Thursday, July 9, 2009

Mortgage rates Charlottesville

Alcoa kicked off the earnings season after the close yesterday by reporting soft earnings, which depict the struggling economic climate. Also this morning, the Initial Jobless Claims came in better than expected and at the lowest level since January. However, continuing unemployment claims--which measures the number of people who still receive jobless aid after their initial week--rose by 12,000. When you add it all up, the number of Americans receiving unemployment benefits total 6.88 million, which is a new record high and more than double what it was this same time last year.
The recent rally has provided a second chance to see all-time lows in mortgage rates. That doesn't happen often and presents a huge opportunity. Currently, Mortgage Bonds are slightly lower and appear overbought.
Leonard Winslow , Dominion Trust Mortgage
434-760-2580 (cell)
leonard.winslow@dominiontrustmortgage.com
www.dominiontrustmortgage.com/leonard.winslow
Posted by Rob Alley at 8:39 AM
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1 comments:

Rob Alley said...

Thursday's bond market has opened well in negative territory as investors reverse positions taken over the past few days. This can also be considered profit-taking to capture the gains from the recent rally. The stock markets opened with gains but are now mixed with the Dow down a few points and the Nasdaq up 7 points. The bond market is currently down 22/32, but we will still see an improvement in this morning's mortgage rates of approximately .250 of a discount point compared to yesterday's morning rates due to gains late yesterday.

This morning's weekly unemployment figures showed a surprise drop in new claims for benefits. The Labor Department reported that 565,000 new claims were filed last week. This was much lower than the 603,000 that was expected. However, seasonal plant closings and the Independence Day holiday are believed to have skewed the final total. This data is not considered to be of high importance, but the size of the drop in claims and the fact it's the lowest total since January did catch the attention of traders and may be contributing to this morning's losses in bonds.

Yesterday's late rally in bonds was attributed to an overwhelmingly positive auction of 10-year Treasury Notes. The results showed that there was still a good demand for government securities, leading to buying in the broader bond market. This led to afternoon improvements in mortgage rates yesterday. But, it appears that some traders think that bonds are ready for a pullback and are selling holdings this morning. This could be a result of Alcoa's earnings last night that beat estimates or simply an expectation of profit-taking from the recent rally in bonds. Regardless of the reasoning, bonds are not looking pretty this morning. The question is whether the rally has run out of steam or is this is just a minor setback before another move higher.

Today also brings us the $11 billion auction of 30-year Bonds. Results of this sale will be posted at 1:00 PM ET, but this auction will most likely be of much less importance to the markets and mortgage rates than yesterday's 10-year sale was. I believe that it can do more harm than good if that makes sense. A strong demand from traders probably will be considered old news and not be enough to reverse this morning's losses. However, a weak demand could raise more concern that the bond rally may be ending, possibly leading to even more selling this afternoon. That could lead to afternoon increases in mortgage rates.

July 9, 2009 at 9:50 AM

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