bond prices Worsen

Mortgage bond prices opened weaker this morning adding to the slight losses from Friday afternoon which looked to push rates higher. Fortunately we bounced back a bit from the initial weakness but still remain weaker since pricing Friday morning.

The data this morning was not rate friendly. Retail sales rose 1.1%, analysts expected a 0.7% increase. That was it for the data today. Stocks and global news will dictate trade going forward. Stock futures were positive this morning and that held true at pricing with the DOW up 21 points. Stocks and bonds often trade inversely, though that is not an absolute.

Greece is the focus this morning as debate continues about an exit from the euro zone. Swedish finance minister Anders Borg indicated he expected a Greek exit within six months. Germany's finance minister Wolfgang Schäuble quickly countered that assertion, "I think it will not happen that there will be a state bankrupt in Greece.....Greece has to take a lot of very serious reforms and this will harm. Everyone is trusting that the Greek government is doing what is necessary.

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Mortgage bond prices

Mortgage bond prices are near unchanged mid-morning Wednesday failing to erase the losses seen Tuesday afternoon. MBS prices initially opened lower pressuring rates higher only to have buyers emerge taking prices higher.

Traders will spend the day watching stocks to help gauge interest rate direction as they wait for the auction and Fed Beige Book results. At the 10:00 am ET price point the Dow was down 34.

This afternoon the Treasury will auction $21B of 10-year notes with results by 1:15 pm ET. At 2:00 pm ET the Fed Beige Book will be released. The report details economic activity in all Federal Reserve districts.

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We have the Fed minutes this afternoon.

Mortgage bond prices opened near unchanged to slightly weaker following the data.

ADP employment rose 162K. Analysts expected an increase of 133K. This data was not rate friendly and the upper coupons saw more of a selloff than the lower coupons.

Stock futures are only slightly higher this morning as was the case yesterday morning. The DOW closed down 33 points yesterday. Stocks and bonds often trade inversely though not always.

News out of the euro zone took a new turn this morning with the head of the IMF predicting a recovery would take a decade. This is generally good news for U.S. debt instruments.

We have the Fed minutes this afternoon.

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Do jobs Numbers mean anything anymore?

Morgage bond prices remain positive this morning helping move rates in the right direction....lower. Rates were helped by worse than expected economic data first thing this morning.

Weekly jobless claims @382k, expected @ 375k. The bad jobs numbers has us starting the day on the right note.

Phildelphia Fed down 1.9, expected down 4.0, LEI down 0.5%, expected down 0.1%. Mixed data but seem to hold the gains so far.

The Wall Street Journal had an opinion piece this morning addressing the euro zone debt crisis. The key to the article was the following, "Could this be the beginning of the end of the euro zone's crisis? Unfortunately, the answer is "probably not." The crisis has been allowed to fester so long that the economic problem may now be too big to be addressed within the shrinking political space available."

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Downward pressure to mortgage rates.

Mortgage bond prices opened higher applying downward pressure to mortgage rates.

The New York Fed's Empire Manufacturing report showed surprise weakness in that region. With that lack of any first tier data releases this morning that report has things rate friendly so far at the open. The reading came in down 10.4, the figure was the weakest in about 2 years.

News out of the euro zone indicated the trade surplus got bigger with fewer imports and higher wages.

There is no data til Wednesday with the housing releases. Stocks and news out of the euro zone will likely dictate trade.

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Don't Fight the Fed

Don't fight the Fed"
 
That's the message from the market in the wake of Thursday's blockbuster announcement of open-ended QE from the central bank.

After surging Thursday, major averages were rallying further Friday. In recent trading, the Dow (DJI) was up 0.5%, pushing further into multi-year-high territory.

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Mortgage bond prices are slightly lower mid-morning Tuesday applying upward pressure to mortgage rates. Trade is quiet.

In news released this morning, the US trade deficit stood at $42B. Analysts expected the deficit to increase $1.9B to $44B.

With no more news set for release today, traders will spend the day watching stocks as they wait for the results of the Treasury auction of $32B of 3-year notes. At the 10:00 am ET price point the Dow was up 52 points. Auction results will be published by 1:15 pm ET.

Overnight trade in Asia and Europe was quiet. Global market participants are mostly sidelined as they wait for two key events to unfold this week. In Germany, a high court ruling on the constitutionality of the European Stability Mechanism is set for Wednesday. Thursday the Federal Reserve will announce any changed to monetary policy when the governing body concludes their two day meeting. It is believed the German court will rule the bailout fund constitutional, however they may place limits or other requirements on the fund. In the US, traders are expecting Ben Bernanke to announce QE3.

The events on Wednesday and Thursday will make history and most likely cause market volatility. It is unlikely the German court is going to give the green light to the ECB without any stipulations. The ruling may lead to more uncertainty for the euro-zone. In the US, traders are hopeful Mr. Bernanke will offer an open ended QE3 and include more mortgage debt in future purchases.

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a little bounce back from yesterday

Mortgage bond prices opened significantly positive following the disappointing payrolls figure.

Unemployment @ 8.1%, expected @ 8.3%, Payrolls +96k, expected +125k.

We got hit hard yesterday with rate increases but fortunately have erased the afternoon losses and then some.

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Rates Getting Crushed

Mortgage bond prices opened considerably lower pushing rates higher this morning. The strong data was the catalyst.

ADP employment up 201k, expected up 140k, Weekly jobless claims @ 365k, expected @ 370k. The better than expected data combined to cause MBS prices to tank and rates to push higher in the short term this morning.

We are still waiting to hear results of the European Central Bank meeting but analysts expect some additional information on a bond buying program designed to keep rates low for member nations. We can expect some reversal of the flight to quality buying of US debt instruments as a result in the short term, but in the long term the up and down pattern is likely to continue as the euro zone is far from stable.

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Moody's cut the euro zone's outlook rating to negative.

Mortgage bond prices are near unchanged on the day holding the strong gains from Friday afternoon.

There was no data first thing this morning. ISM Index @ 49.6, expected @ 50.

The recent positive movement in rates has been attributed much to comments by the Fed Chairman. Federal Reserve Chairman Bernanke told the audience at the Jackson Hole Symposium that the governing body was concerned over the outlook of the economy. The stagnation of the labor market was a “grave concern” and that long-term unemployment could wreak structural damage to the economy. He said inflation remained tame allowing for further action to help the labor market. Mr. Bernanke took the opportunity to defend past actions from the Fed following critical remarks from lawmakers. His comments left little doubt that future easing will be tied to employment.

Fannie and Freddie announced an increase to the guarantee fee this morning. The fee will increase by 10 bps in rate or roughly 3/8’s of a discount point. You can expect to see this as an increased cost in your rates very soon if not already.

Moody's cut the euro zone's outlook rating to negative. We haven't gotten much traction from that news yet this morning.

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US economy expanded at a 1.7%

Change since pricing In discount points In 32's Decimal  30 Year Conv (FNMA MBS)  3.375%-3.75% Unchanged 0 0  3.875%-4.25% Unchanged 1 0.03125  4.375%-4.75% Unchanged 3 0.09375  30 Year FHA/VA (GNMA MBS)  3.375%-3.75% Worse by 1/8 -1 -0.03125  3.875%-4.25% Unchanged 1 0.03125  4.375%-4.75% Unchanged 1 0.03125  15 Year Conventional  2.875%-3.25% Worse by 1/8 -3 -0.09375  3.375%-3.75% Worse by 1/8 -1 -0.03125  3.875%-4.25% Worse by 1/8 -2 -0.0625  15 Year FHA/VA  2.875%-3.25% Worse by 1/8 -3 -0.09375  3.375%-3.75% Worse by 1/8 -1 -0.03125  3.875%-4.25% Worse by 1/8 -2 -0.0625  7/23 Conventional Worse by 1/8 -2 -0.0625  5/25 Conventional Unchanged 0 0

	Instrument Current Yield Change  10 Year Treasury 1.65% -3  30 Year Treasury 2.76% -7  NASDAQ 3077 Closed  Ginnie Mae 3.5% 107.83 1  Fannie Mae 3.5% 105.67 2

Commentary & News:
Open

Mortgage bond prices opened slightly lower Wednesday morning applying upward pressure to mortgage rates.

In news released this morning, the US economy expanded at a 1.7% rate in the second quarter. That data was near expectations and had little effect on trade.

Traders are now waiting for stocks to begin trade at 9:30 am ET to help gauge interest rate direction. This afternoon the Treasury will auction $35B of 5-year notes with results by 1:15 pm ET and the Fed Beige book will be released at 2:00 pm ET.

In overnight trade, European Central Bank President Mario Draghi wrote an op-ed piece in a German publication saying exceptional measures are sometimes needed to carry out the mandate of stable prices. This is his second big “splash” this week. On Monday he announced he would skip the Jackson Hole Symposium this weekend due to his workload. It appears Europe may be coming to grips with the debt crisis. We hope it is not too late.

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Mortgage bond prices opened near unchanged

	Instrument Current Yield Change  10 Year Treasury 1.64% 5  30 Year Treasury 2.75% 8  DOW Jones 13118 -6  NASDAQ 3075 2  Ginnie Mae 3.5% 107.8 1  Fannie Mae 3.5% 105.64 3

Commentary & News:
Open

Mortgage bond prices opened near unchanged Tuesday morning holding mortgage interest rates steady from pricing Monday.

Traders are waiting for stocks to begin trade at 9:30 am ET and for the release of consumer confidence set for 10:00 am ET. This afternoon the Treasury will auction $35B of 2-year notes with results by 1:15 pm ET.

This Friday Federal Reserve Chairman Bernanke will speak at the Jackson Hole Symposium. The event is designed as a forum for central bankers, policy experts and academics to come together to focus on topics that are not necessarily of immediate concern, but instead looks into the future at emerging issues and trends. Last night European Central Bank President Mario Draghi announced he will skip the meeting due to his work load. That announcement has some wondering if Europe is really crafting a plan to save the Euro. Market participants are hopeful Mr. Bernanke will lay the groundwork for further easing from the Fed. If the Fed is going to provide more stimulus to the economy it will most likely come from the Fed meeting in September, not this venue.

hinese industrial corporate profits saw their biggest declines of 2012

Mortgage bond prices opened slightly higher Monday morning erasing some of the losses seen Friday afternoon.

There is no economic news set for release today. Traders are waiting for stocks to begin trade at 9:30 am ET to help gauge interest rate direction. Dow futures indicate a flat opening for equities.

In overnight trade, Chinese industrial corporate profits saw their biggest declines of 2012 and German Info Business Climate showed confidence declined for a fourth month in a row. The weak data has market participants hoping for more central bank easing.

This week has three auctions and some important economic releases including GDP second estimate, Fed Beige Book, weekly jobless claims, income and outlays. This is the last week of summer vacation. We expect to see trade slow to a crawl as the week progress

Mortgage bonds opened near unchanged

Mortgage bonds opened near unchanged this morning holding rates steady after the big runup in price yesterday. The data this morning was rate friendly but the initial reaction was muted.

Weekly jobless claims @ 372k, expected @ 365k, rate friendly.

Yesterday afternoon's Fed minutes indicated:
Further easing likely soon
US economic risk toward downside due to euro zone strains
Some members advocate a large scale asset purchase program to boost recovery

Data from the euro zone indicated business activity decreased, even in Germany. It appears the euro zone is headed back into recession.

Mortgage bonds added to the small gains from yesterday

Mortgage bonds added to the small gains from yesterday following reports of economic slowdown abroad.

Japanese trade data was weaker than expected. In addition, stock futures point to more weakness. The DOW closed down 68 points yesterday.

News out of the euro zone focused on a possible Greek exit. This talk has gone on for some time but the talk continues.

We have a light data week but the Fed minutes this afternoon often cause some volatility so caution is key. Exisiting home sales data will be released @ 10am et but usually doesn't move the market much.

To demonstrate how uncertain and unstable the euro zone is, here are two world reports with totally different takes, reported within hours of each other:

The brightest minds and richest investors are scrambling to end up on the right side of that debate. Fortunately, "uncertainty" is good for U.S. debt, unfortunately improvements can be erased as quickly as they come as we have seen the past few weeks. In this environment it is smart to take advantage of improvements when they come your way! 

The market is Worse by 1/8 since Monday 's ratesheet

Mortgage bonds closed opened weaker this morning pushing rates higher.

There was no data this morning. News out of the euro zone dictated trading. Spain had successful 10Y auction where they saw their yields fall from 6.33% last night to 6.231% this morning. Newswires dominated by talk that the ECB will implement a bond buying scheme to drive euro zone debt yields lower. This would reverse the flight to quality buying of U.S. debt instruments as we continue to experience. The inverse of what helped our rates hit record lows is now pressuring our rates higher.


We have a light data week but the Fed minutes this afternoon often cause some volatility so caution is key.

Mortgage bonds opened slightly weaker this morning

Mortgage bonds opened slightly weaker this morning eating away some of the small gains from Friday afternoon.

There was no data this morning. We initially looked to open considerably weaker as reports from the euro zone indicated the European Central Bank would buy member nation debt to help keep borrowing costs in check. However, the ECB downplayed those initial reports and the seesaw volatility resumed.

We have a light data week but the Fed minutes Tuesday often cause some volatility so caution is key.

Mortgage Rates Unchanged

Mortgage bond prices opened slightly positive on the day but not enough to erase the significant losses from yesterday afternoon. Rates remain worse since pricing Wednesday morning.

In new, housing starts came in @ 746k, expected @ 757k. This data was generally rate friendly. Weekly jobless claims @ 366k, expected 365k, relatively in line and didn't move things much.

News out of the euro zone was mixed. Overall growth continued to contract while Germany remained the one bright spot with steady growth.

British retail sales showed a somewhat surprise uptick, but much is being attributed to the Olympics and future projections look for that figure to fall back down.

We have Philadelphia Fed, LEI, and consumer sentiment data Friday morning.

look to open negative adding to recent negative trend

Mortgage bond prices remained weaker throughout the day adding to the losses from yesterday afternoon.

The U.S. bond market was generally weaker heading into the data as news out of the euro zone was not U.S. rate friendly. France and Germany both saw higher than expected GDP figures. While the rest of the euro zone showed decreases, those decreases were expected.

The news this morning added fuel to the already negative fire. Retail sales rose 0.8%, considerably higher than the expected 0.3% increase. The producer price index was higher than expected. PPI rose 0.3%, expected up 0.2%. The core, which excludes volatile food and energy rose 0.4%, expected up 0.2%... not rate friendly! The last thing we need is to see inflation fears ignited. Inflation, real or perceived is the enemy of fixed income securities and causes prices to fall and rates to rise.

Tomorrow we have consumer price index, industrial production, and capacity use data.

Expect more volatility

Mortgage bond prices opened slightly weaker this morning adding to the losses from Friday afternoon.

There is no data today but this week brings some important releases with retail sales and inflation data toward the front portion of the week.

News out of the euro zone was not as bad as typical. Greece economic growth declined 6.2% but beat estimates of a 6.6% decline. This isn't exactly good for Greece but in the short term gives some hope.

Stock futures are slightly weaker while oil prices are slightly higher this morning. Expect more volatility from both.

Up Down up Down

Mortgage bond prices opened better adding to the gains from yesterday afternoon.

News around the globe showed continued economic weakness. Indications that Chinese exports are weakening reignited those concerns and sent some flight to quality buying into U.S. debts including mortgage bonds.

News out of the euro zone indicated France continues to struggle. The Bank of France indicated the economy is likely headed for recession. Just another indication of how troubling things are in Europe.

There is no data today but hopefully this positive rebound will continue so we recover the losses seen earlier this week.

This morning represents a forward drop for MBS traders. The front month for delivery has rolled to SEPTEMBER. This is a technical aspect of the bond market and has no real impact on daily rates. Secondary managers have been pricing into the SEPTcoupon for some time. What is most noticeable is the drop in bond prices as forward months fall approximately 8/32s to 10/32s.

Mortgaeg Rates on the Rise

Mortgage bond prices opened slightly weaker this morning adding to the losses from yesterday afternoon following mixed data.

The trade deficit came in at $42.92b, expected $47.5b. A falling deficit usually strengthens the value of the dollar and can help rates. The short term reaction was muted as the weekly jobless claims data overshadowed the release.

Weekly jobless claims came in @361k, expected 370k, not rate friendly.

In new from the euro zone, one of the founding fathers of the euro, Otmar Issing, a former European Central Bank chief economist, said that some countries may be forced to leave the currency to save the euro and strengthen Europe. So far we have had little traction on the report but expect continued volatility on this front.

We have a 30Y Treasury auction this afternoon that is likely to factor into trading.

The market is Unchanged since Tuesday 's ratesheet

Mortgage bond prices opened positive helping reverse the recent negative trend and helping rates improve a little.

Preliminary Q2 productivity up 1.6%, expected up 1.3%. The initial reaction was muted as U.S. debts looked to open positive even before the release.

News out of the euro zone continue to show trouble. The S&P downgraded the Greek credit rating, cutting the outlook from stable to negative. Not a huge shocker but counters other news articles claiming things are stabilizing for the euro zone. Spain continues to show weakness with industrial output continuing to fall. The only bright spot remains Germany which saw solid demand for their 10 year debt.

Mortgage bond prices remain weaker this morning pushing mortgage interest rates higher

Mortgage bond prices remain weaker this morning pushing mortgage interest rates higher. The data out of the euro zone was generally U.S. debt friendly but unfortunately we cannot get any traction from the news and the supply(Treasury auctions) heading our way this week are weighing heavily on U.S. debt instruments.

A manufacturing report out of Germany was weaker than expected but the initial short term reaction did not reverse the negative sentiment this morning for mortgage backed securities. The euro zone troubles are far from over and we should expect more volatility.

There was no data released this morning. We have a 3Y Treasury auction this afternoon.

Mortgage bond prices remain near the levels where daily pricing was set holding rates steady.

There was no data released this morning.

News out of the euro zone has driven trade for some time with flight to quality buying of U.S. debt helping keep mortgage interest rates low. All is quiet this morning with only minor political stories hitting the wires. A German foreign minister warned all parties to tone down the "very dangerous" rhetoric. "The tone is very dangerous. We must take care not to talk Europe down," Westerwelle said in a statement. He added, "We need a strengthening, not a weakening of democratic legitimation in Europe." So not only does the euro zone face disaster, the ruling powers are so fragmented it is difficult for them to even present a much-needed unified front to tackle the very difficult problems ahead. This is far from over and continued volatility is to be expected

Rates are under pressure

Mortgage bond prices opened lower applying upward pressure to mortgage rates. Rates are under pressure following stronger than expected jobs data.

In news released at the open, non-farm payrolls rose 163K and the unemployment stood at 8.3%. Expectations were for the US economy to add 100K new jobs and the unemployment rate to stand at 8.2%. The stronger read on the non-farm payrolls number may well give Ben Bernanke cause to pause.

Traders are now waiting for stocks to begin trade at 9:30 am ET.

Mortgage bond prices are currently extremely volatile

Mortgage bond prices are currently extremely volatile with swings of 4/32 common. The volatility comes as traders digest comments from ECB head Draghi.


In news released this morning, weekly jobless claims printed at 365K and continuing claims, a summation of all receiving benefits, at 3,272K. That data was near expectations.

In Europe, the ECB held rates unchanged with chairman Draghi speaking when the financial markets opened in the US. From the comments we have seen, it appears as if he is setting up fight between the ECB/Euro Zone and Germany. Germany opposes the outright purchase of debt from the PIGS of the euro. This is going to be very interesting to see how it plays out.

Stocks open at 9:30 am ET and factory orders data will be released at 10:00 am ET.

ADP payroll processing report indicated the US economy added 163K

Mortgage bond prices opened lower Wednesday morning erasing the small gains seen Tuesday afternoon. Rates are under mild pressure from positive stock futures, an indication the Dow will open higher.

In news released this morning, the ADP payroll processing report indicated the US economy added 163K jobs last month. Economists’ estimates were for an increase of 125K jobs. This is the first of three employment reports this week. Tomorrow brings weekly jobless claims and Friday we will see the Bureau of Labor Statistics monthly employment report.

Traders are now waiting for stocks to begin trade at 9:30 am ET and for the release of ISM data set for 10:00 am ET.

The Federal Reserve concludes a two-day meeting today and will announce any changes to monetary policy at 2:15 pm ET. Global expectations are running high for central banks in Europe, Asia and the US to provide more stimulus to promote growth. Ben Bernanke and the Fed have four options ranging from doing nothing, continuing to lay the groundwork for more easing, extend promise to keep rates low to a full blown QE3. Be ready for a volatile afternoon. Given the fact that the ECB meets tomorrow, ADP came in better than expected and the monthly jobs report is set for Friday we would not be surprised to see little from the Fed this afternoon.

Mortgage bond prices opened higher Tuesday morning

Mortgage bond prices opened higher Tuesday morning adding to the gains seen Monday afternoon.

In news released at the open, personal income rose 0.5% and outlays were unchanged. Expectations were for income to rise 0.4% and outlays to rise 0.1%. The inflation component of the report, core PCE, rose 0.2% as expected.

Traders are now waiting for stocks to begin trade at 9:30 am ET and for the release of consumer confidence data set for 10:00 am ET.

The Federal Reserve convenes a two-day meeting today and will announce any changes to monetary policy tomorrow. Thursday the ECB meets and Friday brings the monthly jobs report. Traders’ expectations for action from the central banks are high, especially for the ECB. While the Fed has the option of waiting until September, when the governing body publishes new economic projections, Mr. Draghi from the ECB does not have that luxury. With rising unemployment and falling GDP, the ECB must do something to sooth the markets. Europe desperately needs to buy some time.

Mortgage bond prices opened slightly higher Monday

Mortgage bond prices opened slightly higher Monday morning erasing some of the losses seen Friday afternoon. Rates are finding mild support in thin trade from weak stock futures.

With no economic news set for release today traders are waiting for stocks to begin trade to help gauge interest rate direction. The equity markets open at 9:30 am ET.

This week is packed with important events that will move prices of both bonds and stocks. Central Banks in the US, England and Europe all meet this week. Markets continue to price in additional easing as the global economic outlook darkens. Prepare yourself and your borrowers for what could be a wild ride.

The market is Worse by 3/8 since Thursday 's ratesheet

Mortgage bond prices remained weaker this morning pushing rates higher as stocks surged higher yesterday on hopes of Fed intervention. Stock futures are up again this morning after the DOW closed up 212 points yesterday.

Advance Q2 GDP up 1.5% as expected, consumer sentiment data later this morning. The initial reaction to the data has been poor for bonds causing rates to rise.

Oil prices rose this morning on hopes of additional action from both the European Central Bank and the Fed.

Weekly jobless claims came in @353k, expected @380k

Mortgage bond prices remain slightly weaker this morning pushing rates higher.

The headline figures of the economic releases this morning were not rate friendly, but some of the underlying components resulted in mixed reports.

Weekly jobless claims came in @353k, expected @380k. This was not rate friendly. Durable Goods Orders up 1.6%, expected up 0.4%. This also pressured rates. However, the ex-transportation component of the durable goods release showed a 1.1% decrease which was considerably weaker than the expected unchanged reading.

News out of the euro zone indicated the European Central Bank would boost efforts to shore the instability. Full details This reduces the flight to quality buying of U.S. debt instruments in the short term. However, the euro zone troubles are far from over. Spain and Greece remain in dire shape. Full details

Expect additional volatility!

Mortgage bond prices opened weaker this morning on news out of the euro zone

ECB member stated that the euro rescue fund should be granted a banking license. This sent some initial shockwaves through the financial markets.

There was no data first thing this morning. We have new home sales data @ 10am et and a 5Y auction this afternoon.

News Data out of the euro zone showed continued weakness. A German manufacturing report showed weak sentiment along with lower capacity use.

While there are no certainties, the euro zone crisis is far from over and we are likely to see additional market swings. Stay alert.

How long can they weather the storm?

Mortgage bond prices opened slightly weaker as we see things back up from the recent runup in prices.

There was no data this morning. We have a 2Y note auction this afternoon.

News out of the euro zone was mixed this morning. Moody's downgraded Germany's credit rating outlook and Chancellor Merkel was quick to counter those reports with her own statements which indicated, “Germany will, through solid economic and financial policy, defend its ‘safe haven’ status and continue to responsibly maintain its anchor role in the euro zone." The trouble isn't that Germany's economy is solid compared to the rest of the euro zone, rather, Germany is being slowly but surely bound to the risk from all the other insolvent countries(Spain, Italy, Greece, etc....)

Mortgage bond prices opened higher this morning pushing rates lower.

There is no economic data today. However this week brings 2/5/7-year auctions and Q2 GDP.

Europe continues to slide toward the financial abyss. News out of Spain over the weekend indicated various regional governments are seeking financial assistance. Spain's 10 year borrowing costs surged higher to near the 7.5% mark. These regional governments must refinance billions in debt and are struggling to find a solution.

Spain isn't the only concern as the Greek prime minister indicated the country was in a "Great Depression."

The flight to quality buying of U.S. debt instruments continues. In the short term this is great for U.S. mortgage interest rates. However, the future remains uncertain. Escalating oil prices could ignite inflation fears which would create a dire situation for economies across the globe.

Mortgaeg Bond Prices Open Higher

Mortgage bond prices opened higher Friday morning adding to the small gains seen Thursday afternoon. Rates are finding support from weak stocks in Europe and Asia.

There is no economic data set for release today, therefore traders will watch stocks to help gauge interest rate direction. The equity markets open at 9:30 am ET.

Trade in Europe was quiet overnight. The region continues to slide toward a financial abyss. Rising interest rates and unemployment continue to pressure member states. Unless decisive policy action is taken soon the damage will only get worse.

Mortgage bond prices near unchanged

Mortgage bond prices near unchanged Thursday morning holding mortgage rates steady from pricing Wednesday.

In news released at the open, weekly jobless claims printed at 386K and continuing claims, a summation of all receiving benefits, at 3,314K. Expectations were for weekly claims to increase 15K to 365K and continuing claims to fall 4K to 3,300K.

Traders are now waiting for stocks to begin trade at 9:30 am ET and for the release of existing home sales, LEI and the Philly Fed survey set for 10:00 am ET.

Things are heating up in Europe once again. Spain, the euro zones most precarious country, raised almost $4B in 2/5/7-year notes however it paid handsomely to do so. Buyers shunned the offering driving yields higher. Spain in once again at threshold of having to pay 7% in the secondary market to raise money, a rate that is considered unsustainable.

#Invest Twitter journal

Mortgage bond prices opened higher Wednesday

Mortgage bond prices opened higher Wednesday morning erasing the small losses seen Tuesday afternoon.

In news released at the open, housing starts printed at 760K. Expectations were for starts to increase 35K to 743K. That data was stronger than expected.

Traders are waiting for stocks to begin trade at 9:30 am ET. Federal Reserve Chairman Ben Bernanke will be in front of the House today delivering a carbon copy of the talk he gave the Senate yesterday.

This afternoon the Fed Beige book data will be released. The report details economic activity in the US. Traders will scour the report hoping to find the silver bullet that is QE3. That data will be released at 2:00 pm ET.

Mortgage bond prices opened higher Monday morning adding to the gains

Mortgage bond prices opened higher Monday morning adding to the gains seen Friday afternoon. Bonds are finding support from weak economic news released at the open.

In news released at the open, retail sales fell 0.5% in June. Excluding car purchases, retail sales fell 0.4%. That data was sharply weaker than expected. Analysts had estimated sales would rise 0.2% and ex-auto sales would be unchanged.

Traders are waiting for stocks to begin trade at 9:30 am ET.

This week is packed with important events and data, which will cause prices to swing. Tomorrow brings consumer price index (CPI), production and utilization data. Wednesday brings housing starts and the Fed Beige Book and Thursday we will see jobless claims, LEI and the Philly Fed survey. In addition 1/3 of the stocks in the Dow will release earnings reports.

The main event of the week is expected to be Federal Reserve Chairman Ben Bernanke's congressional testimony on the economic outlook on Tuesday and Wednesday. Investors will scour his remarks for any hints the Fed is leaning toward providing additional monetary stimulus.

The Euro Zone continues to struggle. In a turnaround from previous policy, the European Central Bank (ECB) advocated imposing losses on senior bondholders of debt issued by Spanish banks. This marks a contrast to the position the bank took when bailing out Irish banks in 2010 and is furthers evidence the situation in Europe is fluid.

PPI up 0.1%, expected down 0.5%, Core up 0.2% as expected

Mortgage bond prices opened weaker this morning following the higher than expected inflation data. This erased the small gains from yesterday afternoon.

The producer price index rose 0.1%, higher than the expected 0.5% decrease. The core, which excludes volatile food and energy prices, rose 0.2% as expected.

We still have consumer sentiment data @ 10am et.

Stock futures are slightly higher.

News out of the euro zone is generally tame this morning. Italian officials are railing against another Moody's downgrade of Italy's credit rating. Concerns continue to grow in Spain regarding reports that Spanish banks are having difficulty staying capitalized. Turmoil abroad is generally good for U.S. debt instruments which are viewed as a safe-haven amid all global uncertainty.

Rates are due for a bounce

Mortgage bond prices opened slightly positive this morning helping erase most of the losses from yesterday afternoon. Unfortunately we still remain a few ticks worse since pricing yesterday morning.

We initially looked to open considerably positive following overnight developments in the euro zone. Unfortunately the data came in against us which pared some of the gains. Weekly jobless claims @ 350k, expected @ 372k, not rate friendly.

The ECB released a report indicating the possibility of additional downside risks.

We have a 30Y auction this afternoon.

Mortgage Rates Continue to Drop

Mortgage bond prices opened near unchanged this morning holding the gains from yesterday afternoon.

This morning represents a forward drop for MBS traders. The front month for delivery has rolled to August. This is a technical aspect of the bond market and has no real impact on daily rates. Secondary managers have been pricing into the August coupon for some time. What is most noticeable is the drop in bond prices as forward months fall approximately 8/32s to 10/32s.

Rates continue to find support from weakness abroad but Germany had an auction with a low yield overnight. Overall the news out of the euro zone is tame so far this morning.

We have a 10Y auction this afternoon along with the Fed minutes. Stock futures are slightly positive.

Mortgage Bond Prices At all Time Lows

Mortgage bond prices remained near unchanged this morning holding the gains from yesterday. Rates continue to find support from weakness abroad.

There was no data this morning. Stock futures are slightly higher this morning after the DOW closed down 36 points yesterday.

News out of Europe this morning inidcated finance ministers eased up on austerity demands to help Spain. News out of China continued to show economic slowdown.

We have a 3Y auction this afternoon.

Mortgage bond prices

Mortgage bond prices opened positive this morning helping mortgage interest rates improve.

There was no data this morning. Stock futures are slightly weaker pointing to a lower open for equities later this morning.

News out of Europe this morning shows continued trouble. Spain's borrowing costs continue to increase which has euro zone leaders scrambling. In the short term this is good for U.S. debt instruments as flight to safety resumes.

Only Rose 80k

Mortgage bond prices opened higher Friday morning adding to the gains seen Thursday afternoon.

In news released this morning, non-farm payrolls rose 80K and the unemployment rate stood at 8.2%. Analysts’ expectations were for the US economy to add 100K new jobs and the unemployment rate to stand at 8.2%. That data was weaker than expected and bond friendly.

Traders are now waiting for stocks to begin trade at 9:30 am ET.

Things were quiet in Europe overnight. Governments in the region continue to move forward with a more pro-growth stance than in the past. The strict austerity demanded of the PIGS has only caused their respective economies to spiral downward. Unemployment in Greece and Spain is north of 20%, near 50% for the younger workers. High unemployment can be devastating from a fiscal and social perspective. Everyone loses when an unemployed person has his or her house taken by a bank.

Stronger than expected...

Mortgage bond prices opened lower Thursday morning following stronger than expected economic data.

In news released this morning, the ADP payroll report showed the US economy added 176K private sector jobs last month. Analysts were expecting the ADP report to show 105K jobs. That data was much higher than expected.

Weekly jobless claims printed at 374K and continuing claims, a summation of all receiving benefits, at 3,306K. Expectations were for weekly claims to fall 1K to 385K and continuing claims to 13K to 3,283K.

The data released this morning was better than expected and not bond friendly.

Traders are now waiting for stocks to begin trade at 9:30 am ET. Currently Dow futures indicate a flat open.

Tomorrow brings the monthly jobs report for the Bureau of Labor Statistics (BLS). Trading volumes are thin with many senior traders still on vacation. Let your floating borrowers know tomorrow brings the single most important economic event of the month.

Central banks around the globe cut lending rates and used other tools to spur economic growth. The People’s Bank of China lowered interest rates for the second time in a month. The European Central Bank cut lending rates by .25% to a historic low of .75%. In England, the Bank of England left rates unchanged however they increased its bond-buying program (QE) by 50B pounds. Looks like QE3 is in the wings.

Suprise! We have a Band Aid...

Mortgage bond prices remain sharply lower pushing rates higher following a surprise euro zone deal in the early hours Friday morning.

Euro leaders agreed to a plan to help lower borrowing costs which allows rescue funds to be used for sovereign debt purchases without cutting more spending. This was a sharp contrast to Germany's demands that additional assistance must come with additional cuts. Market participants were caught by surprise as no deal was expected from the meeting. Unfortunately in the short term, this lowers borrowing costs for troubled nations such as Italy and Spain. This also reverses some of the flight to quality buying of US debt instruments, which is what we are seeing this morning. However, this doesn't solve the debt problems the euro zone faces and more volatility is expected. We call this a BANDAID and only a short term move. Much bigger problems remain for that region.

Personal income up 0.2%, spending unchanged, both exactly as expected. Michigan consumer sentiment came in at 67.8 versus the expected 69 mark. The data is being heavily overshadowed by the euro zone developments.

Mortgage Bond Prices Slightly Higher

Mortgage bond prices opened slightly positive this morning helping add to the small gains from yesterday afternoon which is seeing rates improve.

Weekly jobless claims @ 386k, expected 385k, Q1 GDP final revision up 1.9% as expected.

News out of the euro zone countered yesterday's remarks by German Chancellor Merkel which rejected a proposal to "share" the euro zone debt through bonds. This morning German Finance Minister Wolfgang Schäuble said ""We are willing to go as far as we need to in order to get a sustainable agreement in Europe." Round and round we go.... expect more up and down trading tied to Europe as their situation remains in flux.

A wild first half, Whats next?

Mortgage bond prices remain slightly weaker this morning following the data.

Durable goods orders rose 1.1%, higher than the expected 0.4% increase. However****, ex-transportation figures rose 0.4%, lower than the expected 0.7% increase. Overall the data was mixed and the market swung back and forth as it digested it. At the open, the initial reaction was slightly negative though only within a narrow range. Stocks seemed to like the data with the DOW up 47 points at 10am et PRICING.

News out of the euro zone was good for US debt as German Chancellor Merkel rejected a proposal to "share" the euro zone debt through bonds. Expect more up and down trading tied to Europe as their situation remains in flux.

We have a 5Y Treasury note auction this afternoon.

S & P TO 1500?

Mortgage bond prices opened slightly weaker this morning erasing some of the small positive gains seen at the close yeaterday. News out of the euro zone was positive overnight which reverses some of the flight to quality buying of US debt that helped rates yesterday.

A German consumer sentiment index was higher than expected. There are fears that the euro debt crisis will eventually boil over into the German economy. So far higher wages and increased spending from consumers shows the German economy remains fundamentally positive. How long Germany can hold strong amid all the turmoil surrounding it is debated.

We have consumer confidence data @ 10am et.

We Are Living in a Modern Day Depression: David Rosenberg The 'Modern Day Depression’ Is Already Here

Mortgage bond prices opened higher this morning helping knock out the small losses from Friday afternoon. Rates are being helped by continued turmoil in the euro zone.

Spain asks euro zone for $77b to recapitalize banks. This rekindles the flight to quality buying of US debt instruments such as mortgage backed securities.

We have new home sales data later this morning before pricing is set. This week has several important data releases including consumer confidence, durable goods, personal income and outlays.

Moody’s Investors Service downgraded multiple large financial institutions and banks. In February the company said it was going to examine banks with a global reach. Five of the six largest US banks had their ratings downgraded, which could effect borrowing costs and reserve requirements.

What will Mr. Bernake do?

Mortgage bond prices opened lower Wednesday morning erasing the small gains seen yesterday afternoon. Rates are under pressure from positive stock futures, an indication the Dow will open higher.

With no news set for release this morning traders are waiting for stocks to begin trade at 9:30 am ET. At the opening of the bond market at 8:30 am ET Dow futures were up 97.

This afternoon promises to be interesting. The Federal Open Market Committee concludes its two-day meeting. Any changes will be announced at 12:30 p.m. ET, with Fed Chairman Ben Bernanke scheduled to convene a news conference at 2:15 p.m. ET. Mr. Bernanke has three options; do nothing, extend Operation Twist or announce another round of quantitative easing. Economic conditions have deteriorated since the Fed last met. This puts pressure on the Fed to do something. Stocks are betting on QE3. Be careful this afternoon. If Mr. Bernanke were to drop a “tape bomb” during the press conference the markets would become volatile quickly.

Central banks around the globe are under pressure to act as economic activity slows. The Bank of England Monetary Policy Committee is under pressure to extend their current quantitative easing program. The bank of Japan stands ready to act if the situation in Europe continues to decline.

QE3 coming to a rate sheet near you?

Mortgage bond prices opened near unchanged Tuesday morning holding rates steady from pricing Monday.

In news released at the open, housing starts printed at 708K. Expectations were for 725K starts. That data had little effect on trade.

With no more news set for release today traders are now waiting for stocks to begin trade at 9:30 am ET. Currently Dow futures indicate the index will open slightly higher.

Trade in Europe was quiet, a welcome relief. The ZEW Economic Sentiment report shocked to the downside with both the Euro zone and Germany printing well below expectations. Recession pressures are building in Europe and around the world. Greece looks to form a collation government as early as today. That would be good news for the entire world.

The Fed begins their two-day meeting today and will announce changes to interest rate policy tomorrow afternoon. Many are looking for the Fed to ease further. At this juncture in history, the majority of the world’s major economies are looking for support from central bankers. Global growth is slowing and inflation pressures are in check. Who knows, is QE3 coming to a ratesheet near you?

Greek election victor calls for broad coalition Europe Hints at More Time for Greece

Mortgage bond prices opened higher Monday morning adding to the gains seen Friday afternoon. Rates are finding support from weak stock futures, an indication the Dow will open lower.

The much anticipated Greek election is finally over. The pro-bailout group, The New Democracy’s won the election helping calm global worries. Stocks shot higher in Asia and Europe on the hopes Greece will be able to form a collation government. This remains to be seen. If Greece is unable to do so another election will be held. This story is far from over.

Spain is back in the crosshair of the bond vigilantes. Yields on the beleaguered country’s 10-year bond shot to 7.15% before backing off. Yields in Italy are also under pressure. 7% on 10-year money is considered unsustainable and has driven other countries into a full-blown bailout. The bottom line is Europe remains a mess and this weekend’s events only kicked the can further down the road. Europe needs to make some bold moves quickly to keep the union together.

With no data set for release today traders are waiting for stocks to begin trade at 9:30 am ET to help gauge interest rate direction. At the bond market opening the Dow futures were down 44.

Greek Elections this weekend

Mortgage bond prices are positive at the open helping recover the small losses from yesterday afternoon.

The entire world is on hold waiting for the outcome of the Greek elections this weekend. The vote may well dictate whether or not Greece stays in the euro. The ramifications of the vote, no matter the result, still remain very uncertain. Even if Greece stays in the euro zone how does it resolve all the problems it faces with massive debt that cannot be repaid?

We have industrial production, capacity use data, and Michigan consumer sentiment data later this morning.

EU Countries Across World Gird for Greece Turmoil

Mortgage bond prices opened negative on the day despite bond friendly data. The initial reaction was positive but things quickly swung the other way. Fortunately we only erased the gains from yesterday afternoon.

Weekly jobless claims @ 386k, expected @ 375k. The consumer price index fell 0.3%, expected down 0.2%, The core, which excludes volatile food and energy prices, rose 0.2% as expected. The data continues to show economic weakness with little or no price pressures which generally bodes well for low rates.

We still have a 30Y auction this afternoon.

Spain saw government debt ratings downgraded by Moody's overnight. A debt rating downgrade using means higher rates for them which is the last thing they need as unemployment is already very high and their borrowing costs already show increased yields. However, other euro zone bonds are showing lower yields this morning on increased demand such as the UK, Germany, and Italy.

Mortgage bond prices opened near unchanged

Mortgage bond prices opened near unchanged failing to erase the small losses from yesterday afternoon.

The data this morning didn't move the market much.

Retail sales down 0.2% as expected , PPI down 1%, expected down 0.6%, Core up 0.2% as expected.

We still have a 10Y auction this afternoon.

US debt across the board(Treasuries, MBS, etc...) is a bit weaker this morning as a euro zone industrial production figure beat estimates slightly. The figure was still negative but it seems like any good news in the euro zone is received well as of late.

Traders work on the floor of the New York Stock Exchange Futures Mixed Higher as Volatility Swirls

Mortgage bond prices opened weaker this morning erasing most of the gains from yesterday afternoon. There was no data this morning. We have a 3Y note auction this afternoon. News out of Europe overnight is very tame. Nothing moving the markets much and things remain shockingly quiet. This is a stark contrast to the volatility out of the euro zone as of late. Stock futures are sharply higher. Stocks and bonds often trade inversely, though not always the case. Spains "bailout" (THOUGH commentators are careful not to use that word, but let's call it what it is) still is factoring into trade. The eurozone stepped in and helped Spain's banks with $125 billion of assistance. The last thing Europe needs is additional defaults. Greece is already rumored to be leaving the euro, they can't add Spain to the fears without dire consequences. In the short term this rescue package helps, in the long term things still look dire. Spain is now the fourth on the list of countries the eurozone have bailed out....Portugal, Greece, Ireland. Italy is also in bad shape. France isn't without woes. Some analysts this morning say the recent steps are only a bandaid and we will revisit Spain's woes again in 30 days. We shall see. This morning represents a forward drop for MBS traders. The front month for delivery has rolled to July. This is a technical aspect of the bond market and has no real impact on daily rates. Secondary managers have been pricing into the July coupon for several weeks. What is most noticeable is the drop in bond prices as forward months fall approximately 8/32s to 10/32s. />

Traders work on the floor of the New York Stock Exchange Futures Gain on Spain Aid Deal

Mortgage bond prices opened slightly positive on the day but failed to erase the losses from Friday afternoon which leaves us worse since PRICING Friday morning. There is no data today, however this week brings 3/10/30-year auctions, consumer and producer price index data and retail sales. The eurozone stepped in and helped Spain's banks with $125 billion of assistance. The last thing Europe needs is additional defaults. Greece is already rumored to be leaving the euro, they can't add Spain to the fears without dire consequences. In the short term this rescue package helps, in the long term things still look dire. Spain is now the fourth on the list of countries the eurozone have bailed out....Portugal, Greece, Ireland. Italy is also in bad shape. France isn't without woes.

No Rest for the Weary

Mortgage bond prices opened higher Friday morning adding to the gains seen Thursday afternoon. Rates are finding support from weak stocks. Equity markets in Europe and Asia are lower and the selling pressure appears to be spilling over into the US markets. At the bond market opening Dow futures were lower by 51-points. In news released this morning, the trade deficit stood at $50.1B. Analysts were expecting a deficit of $49.7B. That data has little effect on trade. With no more data set for release today traders are waiting for stocks to begin trade at 9:30 am ET. No rest for the weary. It is going to a busy weekend in Euro Land. Saturday morning senior euro zone officials and European Union finance ministers will discuss how to provide support to Spain. A euro zone official described the situation in Spain as “quite bad”. The IMF and two outside companies are scrutinizing data from Spain in an attempt to find out how deep the hole really is. It is unclear how officials plan to provide the aid and how much is needed. Spanish banks have a similar issue faced here in the US. In the boom times mortgages were easy to obtain and housing prices were escalating quickly. We know how that ended. As the amount of foreclosures grow, housing prices come under pressure which effects the value of the loans (both performing and non-performing) held by the banks. As the value of the loans (an asset) falls, capital ratios are reduced requiring the banks to raise money. To raise money banks sell holdings of high grade performing loans, which have the most value. This is another one of those vicious cycles.