressure on mortgage interest rates.
With nothing else to capture their attention during the run-up to Thursday's release of the Leading Economic Index - look for mortgage investors to take their interest rate directional cues from trading activity in the stock markets. Rising stock prices will tend to drive mortgage interest rates higher -- while falling stock prices will tend to be supportive of steady to perhaps fractionally lower mortgage interest rates.
Be patient . be disciplined . and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
Friday, January 15, 2010
Daily Commentary by Larry Baer 1/15/2010
Commentary: Credit market investors are breathing a huge sigh of relief now that Uncle Sam has wrapped up his $84 billion, four-part auction and is not expected to be back in the credit markets for a couple of more weeks.
Today's rally in the mortgage market is also being supported by news from the Labor Department that inflation pressures at the consumer level remain benign. The headline Consumer Price Index rose 0.1% last month from November as food and energy costs gained only modestly and housing-related expenses held steady. Stripping out the more volatile food and energy prices, the Labor Department said the core rate of the consumer price index edged up 0.1% in December after being flat the prior month. Compared with December 2008, the core inflation rate rose 1.8% -- well within the Fed's stated tolerance level of 2.0%. Fed Chairman Bernanke and his fellow central bankers are likely walking around Washington with a look of relief on their faces - since there is certainly nothing in today's inflation data to suggest an imminent change to their current monetary policy is necessary - and that's a good thing for the prospects for steady to perhaps fractionally lower mortgage interest rates ahead.
Considering all of the cross-currents created by this week's very active schedule of government debt auctions - mortgage interest weathered the storm rather well. According to Freddie Mac, the rate for 30-year fixed home loans dropped to 5.06% for the week (ended yesterday) from 5.09% the prior week.
Looking ahead to the upcoming holiday shortened week the economic calendar offers the December Producer Price Index figures and December Housing Starts and Building Permit stats on Wednesday together with the standard weekly initial jobless claims data on Thursday. The consensus estimate for all three reports calls for their respective values to fall within mortgage market neutral ranges.
Be patient . be disciplined . and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
Today's rally in the mortgage market is also being supported by news from the Labor Department that inflation pressures at the consumer level remain benign. The headline Consumer Price Index rose 0.1% last month from November as food and energy costs gained only modestly and housing-related expenses held steady. Stripping out the more volatile food and energy prices, the Labor Department said the core rate of the consumer price index edged up 0.1% in December after being flat the prior month. Compared with December 2008, the core inflation rate rose 1.8% -- well within the Fed's stated tolerance level of 2.0%. Fed Chairman Bernanke and his fellow central bankers are likely walking around Washington with a look of relief on their faces - since there is certainly nothing in today's inflation data to suggest an imminent change to their current monetary policy is necessary - and that's a good thing for the prospects for steady to perhaps fractionally lower mortgage interest rates ahead.
Considering all of the cross-currents created by this week's very active schedule of government debt auctions - mortgage interest weathered the storm rather well. According to Freddie Mac, the rate for 30-year fixed home loans dropped to 5.06% for the week (ended yesterday) from 5.09% the prior week.
Looking ahead to the upcoming holiday shortened week the economic calendar offers the December Producer Price Index figures and December Housing Starts and Building Permit stats on Wednesday together with the standard weekly initial jobless claims data on Thursday. The consensus estimate for all three reports calls for their respective values to fall within mortgage market neutral ranges.
Be patient . be disciplined . and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
Thursday, January 14, 2010
Daily Commentary by Larry Baer 1/14/2010
Commentary: A report earlier today from the Commerce Department showed retail sales unexpectedly fell 0.3% in December after posting an outsized 1.8% gain in November.
In a separate report the Labor Department indicated the number of Americans standing in line to file for first-time jobless benefits rose by a surprising 11,000 last week.
Limited pricing power among retailers and continued labor market weakness are strong indications inflation concerns are not yet even a blip on investors' radars -- and that is a story that solidly reinforces the consensus belief that the Fed will not make a move to raise short-term interest rates anytime soon.
The credit market's next task is to underwrite and distribute the $13 billion of 30-year bonds Uncle Sam has on the auction block today. These securities are currently carrying their highest yields in the last six months - so the potential is high this debt offering will draw decent investor demand. If so, look for this event to be supportive of steady to perhaps fractionally lower mortgage interest rates. A poorly bid auction today will almost certainly put some noticeable upward pressure on mortgage interest rates.
Be patient . be disciplined . and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
In a separate report the Labor Department indicated the number of Americans standing in line to file for first-time jobless benefits rose by a surprising 11,000 last week.
Limited pricing power among retailers and continued labor market weakness are strong indications inflation concerns are not yet even a blip on investors' radars -- and that is a story that solidly reinforces the consensus belief that the Fed will not make a move to raise short-term interest rates anytime soon.
The credit market's next task is to underwrite and distribute the $13 billion of 30-year bonds Uncle Sam has on the auction block today. These securities are currently carrying their highest yields in the last six months - so the potential is high this debt offering will draw decent investor demand. If so, look for this event to be supportive of steady to perhaps fractionally lower mortgage interest rates. A poorly bid auction today will almost certainly put some noticeable upward pressure on mortgage interest rates.
Be patient . be disciplined . and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
Wednesday, January 13, 2010
Daily Commentary by Larry Baer 1/13/2010
Commentary: Different day - same story.
Uncle Sam is once again thrashing around in the credit markets today looking to borrow $21 billion in the form of 10-year notes. These securities are currently carrying their highest yields in the last six months - so the potential is high this debt offering will draw decent investor demand. If so, look for this event to be supportive of steady to perhaps fractionally lower mortgage interest rates. A poorly bid auction today will almost certainly put some noticeable upward pressure on mortgage interest rates.
The economic calendar offers little of significance today. Under these conditions trading action in the stock markets will likely exert more than normal influence on the trend trajectory of mortgage interest rates. Look for falling stock prices to be supportive of steady to perhaps fractionally lower mortgage interest rates while rising stock prices will have an inclination to nudge mortgage interest rates higher.
Be patient . be disciplined . and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
Uncle Sam is once again thrashing around in the credit markets today looking to borrow $21 billion in the form of 10-year notes. These securities are currently carrying their highest yields in the last six months - so the potential is high this debt offering will draw decent investor demand. If so, look for this event to be supportive of steady to perhaps fractionally lower mortgage interest rates. A poorly bid auction today will almost certainly put some noticeable upward pressure on mortgage interest rates.
The economic calendar offers little of significance today. Under these conditions trading action in the stock markets will likely exert more than normal influence on the trend trajectory of mortgage interest rates. Look for falling stock prices to be supportive of steady to perhaps fractionally lower mortgage interest rates while rising stock prices will have an inclination to nudge mortgage interest rates higher.
Be patient . be disciplined . and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
Tuesday, January 12, 2010
Daily Commentary by Larry Baer 1/12/2010
Commentary: Uncle Sam is in the credit markets today looking to borrow $40 billion in the form of 3-year notes. Demand for this debt offering will likely be solid - since the big run-up in yields last month left prices at very attractive levels. Bigger test of investors' appetite for more government debt will come tomorrow when Uncle Sam looks to off-load a $21 billion stack of 10-year notes followed by a $13 billion wad of 30-year bonds on Thursday.
The economic calendar has nothing to offer today. Under these conditions trading action in the stock markets will likely exert more than normal influence on the trend trajectory of mortgage interest rates. Look for falling stock prices to be supportive of steady to perhaps fractionally lower mortgage interest rates while rising stock prices will have an inclination to push mortgage interest rates higher.
Be patient . be disciplined . and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
The economic calendar has nothing to offer today. Under these conditions trading action in the stock markets will likely exert more than normal influence on the trend trajectory of mortgage interest rates. Look for falling stock prices to be supportive of steady to perhaps fractionally lower mortgage interest rates while rising stock prices will have an inclination to push mortgage interest rates higher.
Be patient . be disciplined . and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
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About Me
- David Kimmer
- Beaverton, OR, United States
- David is a loan officer for American Pacific Mortgage. He has worked in the lending industry since 2000. Prior to that he invested 19 years in the insurance industry. He enjoys helping people finance the purchase of their dream home.