Foundation Mortgage Rate Watch
Get your
specific rate quote at:
Tuesday,
3/9/10
Interest
rates doing better in early trade this morning on weaker stock indexes.
Seems like its every other day for the bond and mortgage markets, up one
day, down the next. At 9:00 (all
times Eastern) the 10 yr note +8/32 after being down 8/32
yesterday, its yield at 3.68% same as last Friday. Mortgage prices at 9:00
+4/32 (.12 bp), the DJIA index -20 points. At 9:30 the DJIA opened -7, 10 yr
+8/32 and mortgages +4/32 (.12 bp).
Once again
today no economic releases; Treasury begins three days of borrowing
with $40B 3 yr notes at 1:00. Traders continue to expect strong bidding for
the 3 yr and firm demand for the 10 and 30 on Wednesday and Thursday. The
dollar is firmer this morning sending gold and crude oil prices down in big
moves; at 8:30 gold off $12.00 and crude down $1.50 but still above $80.00.
Dollar firm commodities lower, dollar weak commodities higher----ring around
the rosy----stock market firm interest rates weak, stocks weak interest
rates better-----ditto.
Most all
global stock markets were (are) weaker this morning on earnings not meeting
expectations. On days when equity markets are soft there is the
obvious question raised that maybe the world economies are not yet out of
the woods on the recovery; conversely, when stocks rally the entire world is
convinced that the recession is over. The take away, whichever view one
holds is without much conviction.
We have been
noting the strength of the mortgage market compared to treasuries,
especially the 10 yr note. The spread between the yield on the 10
yr and 30 yr fixed Fannies is at its narrowest now since 1984. Even with the
Fed exiting the MBS market at the end of this month, the spread is narrowing
contrary to the widely held belief that the spread would begin to widen.
Investors are more favorable toward mortgages based on the increasing view
that rate volatility will remain subdued. As of Mar 3rd the Fed has
completed $1.22T of the $1.25T committed by the end of the month.
Two retail
sales reads this morning; the Johnson Redbook reported sales up
3.1% yr.yr; the best since last November. Redbook also is saying this week
is coming in lower than planned on sales but is
expecting increases through the month as Easter is early this year. On a
month to month basis Redbook reports an increase of 0.7%, off the +1.3%
expected; Feb sales compared to Jan
were up 1.6%. Meanwhile the ICSC Goldman Sachs retail data showed an
increase of 3.4% yr/yr and +2.9% week/week. The 2.9% week/week was the
biggest weekly gain in nine years. The year-on-year pace of plus 3.4% edges
out similar rates in November for the largest in two-and-a-half years.
By 10:00 this
morning the stock market was unchanged with the interest rate markets
remaining better on the day. There isn't much in the way of news to
motivate traders and investors. we expect another quiet day today. At 1:00
Treasury will auction $40B of 3 yr notes, unless there is a huge surprise on
weak demand (not likely) there won't be much to move markets. A mixed
technical picture between the 10 yr note which is bearish while the FNMA 4.5
coupon has a bullish bias.
PRICES @ 10:05
AM
10 yr note: 99.12
+5/32 3.70% -1 BP