Market Data Report - Mortgages Steady

With the market report, we are seeing some interesting changes that might change the mortgage rates in the near future.  Weekly claims out this morning was more than expected, the highest in six weeks. The reaction supported the bond and mortgage markets somewhat. July import prices -0.2%, yr/yr +0.8%; export prices were unchanged. That is all for the data today.

Treasuries and MBS prices improved this morning on weak data and continuing slides in Europe’s economies. The 10yr at 8:00 2.40%, the new 10yr note issued yesterday at the quarterly refunding actioned at 2.439%. The recent focus has been almost all about the issues in Ukraine, Israel and Iraq; those factors are less now yet rates continue to decline as focus returns to the weakening economic outlook that will keep the global central banks from increasing rates, and there is a real possibility it will feed into more selling of US stocks. Still a moving target, but at least for the moment the geo-political fears are easing.

Investors got a surprise yesterday when July retail sales showed no improvement and today’s increase in weekly claims. Stocks rallied yesterday and rates declined on the retail sales; sales were the lowest in six months. The reaction in both equity markets and the bond market was driven on the belief now that the Fed will not be able to increase rates as soon as what was expected. Adding to the weakness in sales, Macy’s quarterly results were weak, and today Wal-Mart cut its outlook as traffic is slowing and same store sales have been flat. The decline in sales is being seen as another concern that consumers are not jumping into the pool being filled by stock market and Fed bulls that continue to beat a broken drum that the US economy is going to continue to improve.

At Noon Treasury will complete the quarterly refunding with a new 30yr bond, selling $16B. Yesterday’s 10yr auction did not do well initially with the yield higher than what was expected in the WI trade; fast forward 20 hours and the auction is now a hit; the rate went at 2.439%, now 2.39%.

Rates are declining and it isn’t on geo-political fears. The global economies are slowing, especially in Europe that now teeters on recession even in Germany with its quarterly growth down 0.2%. On August 28th the preliminary US Q2 GDP report will very likely be lowered from the advance report that showed growth in the quarter at +4.0%. The Fed and ECB have little options now; keep rates low, the only option to keep the economies from rolling back into recession. It is however, a constantly shifting analysis that can change on the next economic report.

Remember, if you want to know the benefits of locking your rate today versus floating, simply give me a call at 314-744-7806 or visit me on my website at www.CallTheMoneyMan.com. I have access to real time Wall St. data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.