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Anthony Hood's Blog

By Anthony Hood | Mortgage Broker
or Lender in Newport Beach, CA
  • Mortgage Rates

    Posted Under: Market Conditions, Home Buying, Financing  |  November 14, 2013 7:39 AM  |  325 views  |  2 comments
    Mortgage Rates
     
    Anthony Hood
    Equity Investment Capital
    Office: 949-891-0067
    Email: tony@equityinvestmentcapital.com
    website: www.equityinvestmentcapital.com


    Mortgage backed securities (MBS) gained +57 basis point from Tuesday's close which caused fixed mortgage rates to improve.
    Our benchmark FNMA 3.50 December MBS coupon made some good gains but was unable to break above an important technical resistance level.
    At 1:03EDT we got our 10 Year Treasury Note Auction Results:$24B with a yield of 2.75%. The yield just prior to the auction was 2.734, so we had to pay more to borrow money on this new issue versus what was avail in the open market prior to the auction. The Bid-to-cover ratio of 2.70 is a slight pull back from our avg of 2.72.  This was largely priced in and MBS had almost no reaction to the results.
    We were confined to a well-defined trading channel, supported by our 100 day moving average and capped by our 50 day moving average.
    MBS were shedding off some of their gains in the afternoon and were on a downward trend but then had a sharp reversal just before the bond market closed.  This reversal was due to prepared comments by Janet Yellen. Here confirmation process begins Thursday in front of the Senate Banking Committee and her prepared statement was released a day early and once the bond market got ahold of it, bond pricing improved.  This is because they viewed her comments as very "dovish" and may lead to their massive bond buying program staying in place longer.

     

     
     
  • Mortgage Rates

    Posted Under: Market Conditions, Home Buying, Financing  |  November 13, 2013 8:02 AM  |  345 views  |  3 comments
    Mortgage Rates
     
    Anthony Hood
    Equity Investment Capital
    Office: 949-891-0067
    Email: tony@equityinvestmentcapital.com
    website: www.equityinvestmentcapital.com

    Mortgage backed securities (MBS) lost -1 basis point from Tuesday's open (Monday was closed for Veteran's day).  So far, for the month of November, MBS have lost -198 basis points which has directly caused 30 year fixed mortgage rates to rise.
    Our benchmark FNMA 3.50 December coupon traded in a very narrow range that was only 24 basis points wide from our highs to our lows.
    There were no major economic reports.  We did have a 3 year Treasury auction: $30 billion at 0.644% with a very good bid-to-cover ratio of 3.46.  However, if you look at the above line chart - you will see no impact on pricing at 1EDT when the auction results were released.
    We addressed the fact that Friday's sell off was not a "knee-jerk" reaction and to not expect any type of bounce to regain those loses as bond trader sentiment has turned from expecting a taper in the 2nd half of 2014 to much, much sooner.  And there was nothing released yesterday that would reverse that sentiment.  Federal Reserve Bank President Dennis Lockart said the Fed could begin to trim the amount of their current $85 billion bond buying program as soon as next month.  While this is just his opinion and not official policy, it simply adds more credence to the thought that the taper will happen sooner rather than later...which of course remains to be seen.

     


     
  • Mortgage Rates

    Posted Under: Market Conditions, Home Buying, Financing  |  November 12, 2013 7:27 AM  |  351 views  |  1 comment
    Mortgage Rates
     
    Anthony Hood
    Equity Investment Capital
    Office: 949-891-0067
    Email: tony@equityinvestmentcapital.com
    website: www.equityinvestmentcapital.com

    Mortgage backed securities (MBS) lost -122 basis points from last Friday's close which caused 30 year fixed rates to move higher for the second straight week and moved rates to their highest levels since October 14th. We saw our best rates on Monday and our worst rates on Friday.
    The much anticipated October Non-Farm Payroll (NFP) hit and it hit big, trumping just about every forecast.  NFP came in at 204K and the market was expecting 125K (and even lower).  The lower expectations were mostly due to speculation about the negative impact the government shutdown and corresponding decrease in consumer sentiment would have on the economy.  But last week's 3rd QTR GDP reading of 2.8% and the prior week's very strong ISM manufacturing data pointed to economic growth which usually leads to more jobs.  In fact, the Private Sector added 212K jobs in October while the Government Sector lost jobs.
    Plus, the prior period (September) was revised upward from a low reading of 148K to a fairly respectable reading of 163K.
    These numbers are subject to revision and often see major revisions.  But even if October's reading of 204K was revised downward to 180K (which would be a huge revision downward), it would still be a big-time beat of the consensus estimates of 125K. And this has caused traders to rethink their projections on the timing of the eventual Fed taper of Treasury and MBS purchases which of course provides upward pressure on mortgage rates.

     


     

     
  • Mortgage Rates

    Posted Under: Market Conditions, Home Buying, Financing  |  November 1, 2013 8:37 AM  |  363 views  |  No comments
    Mortgage Rate

    Anthony Hood
    Equity Investment Capital
    Office: 949-891-0067
    Email: tony@equityinvestmentcapital.com
    website: www.equityinvestmentcapital.com

    Mortgage backed securities (MBS) lost -2 basis points from Wednesday's close. 
    The trading channel wins again!
    Wednesday, MBS traded above our trading channel...only to be hammered -41BPS from their highs to close back within our channel.
    Thursday, MBS traded below our trading channel....only to rally +13BPS to trade back within our channel.
    MBS started the day up +22BPS on a slightly weaker than expected Weekly Initial Jobless Claims (340K vs est of 339K), MBS were limited though as our ceiling of resistance but a cap on any real gains.
    At 9:45EDT we got the Chicago Purchasing Manager's Index (PMI) and it came in at a block-buster rate of 65.9 which is ridiculously high given that a reading of 50 shows manufacturing expansion.  The market was expecting 55.00, this was negative for bonds because it shows strong manufacturing and economic expansion.  As a result, MBS sold off -35BPS and broke below our floor of support located at the bottom of our trading channel but did eventually crawl back above our support level. 
    The end result is that MBS just logged our seventh straight day of trading in the exact same trading channel.....the very definition of moving sideways.
    Monthly Round Up:
    The benchmark FNMA 3.50 MBS coupon started October with a price of 101.88 and closed at a price of 102.53.  That is a +65BPS improvement for the month which push mortgage rates lower.

     

     
     
  • Mortgage Rates

    Posted Under: Market Conditions, Home Buying, Financing  |  October 30, 2013 7:38 AM  |  370 views  |  1 comment
    Mortgage Rates
     
    Anthony Hood
    Equity Investment Capital
    Office: 949-891-0067
    Email: tony@equityinvestmentcapital.com
    website: www.equityinvestmentcapital.com

    Mortgage backed securities (MBS) gained +6 basis points from Monday's close. On Monday, MBS lost -6BPS - so, pricing has netted out +0BPS for the week. The benchmark FNMA 3.50 November MBS has once again moved in a very narrow range.
    We had two waves of economic data the first wave occurred between 8:30 and 9:00EDT:
    Headline Retail Sales were weaker than expected (-0.1 vs est of 0.1%) this is generally good for bonds..but this reading could have been a lot worse.  
    Offsetting that miss was the Ex-Auto data which hit consensus estimates at 0.4%.
    PPI was very tame and was lighter than expectations (-0.1 vs est of 0.2%).  Bonds love low inflationary data. But, core PPI matched expectations at 0.1%.
    The Case-Shiller Home Price Index once again showed strength in the housing market with a 12.8% gain in home prices which is the best reading since 2006.   This economic strength was a tad negative for bonds, however the home price data is widely available through a variety of previously released economic reports.
    The net effect of the first wave of economic data was only 6 BPS from our morning highs to our early morning lows which tells you that the bond market basically ignored the early data.
    The next wave of data hit at 10:00EDT with Business Inventories and Consumer Confidence.  MBS did react (briefly) to the much weaker than expected Consumer Confidence data (71.2 vs estimates of 75.3).  MBS moved upward (better pricing) from -3BPS to +5BPS. That is ONLY an +8BPS swing on a HUGE miss on Consumer Confidence.  Normally, we would see a much bigger swing in reaction to a miss like that.
    At 1:00EDT, we had a 5 year U.S. Treasury auction: $35 billion at 1.30% with a bid-to-cover ratio of 2.65 which was weaker demand than the recent average of 2.68.  The benchmark long term bond did not materially react to this auction.
    MBS had their worst pricing levels at 9:30EDT (-3BPS from Monday's close) and their best pricing levels at 1:47EDT (+16BPS from Monday's close).  This is only a difference of +19BPS from our intra-day highs to our lows...that's how narrow our trading session has been.
    Yesterday was yet another example that the bond markets and stock markets are trading independently of each other as MBS gained only +6BPS but the DOW shot up over 100 points. 

     


     
  • Mortgage Rates

    Posted Under: Market Conditions, Home Buying, Financing  |  October 28, 2013 7:37 AM  |  376 views  |  No comments
    Mortgage Rates

    Anthony Hood
    Equity Investment Capital
    Office: 949-891-0067
    Email: tony@equityinvestmentcapital.com
    website: www.equityinvestmentcapital.com

    Mortgage backed securities (MBS) gained +61 basis points from last Friday's close which caused 30 year fixed rates to move lower for the week.  We saw our best rates on Wednesday and our worst rates on Monday.
    The benchmark FNMA 3.5 November mortgage backed security (MBS) had one major movement during the week which was almost solely responsible for rates decreasing.  This was due to Tuesday's Non-Farm Payroll release.
    The market was expecting around 180K new jobs.  But the reading was much lower at 148K.  Many economists think that we need at least 150K new jobs each month to see any measurable economic growth.  Bonds generally do better in low or negative economic growth, so this reading was positive for bonds and therefore your mortgage rates.  Traders also viewed this data as a signal that the Federal Reserve would have to keep their massive monthly $85 billion Treasury and MBS purchases in place until at least the 2nd quarter of 2014 which will keep rates at low levels for an extended period of time.

     

     
     
  • Mortgage Rates

    Posted Under: Market Conditions, Home Buying, Financing  |  October 25, 2013 7:38 AM  |  392 views  |  No comments
    Mortgage Rates
     
    Anthony Hood
    Equity Investment Capital
    Office: 949-891-0067
    Email: tony@equityinvestmentcapital.com


    Mortgage backed securities (MBS) lost -14 basis points from Wednesday's close which was slightly negative for mortgage rates.
    The benchmark FNMA 3.5 November coupon traded in a very tight range yesterday.
    Initial Weekly Jobless Claims came in at 350K which was higher than the est of 340K.  The prior week was revised upward from 358K to 369K.  Plus, it is clear that California is still having issues updating their prior readings so these numbers are likely to be understated somewhat. Generally speaking a weaker than expected (which means more claims than the consensus estimates) is a slight positive for bonds.
    However, the Trade Balance numbers were better than expected which is generally negative for bonds.  As a result, any lift from the weaker Initial Jobless Claims were offset.
    Across the Pond: A preliminary PMI reading out of China rose from 50.2 to 50.9.  This signals economic growth and also provided some downward pressure on U.S. bond pricing.
    Basically, there was nothing new or unexpected in the market place to cause MBS to improve and as a result, MBS traded slightly lower as the 10 year U.S. Treasury traded back above the 2.50 yield level for the day. 

     

     
     
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