San Diego Home Mortgage Blog

Sorry for the late update this morning but it has been a REALLY big week for fundings and I wanted to make sure that everyone is getting in their new homes for the weekend.  It looks like rates are stable at the 5% mark on the 30 year fixed conventional right now with a few wholesalers UNDER the 5 mark for a 30 day lock.

Have a great weekend and lets hope for some more good rate news on Monday!

Continue to float this morning but keep tuned if you are holding locks; we do not want to give up the recent price gains and with the 10 yr note close to its resistance .

Early this morning (7:30) the 10 yr note was +9/32 at 3.33%, mortgages started +3/32. At 8:30 the 10 +1/32 3.35% unch and mortgages +1/32; August import prices were up 2.0% for the month dragging treasuries back a little. At 8:45 the stock index futures were slightly better. At 9:00 the 10 was unchanged as were mortgages, stocks still pointed to a slightly weaker open at 9:30. At 9:30 the stock market opened -6, 10 yr +9/32 and mortgages +7/32. (see below for 10:10 levels)

At 9:55 the U. of Michigan consumer sentiment index, expected better at 67.8 frm 65.7, jumped to 70.2; the expectations index increased from 65.0 two weeks ago to 67.3 and the 12 month out index exploded to 79 frm 69 two weeks ago. Big increases in consumer sentiment but the initial reaction to the data didn't move stocks or interest rates.

At 10:00 July wholesale inventories, expected down 1.0%, were -1.4%; sales were +0.5% and there is a 1.23 months of inventory based on present sales; in June the sales ratio was 1.25 months. The equity markets saw some selling on the release and rate markets improved more.

Later this afternoon at 2:00 Treasury will report its August budget, expectations are for a deficit of $162B for the month.

Atl Fed Pres Lockhart said yesterday the U.S. recovery will probably be “lackluster,” hobbled by strains in financial markets and weak consumer spending. Consumers are not, will not spend at levels some in the markets continue to believe; consumer credit has plunged $37.1B in June and July, one of the largest declines since WW II, a clear indication consumers will not buy into the speedy economic rebound. Consumer nest eggs are gone, consumers fear job security, and consumers are increasingly more concerned about saving than anytime in the past 20 years. Not the building blocks for a quick recovery and growth. Don't hear the bulls chanting that consumers account for 70% of GDP growth; the bullish case has to ignore it to continue the run-up in equity markets. All attention is directed to better earnings forecasts from businesses; based primarily on huge cutbacks in expenses and strong outlook in the tech sector.

The bond and mortgage markets continue to benefit from belief the Fed and other central bankers have no plans to increase interest rates for many months as the global economic climate remains very subject with more shoes expected to fall before the financial systems are completely out of the woods. So far we are not even at the edge of the forest. Demand for government securities also increased this morning after a Japanese report today showed the world’s second-biggest economy grew less last quarter than earlier estimated. Japan’s economy expanded at an annual 2.3% pace in the three months ended June 30, slower than the 3.7% reported last month.

The bellwether 10 yr note has technical resistance at 3.28%, 5 basis points from where we trade this morning; that level has been hit twice and so far has failed to break through it. Once it does fall it will set a move for the 10 yr note to make a run to the 3.10% area taking mortgage rates below 5.00% on 30s; however to get that low we will need a move lower in equity markets.

The remainder of the session likely will be subdued; it is Friday with next week filled with key economic reports (August retail sales the most significant on Tuesday). Four separate reports on the manufacturing and business sector and August housing starts and permits also to be digested.

PRICES @ 10:10 AM

10 yr note: 102.16 +9/32 3.32% -3 BP

5 yr note: 100.16 +3/32 2.26% -3 BP

2 Yr note: 100.07 unch 0.88% unch

30 yr bond: 105.26 +28/32 4.16% -5 BP

Libor Rates: 1 mo 0.243%; 3 mo 0.299%; 6 mo 0.677%; 1 yr 1.253%

30 yr FNMA 4.5 Nov: 100.18 +6/32 (.18 bp) (+10/32 (.31 bp) frm 10:00 yesterday)

15 yr FNMA 4.0 Nov: 100.29 +5/32 (.15 bp) (+11/32 (.34 bp) frm 10:00 yesterday)

30 yr GNMA 4.5 Nov: 100.22 +5/32 (.15 bp) (+10/32 (.31 bp) frm 10:00 yesterday)

15 yr GNMA 4.0 Nov: 101.15 +3/32 (.09 bp) (+8/32 (.25 bp) frm 10:00 yesterday)

Dollar/Yen: 90.74 -0.96 yen

Dollar/Euro: $1.4572 unch

Gold Dec: $1010.70 +$13.90

Crude Oil Oct: $72.02 +$0.08

Goldman-Sachs

Commodity Index: 466.90 +5.77

DJIA: 9613.27 -14.21

NASDAQ: 2080.85 -3.16

S&P 500: 104365 -0.49