San Diego Home Mortgage Blog

We suggest not floating over night; not sure what we'll see tomorrow. A very tight range so we don't expect a major move in either direction.

Quiet all day; treasuries and mortgages opened slightly weaker right on the open and sat generally still the remainder of the session. Better than expected economic data this morning on all three reports. ISM index continued to increase in Oct, Sept home sales up 6.1% continued the increase that is now eight months in the making. Sept construction spending also better than estimates, +0.8%. After 10:00 this morning the stock market drove up +120 points on the better data that all came at 10:00; by mid afternoon the stock indexes turned lower but once again moved up a little going into the close.

Tomorrow factory orders and auto sales are on tap. Today Ford, the only US maker that took no money from the government, announced profits of $997 mil on smaller discounts and increased sales. On an adjusted basis, Ford reported a quarterly pretax profit of $1.1B, or 26 cents a share, compared with a year-earlier loss of $3B, or $1.32.

Lenders funded $583B in residential loans in 2Q compared to $480B in 1Q — a 21% increase in volume. Low rates, tax credits, and savvy buyers were active in Q2 and most of Q3. Always darkest before the lights are turned on; things are getting better. Still a long way to go but the residential mortgage market and overall real estate markets are slooowly improving.

Next up for a huge fall; commercial mortgage markets. More and more, key market experts are warning of a huge collapse in commercial mortgages with vacancies exploding and foreclosures mounting daily. One of the preeminent mortgage market experts, Wilbur Ross was sounding the alarm this morning.....along with many more we have heard from in the past few weeks.

The FOMC begins meeting tomorrow, nothing coming from it however until Wednesday afternoon.

The bond and mortgage markets remain tethered to a narrow range with literally no trending direction; likely will continue to be so until at least the employment report on Friday. However small the steps, the economy is improving; no job growth however markets have taken that into consideration in the recent outlook. Employment is a lagging indicator; that said, we continue to expect the unemployment rates will remain high through most of 2010 unless the Obama administration is able (willing) to do another stimulus that is totally directed to job growth with infrastructure projects; although any of those kinds of projects take months to get off drawing boards so no real help until late in 2010. Unlikely though that Obama will do it; America is getting a gut full of wasted government spending and exploding deficits.

PRICES @ 4:00 PM

10 yr note: 101.20 -11/32 3.43% +4 BP

5 yr note: 100.05 -4/32 2.34% +3 BP

2 Yr note: 100.04 -2/32 0.93% +3 BP

30 yr bond: 103.26 -21/32 4.27% +4 BP

Libor Rates: 1 mo 0.241%; 3 mo 0.279%; 6 mo 0.566%; 1 yr 1.195%

30 yr FNMA 4.5 Nov: 100.31 -8/32 (.25 bp) (-8/32 (.25 bp) frm 9:30)

15 yr FNMA 4.0 Nov: 101.22 -4/32 (.12 bp) 9-4/32 (.12 bp) frm 9:30)

30 yr GNMA 4.5 Nov: 101.05 -8/32 (.25 bp) (-8/32 (.25 bp) frm 9:30)

15 yr GNMA 4.0 Nov: 102.13 -5/32 (.15 bp) (-5/32 (.15 bp) frm 9:30)

Dollar/Yen: 90.35 +0.68 yen

Dollar/Euro: $1.4764 +$0.0050 (dollar weaker)

Gold Dec: $1058.10 +$17.70

Crude Oil Dec: $78.00 +$1.00

Goldman-Sachs

Commodity Index: 503.63 +6.82

DJIA: 9789.44 +76.71

NASDAQ: 2049.20 +4.09

S&P 500: 1042.88 +6.69