San Diego Home Mortgage Blog

Start the day floating rate locks. With the 10 yr at its support and mortgages hanging at their key support levels, if held buying may increase through the day. That said, any failures at these levels will turn the tide. Keep Alert for Rate Alerts; lenders usually re-price on 8/32 (.25 bp) moves.

Treasuries and mortgages opened slightly weaker this morning; at 8:00 the 10 -3/32 at 3.50% where it sat quietly until the stock market opened at 9:30. The stock index futures early on were better after yet another selling attempt yesterday failed to gain momentum. The DJIA did close lower (421 points) but that is not significant. Mortgage prices at 9:00 this morning were -5/32. Both the 10 yr note and the mortgage markets are teetering at their respective technical support levels early today. At 9:30 the DJIA opened +46; the 10 yr at 9:30 has held support and was +2/32 at 3.4%, mortgage prices at 9:30 +2/32 (see below for 10:10 prices)

Redbook's retail sales activity tally shows a 2.6% year-on-year decline vs. a 1.9% decline in the prior week. Redbook said back-to-school sales were mixed as the season winds down, noting special weakness at department stores. We continue to focus on the lack of consumer spending; as long as consumers circle wagons the US economy isn't going to improve much, the idea of a recovery without consumers is ridiculous on its face.

The July FHFA home price index was expected to be +0.5%, prices increased 0.3%.

127 and counting; he's back again; President Obama is the first US President to use TV as a pulpit, everyday it seems; President Obama extended his media blitzkrieg into late-night television Monday, becoming the first sitting commander in chief to appear on "Late Show With David Letterman".Today's topic from the UN on climate change; Ban Ki-moon, the UN secretary-general, has called a summit on climate change to try to jump-start stalled negotiations. Chinese President Hu Jintao is expected to announce today a sweeping climate change package that some here claim may elevate China to a leadership position on climate change.

Treasury will begin borrowing another $112B this afternoon with a record $43B of 2 yr notes at 1:00. Markets used to sweat the borrowing, these days demand has been strong the past three months; inflation fears are non-existent and no concern the Fed is anywhere near increasing interest rates. Foreign buyers, including China, are continuing to buy about half of all Treasury buys.

The FOMC meeting begins this morning; a two day meeting, as all are these days, tomorrow at 2:15 we get the policy statement. The statement is akin to deciphering the Dead Sea scrolls looking for buried clues and hidden meetings. Once all the analysis has been ground into fine powder everyone gets in sync with the meaning. No increases in rates, what the group thinks about the recovery and comments on unemployment are likely the key concerns. Will the Fed have any comments about the exploding budget that so far has been pushed under the pile with little concern at the moment.

Like a rock; the 10 yr continues to find support at 3.50%; early this morning the 10 yr sat at it but by 9:30 has backed away slightly and turning mortgage prices from -5/32 at 9:00 to a slight plus at 10:00. Still markets are fearful of a correction in the stock market, still nothing as investors are wildly bullish, any slight set back lasts a few hours before the key indexes find support.

PRICES @ 10:10 AM

10 yr note: 101.12 +8/32 3.46% -2 BP

5 yr note: 99.24 +6/32 2.42% -5 BP

2 Yr note: 100.02 +2/32 0.96% -4 BP

30 yr bond: 104.23 +11/32 4.22% -2 BP

Libor Rates: 1 mo 0.246%; 3 mo 0.285%; 6 m0 0.668%; 1 yr 1.270%

30 yr FNMA 4.5 Nov: 100.07 +4/32 (.12 bp) (-5/32 (.15 bp) frm 10:00 yesterday)

15 yr FNMA 4.0 Nov: 100.25 +2/32 (.06 bp) (unch frm 10:00 yesterday)

30 yr GNMA 4.5 Nov: 100.13 +3/32 (.09 bp) (-4/32 (.12 bp) frm 10:00 yesterday)

15 yr GNMA 4.0 Nov: 101.16 +4/32 (.12 BP) (+1/32 frm 10:00 yesterday)

Dollar/Yen: 91.09 -0.87 yen

Dollar/Euro: $1.4792 +$0.0121 (dollar hit hard)

Gold Dec: $1,017.20 +$12.30

Crude Oil Oct: $71.04 +$1.33

Goldman-Sachs

Commodity Index: 464.34 +8.73

DJIA: 9805.16 +26.30

NASDAQ: 2143.98 +5.94

S&P 500: 1069.65 +4.99