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Blog

January 2020

January 2nd, 2020

Average Mortgage Rates 1/30/2020

 

Rate

Change

Points

Mortgage News Daily

30 Yr. Fixed

3.54%

-0.02

0.40

15 Yr. Fixed

3.19%

-0.01

0.40

30 Yr. Jumbo

3.64%

-0.02

0.00

Freddie Mac

30 Yr. Fixed

3.51%

-0.15

0.70

15 Yr. Fixed

3.00%

-0.15

0.70

5/1 ARM

3.24%

-0.15

0.30

Mortgage Bankers Assoc.

30 Yr. Fixed

3.81%

-0.06

0.28

15 Yr. Fixed

3.24%

-0.01

0.22

30 Yr. Jumbo

3.78%

-0.09

0.20

Current Mortgage Rates Data Since 1971 xls

Click here for Weekly News Letter

Instructions on how to read this blog: Below is the news for the month when it happened and the market’s reaction.  For a full view of the month start at the bottom and work your way up. If want to know what just happened start at the top. All Times are Eastern Standard Time.  When the price of Mortgage Backed Securities (MBS) goes down rates go up, and when the price goes up rates come down. Remember in the bond market Bad News is Usually Good News and Good News is Usually Bad news.

Friday - January 31

200130MBS/ Treasury Markets

 

Price / Yield

Change

MBS FNMA 3.0

102.19

+0.09

MBS GNMA 3.0

102.70

+0.06

10 YR Treasury

1.5490

-0.0420

30 YR Treasury

2.0220

-0.0350

Pricing as of: 1/31 8:44AM EST

Friday - January 31  

Week in Review - The coronavirus outbreak in China continued to grip the financial markets this week. The total affected and number of deaths rose sharply throughout the week suggesting the virus is not yet contained.

Stocks hate uncertainty and Bonds love uncertainty. As a result, Bonds traded higher to their best levels since October, pushing home loan rates lower to the best levels in three years.

It wasn't all bad news this week though as economic readings here in the U.S. continue to show that our economy remains strong.

We also had a Fed meeting where the Fed left rates unchanged and did say the U.S. economy remains in a good place. Fed Chairman Powell also said the impact of the coronavirus on the global economy remains uncertain.

Over on Wall Street, corporate earnings overall have been very positive with Apple doing much better than expectations.

Bottom line: home loan rates will continue to be supported by the coronavirus uncertainty until they aren't -- meaning, the present quick decline in rates the past two weeks may prove fleeting should the coronavirus outbreak become more contained and less uncertain.

If you or someone you know has questions about home loans, give me a call. I'd be happy to help.

Market Wrap - U.S. stocks plunged today as the coronavirus fears sparked talk of slower growth across the globe. Travel restrictions from the White House on US airlines have been halted from flying to China. The Dow lost 600 points. Mortgage Bonds ended higher while Treasury prices surged. The 10-yr yield fell to 1.51%. WTI oil settled at $51.58/barrel, down $0.56. Next week two key labor market reports will be released - Wednesday's ADP and Friday's Jobs Report.

Late Morning Review - Inflation remained tame in December and backs up the Fed's notion that it continues to run low with no clear signs of it moving higher. The Core PCE, the Fed's favorite inflation gauge, remained at 1.6% year over year, and below the Fed's 2% target range. Within the report, it showed that consumer spending rose 0.3% and rose 4% in all of 2019, down from 5.2% in 2018.

The consumer continues to be resilient due to record low unemployment, record gains in income and wealth, as well as near-record lows in inflation and interest rates. The January Consumer Sentiment Index hit 99.8 this month, above the 99.1 expected, the highest level in nine months. The report went on to read that consumer resilience is surprising given the overall slowing pace of economic growth.

Coronavirus fears continue to weigh on global stock markets after the World Health Organization (WHO) declared it a global health emergency late yesterday. WHO did commend China in their handling of the flu outbreak along with saying that trade and movement should not be limited as a result of the virus. The death toll has now exceeded 200 with over 10,000 cases of the flu. To put in perspective, here in the U.S., the Centers for Disease Control and Prevention estimates that more than 15 million people have gotten sick with the flu this season. More than 150,000 Americans have been hospitalized, and more than 8,000 people have died from their infection. The risk of contracting the coronavirus identified in China in the is exceedingly low at the moment for U.S. citizens.

Thursday - January 30  

Market Wrap - Stocks embraced the World Health Organization for praising China in their handling of the flu outbreak along with saying that trade and movement should not be limited as a result of the virus. Stocks closed positive reversing a 250 point loss for the Dow to a 125 point gain at the close. Mortgage Bonds closed flat to lower while the 10-yr yield settled at 1.59%. As we have been saying, this story can change quickly and the safe haven trade can unwind just as quickly. It may be starting to happen now. .

Late Morning Review - Economic growth slowed a bit in the fourth quarter of 2019 while consumer spending eased. Gross Domestic Product (GDP) rose 2.1% during the quarter with a full 2019 gain of 2.3%. In 2018, GDP rose 2.9%. Within the numbers, it showed that consumer spending slowed to a gain of 1.8% from 3.2%. The U.S. economy is slowing a bit but it doesn't look like it is at risk of stalling out. GDP measures the market value of the final goods and services produced in a specific time period.

The Fed left the short-term Fed Funds Rate unchanged on Wednesday, as expected, while the statement didn't offer up any surprises nor did Fed Chair Powell at his press conference. Mr. Powell said the Fed is very carefully monitoring the coronavirus. The Fed Chair said he is intent on evading the continued low inflation levels here in the U.S. "We're not satisfied with inflation running below 2%, particularly at a time such as now where we're a long way into an expansion," Powell said.

Mortgage rates declined in the latest survey due in part to the uncertainty surrounding the coronavirus outbreak. Freddie Mac reports that the 30-year fixed-rate mortgage fell nine basis points this week to 3.51%, the second-lowest in three years. That rate does carry 0.7 in points and fees on top of the rate. Sam Khater, Freddie Mac’s Chief Economist said, “Borrowers who take advantage of these low rates can improve their cash flow by lowering their monthly mortgage payments, giving them more money to spend or save.”

Wednesday - January 29  

Market Wrap -  The Fed left interest rates unchanged today and didn't offer any glaring headlines in the statement. Fed Chair Powell didn't offer any new words other than what he has been saying the past few months. Markets weren't impacted in any significant way. Mortgage Bonds ended modestly higher, stocks closed mixed while the 10-yr T Note declined to close at 1.58%. WTI oil ended at $53.36/barrel, -$0.12. Q4 2019 GDP and Weekly Claims will be released tomorrow morning.

Late Morning Review - Low inventories of affordable homes for sale on the market impacted lower sales in December. The National Association of REALTORS® reports that Pending Home Sales fell nearly 5% in December from November. Each of the nation's four major regions suffered losses. Sales were up 4.6% compared to last year. “The state of housing in 2020 will depend on whether home builders bring more affordable homes to the market,” said Lawrence Yun, NAR's chief economist. “Home prices and even rents are increasing too rapidly, and more inventory would help correct the problem and slow price gains.”

Mortgage rates continued to hover just above all-time lows in the latest week, reports the Mortgage Bankers Association (MBA). Fears of the coronavirus outbreak sent a chill throughout global stock markets while investors rushed into the safe haven of the bond markets. The 30-year fixed-rate mortgage fell by six basis points to 3.81 with 0.28 in points in the week ending January 24, 2020. The MBA's Market Composite Index, a measure of total mortgage loan application volume rose 7.2%, the Purchase Index increased 5.4% while the Refinance Index was up 7.5%.

It's Fed day! The Federal Reserve will release its monetary policy statement at 2:00 p.m. ET this afternoon where there is no chance of a change in the short-term Fed Funds Rate. The Fed will most likely reiterate that the economy is in a good place right now and monetary policy will be on a wait-and-see stance while inflation remains low. The Fed may talk of balance sheet tuning and how to scale back on its $60B in Treasury purchases each month. Fed Chair Powell will hold a press conference immediately following the release at 2:30 p.m. ET.

Tuesday - January 28  

Little movement seen for Mortgage Bonds today weighed down by rebounding stock prices while yields inched higher. Stocks rallied though the coronavirus headlines linger. The 10-yr yield rose to 1.65% from the early morning low of 1.57%. WTI oil settled at $53.40/barrel, +$0.26. The Fed statement will be released at 2:00 p.m. ET tomorrow afternoon. Continue to float all files and let's get to the Fed statement and press conference tomorrow. 

Late Morning Review - Home prices continue to increase at a moderate pace across the U.S. with a stable housing market in November. The S&P Case-Shiller 20-City Home Price Index rose 2.6% annually up from the 2.2% gain seen in October. The national index increased 3.5% annually from 3.2% in October. The housing market has gained momentum since November as we are almost now in February for this backward-looking report.

A report out today shows that consumers will continue to drive growth and prevent the U.S. economy from slowing in early 2020. The Conference Board reports that its Consumer Confidence Index surged to 131.6 this month from 126.5 in December and above the 128.0 expected. Within the report, it showed that business conditions increased while the job component increased. Lynn Franco, Senior Director, Economic Indicators, at The Conference Board said, “Optimism about the labor market should continue to support confidence in the short-term and, as a result, consumers will continue driving growth and prevent the economy from slowing in early 2020."

Monday - January 27  

Market Wrap - Ongoing fears of the coronavirus outbreak sent a chill over the U.S. stock markets today as uncertainties surrounding containment continued. The Dow fell by 453 points wiping out this year's gains. Treasury prices surged while the 10-year yield fell to 1.61%. However, Mortgage Bonds ended near unchanged at session lows and stuck at stiff resistance levels ... a big disconnect to the +62bp gain for the price of the 10-yr Note. Today's candle for the Fannie Mae 30-yr 3% coupon has formed a spinning top and signals a possible price reversal if it occurs following a price advance or decline - in this case a price advance. We are on guard. WTI oil fell to $53.15/barrel, down $1.04. Tomorrow's data includes Case-Shiller, Durable Orders and Consumer Confidence. The Treasury will sell $32B 7-yr Notes.

Late Morning Review - The Commerce Department reports that New Home Sales slipped by 0.4% in December from November to an annual rate of 694K units, below the 725K expected. November was revised lower to 697K from 719K. For all of 2019, New Home Sales increased 10.3% to 681,000 units, the highest since 2006. The median new house price rose to $331,400, up 0.5% from a year ago while inventories were at 5.7 months. The New Home Sales report shows the number of newly constructed homes with a committed sale during the month.

U.S. stocks are plunging on the coronavirus headlines as investors look to book some profits with the Dow, S&P and NASDAQ near all-time highs. Stock markets hate uncertainty and in the absence of a cure or swift containment, this virus dilemma will continue to weigh on stocks. The uncertainty surrounding the coronavirus outbreak is sending investors into the safe haven of U.S. Treasury securities with the 10-year yield falling sharply to 1.61%. China has confirmed almost 3,000 cases of the virus and the death toll has risen to 81 people.

In the news this week will be a big heaping of economic data. In addition to this morning's New Home Sales, Durable Orders, additional housing data, the Core PCE, consumer spending, Q4 Gross Domestic Product with Consumer Confidence and Sentiment later in the week. The heart of earnings season will also take place this week. In addition, the two-day Fed meeting kicks off tomorrow and ends Wednesday with the 2:00 p.m. release of the Fed's monetary policy statement. There is a zero percent chance of a change to the Fed Funds Rate but the meeting always carries headline risk. Fed Chair Powell will hold a press conference immediately following the release at 2:20 p.m. ET.

200124

Forcast for the Week 

There is a lot to follow in this upcoming week. We will see a slew of economic data that will cover a big chunk of the U.S. economic landscape such as inflation numbers, housing, and consumer attitudes, to name a few.

In addition, the heart of earnings season will take place with recent numbers streaming to the positive side. Of the S&P 500 companies that have reported thus far, 70% have beaten expectations.

And if that weren't enough, we also have the two-day Fed meeting beginning on Tuesday and ending Wednesday at 2:00 p.m. ET with the release of the Monetary Policy Statement. Fed Chair Powell will hold a press conference following the statement release at 2:30 p.m. ET. There is a zero percent chance of a change to the short-term Fed Funds Rate, but the meeting always carries some headline risk.

Investors will also keep a close eye on the coronavirus headlines.

Reports to watch:

  • Housing data will come from New Home Sales on Monday, S&P Case-Shiller Home Price Index on Tuesday, and Pending Home Sales on Wednesday.
  • The closely watched Durable Orders report will be released on Tuesday.
  • Consumer Confidence will be delivered on Tuesday followed by Consumer Sentiment on Friday.
  • The first reading on Q4 2019 Gross Domestic Product will be announced on Thursday along with Weekly Initial Jobless Claims.
  • Inflation data will come from Friday's Core PCE and the Employment Cost Index with Personal Spending and Incomes accompanying the PCE data. 200124 eco

Friday - January 24  

Week in Review - Bonds love uncertainty and bad news, and as a result, rates improve when not-so-good news emerges.

That was the story this past week, as China has reported a new deadly coronavirus has started to spread in their country. At this point, the virus, which spreads through human contact, has taken several lives and has affected hundreds.

A known case in the U.S., several Chinese cities quarantined, and uncertainty over what happens next with the virus has the financial markets on edge.

In response to the uncertainty, many investors around the globe are placing their money into the relatively safe-haven of the U.S. dollar and U.S. denominated assets like Bonds -- which has helped home loan rates improve to the best levels in three years.

If the virus gets contained quickly and doesn't spread further, the modest improvement in rates this week could reverse very quickly.

At the same time, should the virus story get worse and become even more uncertain, we should expect Bond prices to climb even higher, helping home loan rates even further.

Bottom line: with home loan rates now touching the best levels in three years, anyone considering refinancing or buying a home would be wise to take advantage of what may be a brief further improvement in rates fueled by the coronavirus uncertainty.

 

Market Wrap - Growing fears of the coronavirus sent U.S. stocks lower today while Treasury prices surged and yields fell. Mortgage Bonds closed with modest gains. The 10-yr yield slipped to 1.68%. It was the largest weekly percentage decline for the Dow and S&P since mid-August. In addition, investors took the time to book some profits after the record highs seen in the past month. 

Late Morning Review - The upward momentum in rental prices cooled a bit in December coming in flat for the month, which is a normal seasonal trend. Yardi Matrix reports that the average U.S. rent fell $1 in December to $1,474 and up 3% from December 2018 to December 2019. Rent growth continues to be strong in all regions, led by secondary markets in the West and Southeast.

The S&P 500 opened at a fresh record high this morning before giving up gains as investors look to the solid earnings data that has been released thus far this season. Of the 16% of the S&P 500 companies that have reported, 70% have beaten expectations. Dow components American Express and Intel beat earnings expectations in their latest quarterly numbers - with the latter revising their sales forecast for Q1 2020 higher. Things are real good on both Wall Street and Main Street.

 

Thursday - January 23  

Market Wrap - Fears of a spread in the coronavirus lifted Treasury prices early on and pushed U.S. stocks lower but as the day progressed, stocks pared their losses as the S&P closed in positive territory. Mortgage Bonds closed with slight gains. The 10-year yield settled at 1.73%. WTI closed at $55.61, -$1.13. There are no economic reports due for release tomorrow. Continue to float all files but be on guard.

Late Morning Review - Homeowners continue to feel the benefits of a strong labor market and continued expanding economy. ATTOM Data Solutions reports that U.S. home sellers nationwide saw a realized home price gain of $65,500 in 2019, up from $58,100 in 2018 and up from $50,027 two years ago. In addition, the latest profit figure, based on median purchase and resale prices, marked the highest level in the U.S. since 2006, a 13-year high. “The nation’s housing boom kept roaring along in 2019 as prices hit a new record, returning ever-higher profits to home sellers and posing ever-greater challenges for buyers seeking bargains. In short, it was a great year to be a seller,” said Todd Teta, chief product officer at ATTOM Data Solutions.

Mortgage rates inched lower in Freddie Mac's latest survey and remain just above all-time lows. The 30-year fixed-rate mortgage fell five basis points to 3.60% with 0.8 in points and fees. It is the lowest rate in three months and about a quarter-point above the all-time low of 3.35% hit back on May 2, 2013. Sam Khater, Freddie Mac’s Chief Economist said, "The very low rate environment has clearly had an impact on the housing market as both new construction and home sales have surged in response to the decline in rates, the rebound in the economy and improving financial market sentiment.”

The major U.S. stock indexes are under pressure today due to the coronavirus outbreak in China and in other parts of the globe. The Dow, S&P and NASDAQ began the trading day just below all-time highs. The markets are gearing up for next week's packed economic calendar that features GDP, Core PCE, Consumer Confidence and Sentiment along with housing data. Also, the two-day Fed meeting will kick off on Tuesday and ends Wednesday with the monetary policy statement being released at 2:00 p.m. ET. There is a zero percent chance of a change to the Fed Funds Rate at the meeting.

 

 

 

 

 

 

 

200123 Freddie Wednesday - January 22  

Market Wrap - No movement seen today for Mortgage Bonds today as they continue to be trapped in a sideways pattern at multi-year high resistance levels. Treasury prices were also unchanged ... 10-yr yield unchanged at 1.76%. The S&P closed unchanged. WTI oil settled at $56.71/barrel, -$1.67. Economic data is limited to Weekly Claims tomorrow

Late Morning Review - The National Association of REALTORS® (NAR) reports that Existing Home Sales rose 3.6% in December from November to an annual rate of 5.54 million units versus the 5.42M expected. It was the highest level since February 2018. Sales were up nearly 11% from December 2018. Gains were seen in the Northeast, South and West with a decline in the Midwest. Existing Home Sales include single-family homes, townhouses, condominiums and co-ops.

The median existing home sales price rose to $274,500 up 7.8% from December 2018. Inventories continue to run low at a three-month supply, well below the normal rate of six months. Lawrence Yun, NAR's chief economist said, “We saw the year come to a close with the economy churning out 2.3 million jobs, mortgage rates below 4% and housing starts ramp up to 1.6 million on an annual basis,” he said. “If these factors are sustained in 2020, we will see a notable pickup in home sales in 2020.”

Fannie Mae released its January 2020 Economic and Housing Outlook revealing that consumers will lead economic expansion with a boost from housing construction. The GSE reports that strong consumer demand and low mortgage rates - as well as moderate improvements to supply - have housing well-positioned for a come-back year in 2020. Fannie Mae went on to forecast that in 2020, consumer spending, business fixed investment, and housing are all expected to contribute meaningfully to another year of positive growth in what continues to be the longest economic expansion in U.S. history. Economic growth (Gross Domestic Product) in 2020 stands at 2.1%.

Tuesday - January 21  

Market Wrap - Fears of a corona virus outbreak sent Treasury prices surging today while the 10-yr yield declined to 1.77%. However, Mortgage Bonds closed near unchanged at resistance at multi-year highs. Stocks declined on the virus news as well on lower shares of Boeing and as investors booked some profits. WTI oil closed at $58.25/barrel, -$0.29. Existing Home Sales will be released tomorrow.

Late Morninig Review - RE/MAX reports that the housing sector ended the year on a strong note in December. December finished with a 13.5% year-over-year gain in home sales in the 54 metros it covers - the highest increase of any month in 2019 and also the highest month of December since 2009. However, shrinking inventories remain a concern. The report said that housing inventories fell to 3.3 months of available supply compared to 4.8 months in December 2018.

Bank repossessions of homes continue to decline across the U.S. as the strong labor market and continued expanding economy attributable to the decreasing numbers. In 2019, there were 143,955 properties repossessed, down 37% from 2018and down 86% from the peak of 1,050,500 in 2010 and to the lowest level as far back as data is available in 2006. Foreclosure filings amounted to 493,066 on U.S. properties last year, down 83% from the 2.9 million peak in 2010.

The U.S. financial markets reopened on Tuesday after the Martin Luther King Jr. holiday on Monday. U.S. stocks are modestly lower on reports of a corona virus outbreak in China, which can be transmitted between people, at a time of mass traveling in the country for the Lunar New Year. The S&P is slightly lower as it hovers near all-time highs. Treasury prices are higher while the 10-year T Note yield has declined to 1.77%. Mortgage rates remain just above historic lows.

200117

Forcast for Next Week - With the U.S.-China Phase One trade pact having been signed this past week, the financial markets will get back to what will drive the trading activity in the days and weeks ahead, earnings season.


A slew of earnings reports will be released this week which will directly impact Stocks, Bonds, and home loan rates. If the numbers continue to stream in positive, it could push Bond prices lower, and rates higher. The opposite is also true.

Economic data will be extremely light with just Existing Home Sales and Weekly Initial Jobless Claims being released, so the focus will be on the earnings data.

All U.S. financial markets are closed on Monday in observance of Martin Luther King Jr. Day.

200117 eco

Week in Review -This past week was filled with so much good news. The biggest of which was the signing of Phase One of the U.S. and China trade pact.

This trade deal is a very positive development for the U.S., China, and the world, and paves the way for future business investment and other trade deals around the globe. This also removed what was a big uncertainty for many months.

The economic data was already amazing with the following reports coming in better than expectations:

  1. Small Business
  2. Retail Sales
  3. Philly Fed Index
  4. Initial Jobless Claims

And speaking of better than expectations, we also watched the start of corporate earnings season and most of the big banks handily beat expectations.

All of this good news has pushed Stocks to all-time highs, but at the same time Mortgage Bonds and home loan rates remained right at the best levels in three years... remarkable.

Bottom line: the U.S. economy remains quite strong with zero chance of a recession anytime soon, yet at the same time home loan rates have not moved higher, giving many an incredible opportunity to purchase or refinance a home.

 

Friday - January 17  

Market Wrap - Mortgage Bonds continued to be trapped in the same sideways pattern today which they have been experiencing for the past 14 trading days, unable to rise above current levels though not selling off in the midst of a record high S&P 500. The Dow (29,348), S&P (3,329) and NASDAQ (9,388) all closed at record highs. The Dow gains were capped by lower shares of Boeing as the 737 woes mount. The 10-yr yield inched higher to close at 1.82%. Housing Starts surged in December to a 13-year high easing some fears of a lack in inventories. WTI oil ended near unchanged at $58.55/barrel. 

Late Morning Review - The Census Bureau reports that December Housing Starts surged 17% from November to an annual rate of 1.608M units,the highest since December 2006, versus 1.380M expected as the sector continues to build momentum. It was the biggest percentage gain since October 2016. From December 2018 to December 2019, starts soared 40%. Single-family starts jumped 11.2% to 1.055M units, the highest level since June 2007. Building Permits edged lower, which is typical for December.

China reported upbeat economic data. This week's signing of the Phase One trade deal is likely to continue boosting optimism within the global economy. Corporate earnings have been on the positive side this week and have helped to boost stocks to record levels. Noted hedge fund guru David Tepper told CNBC this morning that he is 'long the market (stocks) and continues that way.' Mr.Tepper has been spot on calling the markets rise for the past 10 years. Tepper said, "I love riding a horse that's running." In addition, hedge fund titan Stanley Drunkenmiller is also bullish on U.S. stocks, at least in the immediate term. The above coupled with low inflation, low rates, solid consumer spending and an expanding economy bolsters the Goldilocks scenario. And yesterday, the Philadelphia Manufacturing Index tripled estimates, a good sign for the sector.

 

Thursday - January 16  

200116 freddie

 

Late Morning Review - A rash of better-than-expected economic data hit the wires this morning which is boosting the major U.S. stock indexes. December Retail Sales were strong signaling that the consumer continues to spend and drive the U.S. economic expansion. Weekly Initial Jobless Claims declined and remain at 50-year lows while the Philadelphia Fed Manufacturing Index surged this month.

Morgan Stanley reported robust quarterly earnings today capping off a stream of solid reports from major financial institutions this week, which is also driving today's stock rally. In addition, the signing of the U.S.-China trade deal yesterday lifted uncertainty which is also positive for stocks and not-so-positive for bonds. The main driver in the equity markets will be the fundamentals ... economic data and earnings.

Mortgage rates remain just above historic lows, reports Freddie Mac. The 30-year fixed-rate mortgage was essentially unchanged this week at 3.65% with 0.7 in points and fees. "By all accounts, mortgage rates remain low and, along with a strong job market, are fueling the consumer-driven economy by boosting purchasing power, which will certainly support housing market activity in the coming months,” said Sam Khater, Freddie Mac’s Chief Economist.

Mortgage rates inched up by one basis point this week with the 30-year fixed-rate mortgage averaging 3.65 percent. By all accounts, mortgage rates remain low and, along with a strong job market, are fueling the consumer-driven economy by boosting purchasing power, which will certainly support housing market activity in the coming months. While the outlook for the housing market is positive, worsening homeowner and rental affordability due to the lack of housing supply continue to be hurdles, and they are spreading to many interior markets that have traditionally been affordable.

Wednesday - January 15  

Market Wrap - The sideways pattern continued today for Mortgage Bonds ending near unchanged while stocks seesawed and ended higher. The 10-year yield settled at 1.78%. The long awaited Phase One trade deal between the U.S. and China was signed today. WTI oil closed at $57.86/barrel, -$0.37. Weekly Claims, Retail Sales and the NAHB Housing Market Index will be released tomorrow. 

Late Morning Review - Mortgage Rates edged lower in the latest week and remain just above historic lows. Low rates have been a tailwind for the housing sector and should continue throughout 2020. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage fell four basis points to 3.87%, the lowest since late September with 0.32 in points for the week ended January 10, 2020. Low rates spurred on mortgage application activity. The Market Composite Index jumped 30%, the Refinance Index rose 43% while the Purchase Index increased by 16%.

Target reports that holiday sales were below estimates as sales rose 1.4% compared to a gain of 5.7% a year ago, with underperforming sales for toys and electronics. December Retail Sales will be released tomorrow to gauge consumer spending during the holiday shopping season. Wholesale inflation was tame in December while the New York State Manufacturing Index beat expectations. The data had little impact on the markets.

Tuesday - January 14  

Late Morning Review - Range bound trading continued today for Mortgage Bonds as they ended near unchanged in quiet trading. The 10-yr yield settled at 1.81%. Stocks closed mixed after giving up gains on negative trade headlines for tariffs. WTI oil closed at $58.30/barrel, +$0.22. Tomorrow's data includes PPI and Empire Manufacturing. 

Late Morning Review - The December NFIB Small Business Optimism Index ended 2019 historically strong, with a reading of 102.7. The report went on to say that an increased number of small business owners reported better business conditions and expect higher nominal sales in the next three months. NFIB Chief Economist William Dunkelberg said, "2020 is starting out with a solid foundation for continued growth, two years into the Tax Cuts and Jobs Act that's providing fuel to grow small businesses and their workforce."

Inflation at the consumer level remained subdued in December with the indexes for gasoline, shelter, and medical care modestly higher while underlying inflation measures declined. The Labor Department reported that the Consumer Price Index (CPI) rose 0.2% last month, inline with estimates and down from the 0.3% increase in November. Core CPI, which strips out volatile food and energy, rose 0.1%, down from a gain of 0.2% in November. The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Earnings season unofficially kicked off today with some of the largest banks in the U.S. reporting their quarterly numbers. JPMorgan Chase, the nation's largest bank, reported a profit of $2.57 per share, above the $2.35 expected. Citigroup reported that fourth-quarter profits rose 15% or $2.15 per share versus the $1.81 estimated. Wells Fargo saw a steep decline in profits due in part to litigation costs and persistently low-interest rates.

 

 

Monday - January 13  

Market Wrap - Mortgage Bonds opened and closed near unchanged today trading in an extremely tight range in the absence of any glaring headlines. The 10-yr yield inched higher to 1.84%. The S&P 500 (3,288) closed at a fresh record high on the trade news and after the U.S. said it will remove the currency manipulator tag from China. WTI oil fell $0.92 to $58.12/barrel as the U.S.-Iran tensions ease. December CPI will be released tomorrow morning. The NFIB Small Business Optimism Index will be released

Late Morning Review - The Mortgage Bankers Association (MBA) reports that its Mortgage Credit Availability Index (MCAI) decreased 3.5% in December to 182.2 and down 4% from June's record high of 189.8 though up 4.1% vs a year ago. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. "Credit availability fell in December after three months of expansion, driven by drops in both conventional and government supply," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.

Quarterly earnings season for Q4 2019 kicks off this week with big bank names such as Citigroup, JPMorgan Chase, Wells Fargo, Bank of America and Goldman Sachs reporting their numbers. Earnings for S&P 500 companies are expected to fall by 0.6% from the fourth quarter of 2018. Investors will also receive economic data from housing, manufacturing, consumer spending and sentiment along with inflation numbers from the closely watched Consumer Price Index.

The major U.S. stock market averages are higher once again today and are at fresh record highs as the week kicks off. The closely watched S&P 500 is at an all-time high of 3,282 after a gain of nearly 30% in 2019. An expanding economy, low inflation and rates, ultra-low unemployment, solid consumer confidence ad spending are a few reasons for the stellar performance in the equity markets.

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Friday January 10

Forcast for Next Week - After the past week's primary focus on the Middle East tensions that quickly faded, the markets in the upcoming week will try to get back to the basics of what's been fueling the expansion in the U.S. economy... positive economic data, a strong job market, along with solid consumer confidence and spending.

The markets will receive data from the housing sector, consumer spending, manufacturing, and inflation from the consumer and wholesale level.

The phase one trade deal between the U.S. and China is expected to be signed on Wednesday.

Reports to watch:
 

  • Inflation data will be reported from the Consumer Price Index on Tuesday followed by the Producer Price Index on Wednesday.
  • From the manufacturing sector, the Empire State Index will be delivered on Wednesday with the Philadelphia Fed Index on Thursday.
  • The NAHB Housing Market Index is scheduled for Thursday with Housing Starts and Building Permits on Friday. Consumer Sentiment will also be reported on Friday.

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Week in Review - This past week, we watched home loan rates tick modestly higher and retreat from three-year lows.

Why?

There are three main reasons:

  1. U.S and Iran. On Wednesday, the de-escalation of tensions between the U.S. and Iran brought an immediate sense of calm to the financial markets. As a result, Stocks traded to all-time highs at the expense of Bonds and home loan rates.
  2. Jobs, jobs, jobs. Both the ADP and Jobs Report showed continued health in the labor market. The positive data is good news for the economy and good news for housing. Bonds hate good news, so rates ticked up.
  3. Improvement in Europe. Germany reported surprisingly stronger economic data, suggesting their economy is on the mend. In response to the good news, German rates ticked higher this week while putting upward pressure on our rates.

Bottom line: home loan rates are within a whisker of the best in three years and near the lowest in the history of our country. Coupled with a strong consumer and housing backdrop, this makes it an incredible time to either purchase or refinance a home.

If you or someone you know has questions about home loans, give me a call. I'd be happy to help.

Freddie Mac US Weekly Average Mortgage Rates 1/09/20.  Many times our rates are better than below.  Rates are found on the following website:  http://www.freddiemac.com/pmms/

Mortgage rates fell to the lowest level in thirteen weeks, as investors sought the quality and safety of the U.S. Treasury fixed income markets. The drop in mortgage rates, combined with the strong labor market, should propel a continued rise in homebuyer demand.

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Thursday - January 9th

Market Wrap - Mortgage Bonds closed flat to slightly higher today after a strong mid afternoon 30-year bond offering results were released. Stocks closed at fresh record highs as Middle East tensions fade. The S&P 500 ended at a record high 3,274. The 10-yr yield finished at 1.86%. WTI oil ended at $59.54/barrel, near unchanged. Heading into the Jobs Report tomorrow morning, you might want to consider locking a bulk of your pipeline in advance of the release. Certainly locking those closing relatively soon makes sense. Look to the Market News section on the MMG website at 8:30 a.m. ET for the jobs data and potential market reaction.

Late Morning Review - Mortgage rates edged lower early this week due in part to the Middle east tensions. Freddie Mac reports that the 30-year fixed-rate mortgage fell by eight basis points to 3.64% with 0.7 in points and fees. However, rates have inched higher in the past few days. Freddie Mac says that the drop in mortgage rates, combined with the strong labor market, should propel a continued rise in homebuyer demand. Last year this time the rate was 4.45%.

The Federal Reserve reports that the value of all U.S. owner-occupied homes increased to a record $29.2 trillion in Q3 2019 in its Flow of Funds Report. It was a 4.2% increase from a year earlier, the slowest annualized gain since 2012. Americans owned $18.7 trillion of their homes, giving them a 64% equity stake, the report said. In addition, the collective value of U.S. homes is now 21% higher than the bubble peak hit in 2006.

Americans filing for first-time unemployment benefits fell by 9,000 in the latest week to 214,000 and remain at 50-year lows. To put it in perspective, in 1970 the U.S. population was 200 million, today it stands at 327 million. This remains a solid reading and leading indicator for the labor market. The four-week moving average of claims, which irons out seasonal abnormalities, fell by 9,500 to 224,000 last week.

Wednesday - January 8  

Late Morning Review - The housing market in 2020 has been upgraded in forecasts for single-family housing starts, new home sales and mortgage originations. Fannie reports that its Home Purchase Sentiment Index (HPSI) capped off a strong year in December with the index just below the survey high at 91.7. Three of the six HPSI components increased month over month, including the percentage of Americans who believe that home prices will go up over the next 12 months. Annually, the HPSI is up 8.2 points, driven primarily by consumers’ favorable mortgage rate expectations and a growing share reporting it’s a good time to buy a home.

Mortgage rates edged lower in the latest week and remain just above all-time lows. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage fell by four basis points to 3.91% with 0.33 in points. Mike Fratantoni, MBA Senior Vice President and Chief Economist said, "We expect that the strong job market will continue to support purchase activity this year, and the uptick in housing construction towards the end of last year should provide more inventory for prospective buyers."

Private job growth surged in December as the labor market continues to be a big source of strength for the U.S. economy. ADP reports that private payrolls rose by 202,000 last month, well above the 155,000 expected. The November number of 67,000 jobs created was revised higher to 124,000. Ahu Yildirmaz, vice president and co-head of the ADP Research Institute said, “The service providers posted the largest gain since April, driven mainly by professional and business services. Job creation was strong across companies of all sizes, led predominantly by midsized companies.”

 

Tuesday - January 7  

Market Wrap - Mortgage Bonds closed flat today and continued to hover near multi-year highs, and have for the past few sessions. The recent uptrend and today's candle formation could be sending a bearish signal as prices are stalling at current levels. Stocks closed lower though the losses were minor as the S&P fell by just 0.28%. WTI oil fell by $0.57 to $62.68/barrel. The Treasury will sell $24B 10-yr Notes tomorrow which will garner some attention ADP Private Payrolls will be released at 8:15 a.m. ET.

Late Morning Review - The service sector of the U.S. economy continues to be a bright spot. The sector provides a service, not a product, such as retail, banks, hotels, real estate and the like. The Institute for Supply Management's Service Index registered 55 in December with the sector growing for the 119th consecutive month. A reading above 50 indicates the non-manufacturing sector economy is generally expanding; below 50 indicates the non-manufacturing sector is generally contracting.

The financial markets are quiet so far this morning with little movement in the bond markets. U.S. stocks fell at the outset yesterday on the Middle East tensions but the Dow, S&P and NASDAQ erased their losses and ended in positive territory. As Jim Cramer said on CNBC this morning, "This market is resilient." Mortgage Bond and Treasury prices are near unchanged with the 10-year yield at 1.81%. The markets are gearing up for some potential headline risk by way of two key labor market reports - tomorrow's ADP Private Payrolls and Friday's official Jobs Report.

 

Monday - January 6  Market Wrap - Mortgage Bonds ended the session near unchanged as did Treasury prices. The 10-yr yield settled at 1.80%. The Dow, S&P and NASDAQ opened lower but closed in positive territory brushing off the Middle East tensions. WTI oil closed at $63.26/barrel, up $0.20 after hitting a high of $64.72 early today. As we approach the jobs data beginning on Wednesday and the imminent signings of USMCA and the Phase One China deal, this might be a good time to lock in.

Late Morning Review - The U.S. financial markets kick off the week impacted by geopolitical headlines though both stock and bond prices trading near unchanged on the push-pull Middle East tensions coupled with positive U.S. - China trade headlines. U.S. stocks opened lower but have quickly shed losses as the session drags on. The markets will continue to take direction from the incoming geopolitical headlines.

Oil prices have gushed higher in the past week due to the Middle East tensions. The price for West Texas Intermediate oil has risen to near $65 from $50 seen back in November. The national average price for a regular gallon of gasoline is at $2.58, unchanged in the past month, but could spike higher on the Middle East tensions. The highest price ever recorded was $4.11 back on July 17, 2008.

Two key labor market reports will be released this week in a sector that has been a bright spot in a solid economy. ADP Private Payrolls will be released on Wednesday followed by Non-Farm Payrolls on Friday. Back in December, a report showed that U.S. employers added 266,000 new workers in the Non-Farm Payrolls report while the 3.5% unemployment rate was at a 50-year low. In addition, average hourly earnings have been on the rise which will continue to boost consumer spending

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Forecast for the next week -This first full trading week of the new decade will be a little light on economic reports.

However, two key labor market reports will be released, and could be big market movers.

The ADP Private Payrolls gives us a read on private job creations, while Friday brings the government's official Jobs Report.

The labor market remains one of the bright lights in the U.S. economy, with the unemployment rate at 50-year lows coupled with rising wages.

The markets will also keep one eye on the U.S.-China trade headlines along with any stimulus headlines from global central banks.
Reports to watch:
The ISM Service Index will be reported on Tuesday.

  • ADP Private Payrolls will be released on Wednesday followed by the government Jobs Report on Friday that includes Non-Farm Payroll, the Unemployment Rate, and Hourly Earnings.
  • Weekly Initial Jobless Claims will be delivered on Thursday.

 

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Friday - January 3 

Week in Review - The new year and new decade started, and good news, some things don't change. Stocks picked up right where they left off in 2019 by touching all-time highs. And Bonds, which also performed well in 2019, continue to hover near three-year highs, keeping home loan rates near 3-year lows.

Many are wondering how the economy and markets will perform in 2020. So, for that reason, here are 3 trends to follow:

  1. Don't fight the Fed. As the saying goes, there doesn't appear to be any chance of a Fed rate hike in 2020. The economy is strong, but not too strong. Plus, the Fed is fighting disinflation, so a rate hike would counter those efforts. Moreover, it's a presidential election year and the Fed has historically tried it's best to avoid any monetary policy moves in those years. Bottom line: good for Stocks and less good for Bonds.
  2. Stock gains. Post-World War II, Stocks on average have gained 10.1% in presidential election years where the incumbent is up for re-election. It's tough to fight that trend, even with Stocks soaring in 2019. Bottom line: Stocks are set to finish 2020 higher.
  3. $1,000,000,000,000. That was what the U.S. spent in holiday retail shopping in 2019. That massive record highlights the strength of the U.S. consumer who makes up 70% of the U.S. economy. Bottom line: there is no recession in sight, great news for housing and the overall economy.

Bottom line: absent of a Black Swan event or unforeseen negative surprise, 2020 is shaping up to be a great year for housing and the U.S. economy, with the labor market strong, wages rising, inflation muted, and interest rates low.

If you or someone you know has questions about home loans, give me a call. I'd be happy to help.

Market Wrap - Heightened tensions between the U.S. and Iran sent Treasury prices soaring today while yields fell in the flight-to-quality trade. The 10-yr T Note yield closed at 1.78% from yesterday's high of 1.95%. Stocks closed lower on the headlines. Today's decline put the S&P in the red for the week snapping a five-week winning streak for the closely watched index. Mortgage Bonds closed with slight gains. Oil prices gushed higher to $63.03/barrel at the close, up $1.85 and traded as high as $64.09 during the session. Two key labor market reports will be released next week with ADP on Wednesday and the Jobs Report on Friday, both for December. Have a great weekend!

Late Morning Review - Economic activity in the manufacturing sector contracted in December while the overall economy grew for the 128th consecutive month, in the latest report from the Institute of Supply Management (ISM). The ISM Index fell to 47.2 last month from 48.2 recorded in November and below the 49.0 expected. A reading above 50 indicates that the manufacturing economy is generally expanding; below 50 indicates that it is generally contracting. The ISM said that overall, sentiment this month is marginally positive regarding near-term growth.

U.S. air strikes at the Baghdad International Airport have killed a top Iranian general overnight, which has impacted the U.S. markets. U.S. Treasury prices are surging with the 10-year yield lower to 1.81%. Stocks are lower giving back a big chunk of yesterday's gains as they hover just below all-time record highs. The closely watched S&P 500 rose nearly 30% in 2019. With equity prices at such elevated levels, U.S. stocks could be ripe for a small correction.

Thursday - January 2  

Freddie Mac US Weekly Average Mortgage Rates 1/02/20.  Many times our rates are better than below.  Rates are found on the following website:  http://www.freddiemac.com/pmms/

30-FRM 3.72% 0.7 fees Points

15-YR FRM 3.17%  O.7 Fees/Points 

5/1 ARM  3.46% 0.3 Fees/Points

Market Wrap - Not much movement in the Mortgage Bond markets today, still in holiday mode as they closed with slight gains. Treasury prices rose while the 10-yr yield slipped to 1.87%. Bond prices were held in check by a big rise in U.S. stocks as the Dow (28,868), S&P (3,257) and the NASDAQ (9,092) all closed at fresh record highs. WTI oil settled at $61.15/barrel, near unchanged. The ISM Index and the Fed minutes will be released tomorrow

Late Morning Review - Outplacement firm Challenger, Gray & Christmas reports that planned U.S. employer job cuts fell for the second consecutive month in December and cuts were the lowest since July 2018, reaffirming the strong labor market. The report showed that there were 32,843 planned job cuts in December, down from 44,569 announced in November. The strength in the labor market should continue to fuel solid consumer spending which in turn will keep the economy expanding. This is also a great story for housing as jobs buy homes.

The new year and decade kick off with U.S. stocks at record highs due to fresh positive trade headlines and new stimulus measures announced in China. However, Treasury prices are higher on dismal economic data out of Germany and the U.K.
Despite the rise in equities, Mortgage Bond and Treasury prices are also higher in response to weak economic data out of Europe. Mortgage rates remain just above historic lows due in part to tame inflation here in the U.S.

Americans filing for first-time unemployment benefits continue to hover near 50-year lows as the labor market is a bright spot in the expanding economy. Weekly Initial Jobless Claims fell 2,000 to 222,000. The recent unemployment rate fell to 3.5%, the lowest in nearly half a century. The four-week moving average of claims, which irons out seasonal abnormalities, rose by 4,750 to 233,250.

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