Fed Acts, Mortgage Markets React
November 4, 2010 by Dan Hartman · 3 Comments
The long-awaited Federal Reserve Open Markets Committee meeting concluded yesterday, and the worst-kept secret in financial markets was revealed. The Fed views the economy as growing insufficiently quickly to correct its biggest problem – unemployment. It’s action? Over the next 9 months, the Fed has committed to purchase $600 billion in medium term Treasury securities.
GDP Results On Target, Quantitative Easing Speculation Dominates Markets
October 29, 2010 by Dan Hartman · 2 Comments
The Commerce Department reported on growth in US GDP this morning, indicating that the economy grew at a modest pace of 2.0% in the third quarter. This matched analyst expectations prior to the report, but added more fuel to the bonfire of speculation that has erupted around next week’s Federal Reserve Open Markets Committee meeting.
US Treasury Auctions Bond with Negative Yield as Deflation Fears Ease
October 26, 2010 by Dan Hartman · 2 Comments
The US Treasury auctions three main types of securities to meet the borrowing needs of the US Government. The most commonly issued security is the Treasury bill, a short-term security with a maturity of less than 12 months. The Treasury bill is differentiated from other types of securities in how it pays interest. Unlike other securities that pay interest semi-annually, the Treasury bill doesn’t pay interest, per se. Rather, investors receive their return on Treasury bills through discount pricing. For example, if a 6-month Treasury bill was yielding 2%, the investor would buy that bill for just over 99 cents on the dollar, thereby getting a 1% return at the end of 6 months.
Bernanke Cites Lack of Inflation in Statement Supporting Fed Action – Daily Mortgage Rate Update for October 15th, 2010
October 15, 2010 by Dan Hartman · 2 Comments
Mortgage pricing opened worse this morning, but has stabilized since then and is just above yesterday’s close. Pricing had trailed off late yesterday on weak results in the 30-year Treasury bond auction. Mortgage rates are still very near all-time lows, with the latest Freddie Mac survey showing an average 4.19% 30-year fixed rate with 0.8 points. This means that there is a greater risk of rates worsening in the short term than there is opportunity for them to improve.
Mortgage Rates Rise from All-Time Lows on Profits, Fed Plan – Daily Mortgage Rate Update for October 13th, 2010
October 13, 2010 by Dan Hartman · 1 Comment
Stocks have opened stronger, and bonds weaker, this morning on news of higher-than expected profits from JP Morgan Chase, one of the largest money center banks in the United States. The bank reported its stronger results were caused by lower reserves set aside to cover mortgage and credit card losses as it starts to see fewer defaults in those areas. It is likely we may see similar results as other large banks report their earnings later this fall. September 30th marked the end of the 3rd quarter, so all major corporations will be reporting their profits or losses in the coming weeks.
95,000 Jobs Lost on Government Cuts, Private Employers Add 64,000 – Daily Mortgage Rate Update for October 8th, 2010
October 8, 2010 by Dan Hartman · 1 Comment
The Bureau of Labor Statistics reported this morning that the US Economy shed 95,000 jobs in September. This result missed average economist estimates for a loss of only 5,000 jobs, and was largely driven by a substantial increase in government layoffs. In addition to 77,000 temporary Census workers whose positions ended, 76,000 positions were cut by state and local governments struggling to balance budgets in the aftermath of the economic crisis. These cuts far outweighed the 64,000 jobs added by private employers in September.
ADP Report Reveals Weakening Employment Situation – Daily Mortgage Rate Update for October 6th, 2010
October 6, 2010 by Dan Hartman · 1 Comment
Payroll and human resources firm ADP this morning reported the results of its September survey of private payrolls, and the results were somewhat worse than expected. Employers reduced their payrolls by 39,000 jobs in September, when economists had been hoping to see an increase of 18,000 jobs. Coupled with the last major round of Census layoffs, this could lead to a sharply worse employment picture in Friday’s employment situation report.
GDP Growth Revised Slightly Higher, Unemployment Claims Edge Lower – Daily Mortgage Rate Update for September 30th, 2010
September 30, 2010 by Dan Hartman · 1 Comment
At last week’s Fed meeting, the Open Markets Committee announced its intention to provide more support to the economy through a channel widely referred to as “quantitative easing” if it felt that necessary. Late last week, and earlier this week, there has been substantial market chatter about this probability. Yesterday, though, the presidents of the Federal Reserve Banks of Philadelphia and Boston spoke, and their words left substantially more unclear the criteria under which the Fed might actually act.
Global Economic Weakness Comes Home; Existing Home Sales Tumble – Daily Mortgage Rate Update for August 24th, 2010
August 24, 2010 by Dan Hartman · Leave a Comment
The National Association of Realtors reported on existing home sales in July this morning, and the results were dismal. Home sales declined at a year-over-year pace of 27.2%, falling to a pace of 3.83 million units per year. While this information sounds very bad, bear in mind that the figures reported by NAR annualize a single month’s results. The housing sector has been viewed as the destroyer of the economy, and is widely seen as the sector that will lead the economy back to normalcy in the future.
Fed Makes Its Move – Daily Mortgage Rate Update for August 11th, 2010
August 10, 2010 by Dan Hartman · 2 Comments
The Federal Reserve has discovered a problem with its position. Because of abnormally low interest rates, many mortgages are getting refinanced, meaning that the Fed’s $1.25 trillion portfolio of MBS has decreased by roughly $70 billion due to early payoffs and regular principal repayments. Today, the Fed announced it would reinvest the funds coming in from those early payments to purchase US Treasury notes on the secondary market.
