San Diego Home Mortgage Blog

Start by floating this morning. Keep focused on the instant re-pricing alerts.  

Starting quietly so far in the rate markets; but holding fractional gains at 10:00. No economic data to deal with today, no data of substance until Thursday and Friday and then not much. This week its supply again; occurring every other week Treasury borrowing used to be a serious thing but these days it almost passes as a yawn as investors continue to suck up $200B a month of Treasury debt (actually, it is your debt that is exploding). As long as the dollar crumbles it will continue to drive investors to US investments. Stocks are running higher on foreign demand, US debt is seeing strong demand on the back of the dollar.

This morning at 8:30 the 10 yr note was unchanged; mortgages +3/32 and the DJIA futures +81. At 9:00 the 10 yr +4/32, mortgages +4/32 and the DJIA +80. At 9:30 the DJIA opened 70, 10 yr note +3/32 and mortgages +4/32.

The dollar is getting hit hard again this morning; stocks rallying, crude oil higher and gold up----all a function of the dollar's decline. So far a good thing for the markets; equities and rate markets. America is for sale and there are buyers out there willing to step up. Eventually however, there will be a huge price to pay for the collapse; inflation. No one in Washington from the Pres to Congress to the Fed and to Treasury has uttered a peep about it. The first administration in over a decade that hasn't jaw boned and do the required thing, saying the US wants a strong dollar, no matter those comments are meaningless. This administration and the Fed don't want to create the least ripple, in fear that markets might take them seriously. While the Fed continues to talk the talk and walk the walk keeping interest rates low for that "extended" period, the Fed is watching closely. No immediate concerns as long as unemployment is increasing (+10.2% in Oct) but when the rate turns so too will the Fed and more importantly investors will sell US bonds and stocks in fire sale moves.

At 1:00 this afternoon Treasury will begin the quarterly refunding with $40B of 3 yr notes; likely to be well bid by both domestic and foreign buyers.

This Week's Calendar:

        Tuesday;

           1:00 PM $25B 10 yr note auction

        Wednesday;

           Bond and Mortgage markets closed for Veteran's Day (stocks and non-financial futures open)

        Thursday;

          7:00 MBA mortgage applications

          8:30 weekly jobless claims (unch at 512K)

          1:00 $16B 30 yr bond auction

          2:00 Oct Treasury budget statement (-$150B)

       Friday;

          8:30 Oct import and export prices (+0.2% and +1.0% respectively)

                 Sept trade deficit (-$31.9B)

         10:00 U. of Michigan mid-month consumer sentiment index (71.8 frm 70.6 at end of Oct)

With Veteran's Day falling in the middle of the week, rate markets are more likely to trade more conservatively. Traders are not likely to press today or tomorrow, global markets trading on Wednesday puts positions a little more at risk. No economic releases of substance; even weekly jobless claims and the U. of Michigan sentiment index are not seen as critical.

The president and Democrats had their day in the sun when the House passed its version of health care reform Saturday; Sunday Senators, both democrats and republicans marked the bill DOA when the Senate starts debate. Senate leaders saying it is unlikely there will be a bill passed until after the first of the year. Most all republican senators and a few democrat senators are opposed to the government option.

PRICES @ 10:00 AM

10 yr note:                          101.02 +2/32 3.50% unch

5 yr note:                            100.11 +1/32 2.30% unch

2 Yr note:                            100.09 unch 0.85% unch

30 yr bond:                          101.17 -1/32 4.41% unch

Libor Rates:                         1 mo 0.239%; 3 mo 0.272%; 6 mo 0.540%; 1 yr 1.131%

30 yr FNMA 4.5 Dec:            @9:30 100.31 +3/32 (+6/32 (.18 bp) frm 9:30 Friday)

15 yr FNMA 4.0 Dec:            @9:30 101.20 +3/32 (+6/32 (.18 bp) frm 9:30 Friday)

30 yr GNMA 4.5 Dec:           @9:30 101.06 +4/32 (+8/32 (.25 bp) frm 9:30 Friday)

15 yr GNMA 4.0 Dec:           @9:30 102.09 +2/32 (+5/32 (.15 bp) frm 9:30 Friday)

Dollar/Yen:                          89.78 -0.20 yen

Dollar/Euro:                         $1.4996 +$0.0110 (dollar weaker)

Gold Dec:                            $1107.80 +$12.10

Crude Oil Dec:                     $79.18 +$1.75

Goldman-Sachs

Commodity Index:                507.87 +10.85

DJIA:                                  10127.41 +103.99 

NASDAQ:                           2140.15 +27.62

S&P 500:                            1081.70 +12.40