YOUR Mortgage Minute -- November 17, 2009

Good Morning,

I hope that your day is off to a terrific start already.

In the Markets today, Mortgage Bonds are starting the day a bit lower, continuing their pullback from yesterday's intraday high.

In the news, October's Producer Price Index--which measures wholesale inflation--came in lower than expected, indicating there is no fear of inflation currently. In other economic news, Capacity Utilization and Industrial Production were reported in line with expectations.

For now, I recommend floating. But be prepared to lock if the downward momentum picks up steam. I will monitor the situation and keep you posted. In the meantime, I hope that you enjoy the rest of your day and if there is ever anything that I can do for you, please let me know.

YOUR Mortgage Minute -- The Week that Was 11/09 -11/13

Good Morning,

Here's an update on what happened last week. Last week was a non-event for the most part in the Mortgage Market. U.S. Treasuries, which weren't traded on Wednesday in observance of Veterans' Day, held their own in spite of major gains on Wall Street and a better-than-expected weekly employment report.

Prices, which move in the opposite direction of yields, ticked up Monday in response to a strong auction of 3-year notes and a feeling that the economy still has multiple hurdles to jump prior to recovery. That should keep money coming into bonds. Prices nudged up again on Tuesday in the wake of a successful 10-year-note auction.

Thursday's first-time unemployment claims for the week ended Nov. 7 was the first report of the week. It showed claims dropping by 12,000 to 502,000 -- the fewest since Jan. 3. The four-week average, which smooths volatility, fell to 510,750 and continued claims -- those collecting benefits for more than one week -- dropped to 5.63 million.

Action in the bond pits was minimal, but prices fell after a weak auction of 30-year bonds. Long-term debt is most susceptible to erosion caused by inflation. But the yield on the 10-year held in the mid-3.4% range.

Friday's early reports had no impact, as there is little reaction to import/export price indexes, which were up 0.4% (excluding oil) and 0.3% (excluding agriculture), respectively. The U.S. trade balance in September grew to a wider-than-expected $36.5 billion trade gap -- up from $30.8 billion.

The final report of the week, the University of Michigan preliminary consumer sentiment report, showed consumers are wary about unemployment and economic recovery. The index fell to 66 from 70.6. But Treasuries remained flat in spite of the news.

A drop in mortgage rates during the week ended Nov. 6 brought refinancers out in droves. According to the Mortgage Bankers Association, refis rose 11.3%, but purchase applications declined 13.7%.

As suspected, this week is loaded with reports, and there's at least one market mover each day through Thursday. No reports are scheduled for Friday.

Retail sales for October are up first, and they're expected to rise 0.9% versus a 1.5% decline in September. Ex-autos, sales should grow by 0.4% versus the previous 0.5% increase. The prospect of spending consumers would likely ignite selling in Treasuries.

On the other hand, the NY Empire State index of November manufacturing conditions could stall selling. The index is expected to fall to 29 from October's 34.51 reading. And business inventories for September, which wields little influence, should fall -0.6%.

The producer price index, which looks at wholesale inflation, should increase 0.5% in October -- some of it due to oil prices. In September it fell 0.6%. But the core rate, which eliminates volatile food and energy prices, could rise by an acceptable 0.1% versus the previous 0.1% decline.

We'll also get a report on industrial production, which after several months in negative territory is showing signs of life. A 0.3% increase, however, is expected for October, which would be substantially lower than the 0.7% rise in September. Capacity utilization could creep up to 70.8% from 70.5%.

The consumer price index, or CPI, which is closely watched for signs of inflation, is due Wednesday. Predictions show inflation to be well under control, which would cheer traders. The CPI should rise 0.2%, the same as September, while the core rate is expected to edge up 0.1% -- less than the previous 0.2% increase.

Housing starts and building permits for October are expected to increase, which could put pressure on Treasuries if they beat projections by a lot. Starts should rise to an annual rate of 599,000 units from 590,000, while building permits could increase to an annual rate of 580,000 from 573,000.

Thursday begins with initial claims for the week ended Nov. 14. If there's a big increase, bonds will rally. If there's a big decline, bonds will sell. At least, that's how it's been lately. And leading economic indicators for October, which look at the economy six to months ahead, should show a 0.4% increase, which bodes well for the economy. However, the Philly Fed survey on November manufacturing conditions is expected to fall to 10.8 from 11.5, which could send money into bonds.

That's it for the recap and look ahead. I hope you have a tremendous rest of your day ahead. If there is ever anything that I can do for you, please let me know.

YOUR Mortgage Minute -- November 13, 2009

Good Morning,

Happy Friday the 13th of November. I hope that your day is off to a terrific start so far.

In the Markets, Mortgage Bonds are trading near unchanged levels this morning, despite the Consumer Sentiment Index coming in much lower than expected.

In other news, the Fed stepped in yesterday with more buying of Mortgage Backed Securities, which helped Bond prices recover from news of a weak Treasury Auction. However, now is a good time to remember that the Fed is winding down that type of buying support, which will likely result in Bond prices moving lower and home loan rates rising over the coming months.

Currently, Bonds facing a tough level of resistance that they haven't been able to move above since early October. Therefore, I suggest locking in the current gains, especially if closing is coming within the next week or so. If you have any questions, please let me know. In the meantime, I hope that you have a great rest of your day and a terrific weekend ahead. If there is ever anything that I can do for you, please let me know.

YOUR Mortgage Minute -- November Client Letter

Good Morning,

Since the Mortgage Bond Market is closed today in observance of the Veteran's Day Federal Holiday, I wanted to take a "minute" to share my client letter with you, as perhaps you may find value in the important resource mentioned here, or know of someone who can use this information. Please feel free to share.

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I hope this note finds you well and enjoying this wonderful fall season.

I wanted to take just a moment to send you a friendly reminder to obtain a free copy of your credit report by going to http://annualcreditreport.com/ . This site is the result of a Federal initiative mandating that the 3 major credit reporting agencies allow consumers free access to their credit report once every 12 months. I accentuate the word "free" here because there are several other websites with similar names which are not free at all. You can obtain all 3 reports at once, or perhaps spread them over the year, collecting one from each bureau at the start of each quarter.

I highly recommend that you take advantage of http://annualcreditreport.com/ every year as one additional step in protecting yourself from identity theft and to make sure your credit is in good order for the next time you need a mortgage or any other major purchase. I send you all the best wishes for a fantastic end to 2009 and a great 2010 ahead as well!

As always, if you have any questions about this email, or just want to say "Hello", I'm always here to serve you. Thanks again for your loyal business and referrals.

YOUR Mortgage Minute -- November 10, 2009

Good Morning,

I hope that this note finds you well and that your Tuesday is off to a fantastic start already.

In the Markets today, Mortgage Bonds are starting the day higher. There are no economic reports due today, but another record amount of debt is set to hit the Bond market this afternoon when the Treasury Department auctions off $25 Billion in 10-year Notes.

Most of the recent auctions--including yesterday's $40 Billion offering of 3-year Notes--have been well received. This has added much needed support as the Fed winds down their purchases and has helped keep Mortgage Bonds near present levels.

I recommend floating mortgage rate locks for now, to see if Bonds can continue the gains seen over the past several days. But be prepared to lock if the ceiling of resistance that's just above current levels negatively impacts Bonds. I will keep you posted.

Don't forget the Bond Market will be closed tomorrow in observance of the Veteran's Day Federal Holiday. I hope that you enjoy the rest of your day. If there is ever anything that I can do for you, please let me know.

YOUR Mortgage Minute -- November 09, 2009

Good Afternoon,

A quick update on today's events. Mortgage Bonds are continuing to improve so far today, following the pricing gains seen since Friday's weak Jobs Report. Stocks are also trading sharply higher so far today after the G-20, a group of finance ministers and central bank governors from 20 world economies, pledged to keep aid flowing to global economies until a recovery was assured.

There are no economic reports today but there is plenty of supply hitting the market via the Treasury auctions, which could weigh on Bond prices. Also on Friday, in case you were not aware, President Obama signed the extended and expanded Homebuyer Tax Credit.

I recommend floating mortgage rates for now, but I will be watching closely to see how today's auction results impact trading. If a change of course is needed, I will certainly let you know. In the meantime, I hope that you enjoy your day and if there is ever anything that I can do for you, please let me know.

YOUR Mortgage Minute -- The Week that Was 11/02-11/06, 2009

Good Morning,

Last Friday's worse-than-expected employment report for September turned Treasuries, which had been under pressure most of the week, around. The unemployment rate soared to 10.2% -- the highest since 1983 -- from 9.8%, when 9.9% was expected.

This was just the medicine Treasuries, which struggled through a week loaded with positive economic reports, needed. The yield on the benchmark 10-year note fell below 3.50%, jumped back up and then headed back down.

Wednesday's Fed post-meeting statement said rates would remain low for an "extended" period, which was good news. But positive comments of economic activity "continuing to pick up" and a stronger housing market worried traders. In addition, three auctions of government debt were announced for this week, which usually initiates selling in Treasuries due to supply worries.

At its September meeting the Fed extended the date for buying MBS to March 2010, and there was hope that it would also expand its purchasing program. But that didn't happen, perhaps indicating a slowing of future purchases.

Positive economic news arrived early last Monday with the October ISM index on manufacturing conditions jumping to 55.7 from 52.6, led by an increase in employment. Analysts were expecting 53.

Pending home sales also rose 6.1% in September sending the index to 110.1 -- the highest it's been since December 2006. The first-time home buyer tax credit, which was extended to April 30, 2010, was a major factor in the increase. Also on the rise was construction spending for September, up 6.1% when a -0.3% was forecast.

Tuesday was quiet, as the markets braced for the Fed. But factory orders in September grew 0.9% and have risen five times in the last six months. In addition, inventories fell 1%, indicating strong demand for U.S.-manufactured goods.

Although Wednesday was all about the Fed, the ISM index on the service sector for October came in lower than the expected 51.7. It edged down to 50.6 from 50.9.

On Thursday Treasuries held their ground after early losses in spite of a 200-plus gain by the Dow. First-time jobless claims for the week ended Oct. 31 fell by 20,000 to 512,000, the lowest since January, and this put selling pressure on bonds. Initial claims have been above 500,000 for 51 straight weeks. Continued claims, those collecting benefits for more than one week, also fell, coming in at 5.75 million.

Productivity in the 3rdquarter rose 9.9% versus a 2ndquarter increase of 6.6%. Although high productivity is good for manufacturers, who get more output per hour, it doesn't do much to help the employment situation.

The employment report, heavily anticipated, was worse than expected. Jobs shed from U.S. payrolls came in at 190,000, which was higher than the 175,000 that analysts expected. And the 10.2% jobless rate is expected to keep rising into next year.

Wholesale inventories, which don't get any respect since they always follow the employment report, fell 1% in September. This turned out to be right on target, and inventory reduction is a good thing.

Mortgage rates edged down again during the week ended Oct. 30, but this time applications rose, at least for those wanting to refinance. Refis jumped 14.5%, but purchases fell 1.8%, according to the Mortgage Bankers Association.

This week is an odd one because not only are there few economic reports, but most of them have little influence on the markets. That leaves Treasuries open to outside influences, which makes it almost impossible to figure which way they'll go.

And to make matters worse, we don't get any news until initial jobless claims for the week ended Nov. 7 are released on Thursday. There is no consensus yet as to which way they'll go, but if claims fall below 500,000, Wall Street will likely rally and Treasuries will probably sell. Employment is the key to economic recovery; weekly declines in the number of people filing is a good sign for the economy, but not for bonds.

Friday ends with a couple of trade reports that have no influence on the markets. However, we'll get the University of Michigan/Reuters' preliminary consumer sentiment index for November, which should rise to 71.8 from 70.6. This could foster selling in bonds.

I hope that you enjoy the rest of your day. If there is ever anything that I can do for you, please let me know.