New Home Sales hit a 5 yr. high in June.  The seasonally adjusted rate is just a small piece of the housing, resulting in the report not having the impact it once did. However, any positive economic news will apply pressure to pricing.

The sell off of MBS's has accelerated in response to the Flash Eurozone PMI increase.  MBS benefit from European weakness, so the positive economic expansion has resulted in the sell off of U.S. Bonds.

The 5 yr. Treasury Note auction resulted in weaker demand, which applied pressure to MBS's, driving pricing down.

Durable Goods Orders were much stronger then expected, resulting in a sell of of MBS's.

The Initial Jobless Claims came very close to expectations, but was still below the 350K benchmark.

The primary momentum shift in pricing resulted from the Wall St. Journal article "speculating" that the Fed would provide longer term guidance and would not rush to increase rates.

"A word of caution", yesterday's rally was not rational and we do not recommend floating.  Guidance is completely separate from the Fund Rate management.

Consumer Sentiment Index was stronger than the last report.  This positive shift will likely have a negative result for bonds.

ADVICE: LOCK
Contact a mortgage professional that can get you the best pricing for your loan transaction.

- Michael Corboy
www.specialtyfinancialmtg.com

Monday's technical pattern was a negative sign for MBS trading, as the rally stalled and failed to close above the resistance level.  Investors are selling off and taking the gains realized from the past two weeks of improvements, resulting in an rate increase for 30 yr. fixed products.

Today's earlier economic data reports has no material impact on pricing.  Today's New Home Sales will be closely monitored, but there would need to be a huge miss to the downside for any pricing improvement to be realized.

The stock market hit a new record, but pre-opening indexes, as well as European and Asian markets are trading lower.

There is presently high optimism that the economy is improving.  The Feds' tapering will be totally dependent on economic data, adding additional significance to each new data report.  No market response was generated by Bernanke's two day testimony.  The debate over tapering continues, will it be September or later?

It is unlikely that rates will decline even if there is any improvement in the 10 yr. note, as interest rates have little momentum to decline as the economic outlook remains positive.

A huge reversal in the stock market, or some kind of turmoil that would instill fear in investors would be required to see any reversal in interest rates.

Today's interest rate levels remain to be very low based on historical numbers.  As there is no solid demand for treasuries or MBS's we believe now is the time to get off the fence and capitalize on the purchase or refinance of your home.

Contact us today for your free rate quote.

- Michael Corboy
mcorboy@specialtyfinancialmtg.com
www.specialtyfinancialmtg.com

Market News 7-22

The 30 yr. rates have continued to improve after Friday's MBS gain (for a second straight week).  Bonds are continuing to rally due to the lower than anticipated Retail Sales Report.  MBS investors are finding renewed interest  from foreign investors as concerns mount about the ability of Italy and Greece to meet their bailout requirements.

Last week all focus was on Bernanke, with traders now speculating that the Fed Chairman's most recent comments are pointing towards the Fed holding out longer before tapering their monthly purchases.

This weeks Economic Calender include:

• Initial Jobless Claims
• Durable Goods Orders

Any variance from market expectations can greatly affect pricing.  Remain in constant contact with your mortgage loan originator to capture any market gains.

Below is a link for this weeks National Real Estate Report:
http://www.newsletterproonline.com/newsletter/originationpro/?newsletter=true&nid=466&uid=10671

- Michael Corboy
mcorboy@specialtyfinancialmtg.com
www.specialtyfinancialmtg.com
https://www.facebook.com/pages/Specialty-Financial-Services/109915892511943?ref=stream

Mortgage Rate Update 7-19

Rate markets started generally unchanged this morning with no news or data on the schedule today. After two days of Congressional testimony Bernanke didn’t generate any market response. Tapering still on the table but totally data dependent, that sums up all his comments. Bernanke repeated more than once that the Fed’s plans to reduce monthly buying will depend on the unfolding economic data. The debate continues; will it be in Sept or later in the year?

Presently there is high optimism that the economy is improving, as long as the reported data continues to confirm improvement, the Fed will begin cutting back. Economic data is always important; after Bernanke said the tapering will be totally dependent on economic data going forward, the importance of each report will have additional significance. The most significant monthly data is the employment report; two weeks from today the July data will be reported. The June employment data was better than what economists were expecting, another strong report will likely be the definitive answer as to “when and if” the Fed will begin tapering. In the meantime look for interest rates to trade in narrow ranges.

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The 10 yr. note is holding in a narrowing range with the key resistance at 2.47% and support at about 2.58%. Mortgage markets are also holding in tight ranges.  Looking at the positive; if the 10 does clear 2.47% on a close, how much lower can rates fall? It is unlikely that rates will decline much if we do see a rally, at the moment there is no reason for investors to load up on fixed income investments. Interest rates have little momentum to decline as the economic outlook remains optimistic. As long as there is no reason to seek safety into US treasuries we can’t anticipate what will drive rates substantially lower.

What would it take to change that outlook? A huge reversal in the stock market, some kind of turmoil with terrorists, the US increasing its presence in Syria, or anything that would send fear in investors’ minds. The present level of interest rates is still historically very low at these levels. All that said, we have to go with the market action, what traders and investors are actually doing in the market, and as of now there is no solid demand for treasuries and MBSs.

Contact Specialty Financial Services, Inc., NMLS #: 141636 for a free rate quote today.

www.specialtyfinancialmtg.com

- Michael Corboy

Market Update 7-16

A generally quiet day in market activity. Markets are likely to sit somewhat still through the day today ahead of the beginning of Bernanke’s testimony tomorrow at the House Financial Services Committee; Thursday he moves to the Senate Banking Committee. The obvious topic is what is he thinking now about beginning the end of the QEs? Generally most all market participants are expecting the Fed to start tapering soon, the question is when? Most of the talk has been centered on September for the first cut in the $85B of monthly purchases; some think a cut of $20B a month. Bernanke has been going back and forth with his comments since June 19th at his press conference that shot interest rates higher when he said the Fed was ready to start pulling back because the economy was improving and the labor market was gaining momentum. Then after the bond market spiked and likely surprised him, is next speech he back-peddled somewhat; saying the employment situation wasn’t as good as the data was implying. Low wages and part-time workers count as employed but won’t as much to consumer spending; also the percentage of would be wage earners is the lowest on record---only 63% of working age people are actually in the labor markets.

After running up to 2.73% the 10 yr has come back about 20 basis points in rate and mortgage rates have eased a little. The markets are still technically bearish; the 10 yr needs to close below 2.50% and it is getting close at 2.54%, we still haven’t seen a lot of new buying just short-covering that has pushed rates down. The bond market has been led around by Bernanke and other Fed officials coming out with conflicting comments. It isn’t clear now how low the 10 yr and mortgage rates can fall but the more macro outlook remains the same, the lows in mortgage rates are unlikely to been seen again. As long as the economic outlook continues to improve demand for low yield fixed income investments will lag. One factor that helps is that inflation is not a factor in the present outlook.

Have your ducks in line to make a move.  The next two days of meetings will be closely monitored and Bernanke's comments will have the ability to shift the market in either direction.  Be prepared to capitalize on any gains and minimize any loss in rate.  Stay in contact with your mortgage originator to make sure you end up on the right side of the fence.

- Michael Corboy 

Interesting Links

Interesting Links going over last weeks market analysis:


http://mobile.bloomberg.com/news/2013-07-11/treasuries-remain-higher-after-weaker-than-forecast-bond-auction.html


http://money.cnn.com/data/markets

- Michael Corboy

Market Update

There are a number of key economic releases this week, but the major focus this week is Bernanke testifying in the House and Senate on the economy, employment and inflation. Likely he will field a lot of questions from politicians about what the Fed intends to do with its QEs and more grilling on the state of the economy and unemployment that refuses to subside. He goes before the House Financial Services Committee on Wednesday and then to the Senate’s Banking Committee on Thursday.  

At the moment, markets continue to lean towards the Fed beginning to taper as soon as September, but Bernanke is keeping markets on edge by changing is tune from one speech to another.  He has managed to twist interest rate markets into a tight knot with his recent comments, on June 19th saying emphatically that the Fed was preparing to begin removing the Fed’s support of the bond markets by slowing its monthly purchases, that sent interest rates spiking higher, then in a speech early this month retracting a little after he was surprised at the swift increase in mortgage rates. The housing sector being the strongest sector in the economy, mortgage rates increased 5 basis points; the reaction to his remarks early this month stabilized mortgage rates in a narrow range. His testimony this week is critical, he will be grilled hard by members of the committees on the economic outlook and the Fed’s intentions.

Economic data this week includes June retail sales on Monday, June CPI, June reports on industrial production and factory use, and June housing starts and permits.  We expect markets will trade in narrow ranges early this week ahead of Bernanke testimonies. It isn’t wise now to anticipate that interest rates will decline much. Maybe Bernanke can swing the outlook to a more positive outlook, but if that were to occur he would have to imply the Fed will not begin tapering until next year.

A lot of focus these days on China and the slowdown that continues, but this morning their GDP expanded 7.5% in the second quarter, its economy expanded 7.7% in Q1. China is slowing but obviously still a lot better than here in the US. The GDP report pushed Europe’s stock markets better. U.K. home sellers raised asking prices for a seventh month to a record in July, according to Rightmove Plc, which said values will increase twice as much as previously forecast this year.

There is an increasing number of bullish comments that rates may decline a little more from present levels; I am not arguing against that thought, there is some logic behind it but until the market itself demonstrates it will hold to out bearish outlook based on price action, not comments.

Read the Updated Real Estate Report at:

http://www.newsletterproonline.com/newsletter/originationpro/?newsletter=true&nid=463&uid=10671

- Michael Corboy