Mortgage Rates

Mortage Raes The stock market better in early pre-market trading; the 10 yr note higher in yield. Mortgage prices at 8:30 were generally unchanged. 8:30 brought weekly jobless claims, claims were up 34K to 386K after falling last week’s decline of 26K. Expectations were for claims to increase 15K. There was little reaction to the report; the volatility in the numbers was due to a change in the timing of annual automobile plant layoffs. This time of year auto makers shut down for re-tooling and each year there are a few weeks that claims data is impacted. The timing of auto plant shutdowns to retool for the new model year has been difficult to predict this year, making adjusting the claims data for these seasonal variations more challenging. The four-week moving average, a less-volatile measure, fell to 375,500 from 377,000. The number of people continuing to collect jobless benefits increased by 1,000 in the week ended July 7 to 3.31 million. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs. At 9:30 the DJIA opened +24, NASDAQ +20, S&P +3 on stronger than expected earnings reports from e-Day and IBM. At 9:30 30 yr MBSs -1/32 frm yesterday’s close; the 10 yr note 1.51% +1 bp Three more reports at 10:00. June existing home sales were expected up 2.7% to 4.65 mil units (annualized). July Philly Fed business index expected at -8.0 frm -16.6 in June. June leading economic indicators expected -0.2%. Existing home sales declined 5.4% to 4.37 mil units. The Philly Fed index was weak at -12.9 frm -16.6 in June; and Leading economic indicators -0.3%. All three reports were weaker than what had been thought. Somewhat surprising that the equity markets didn’t see more selling, but the data being weaker increases the view the Fed will have to ease again. The Philly Fed report implies the ISM data will be weak when reported in two weeks. The number of previously owned homes on the market decreased 3.2% to 2.39 million in June from a month earlier. At the current pace, it would take 6.6 months to sell existing inventory, the longest since November, compared with 6.4 months at the end of the prior period. Sales of single-family homes decreased 5.1% to an annual rate of 3.9 million, the slowest this year, while condominiums and co-op transactions dropped 7.8% to a 470,000 pace. Spain sold 2.98 billion euros of notes due from 2014 to 2019, in line with its maximum target. The Bank of Spain said demand for the two-year notes dropped to 1.9 times the amount sold from 4.26 last month. Spain’s 10-year government bond yield climbed above 7% following today’s debt sale. That was the level that spurred Greece, Ireland and Portugal to seek bailouts. Spain is negotiating a bailout of as much as 100 billion euros for its banks after souring real estate and consumer lending forced Bankia group in May to seek 19 billion euros of aid. German two-year yields were below zero for a 10th day before the parliament votes on aid for funding Spanish banks. Austrian, Belgian and French yields fell to records amid demand for havens with higher yields than Germany. German 2 yr note climbed two basis points to minus 0.042%. The 10 yr note failed to break 1.46% on a close Monday, since then the note has moved up fractionally. Mortgage prices are essentially unchanged since Monday. The 10 and 30 yr MBSs continue to hold positive momentum readings and both remain contained on selling at their respective 20 day averages. Since early April the 10 yr note has moved above its 20 day twice (6/22 and 6/29) but in each instance the note yield moved back down below it. That said, the rate markets have momentarily stalled; the note trading between 1.53% and 1.46%.