Mortgage Rates

The day started with better prices for mortgages and the 10 yr note yield at 1.70% at one point about 8:15. Global stock markets weaker this morning on weaker than expected growth in China; the key GDP index rose 7.7% in the first quarter, the National Bureau of Statistics said in Beijing. That compared with the 8% median forecast by analysts and the 7.9% pace in Q4 2012. At 8:30 in the US, the NY Empire State manufacturing index also weaker than forecasts; the index at 3.1 frm 9.2 in March was expected at 7.5. Beside the weaker economic data early this morning that has supported interest rate markets; Fed officials out denying the Fed is ready to end the QE. Charles Evens Chicago Fed President said the Fed’s monetary policy isn’t accommodative enough. Narayana Kocherlakota, Minneapolis Fed President said he would like to see more accommodative polices. Dennis Lockhart, Atlanta Fed President he supports more easing. The three spoke on Saturday. This week has a number of Fed officials speaking; Fed Governor Elizabeth Duke at 12:30 Tuesday,  Narayana Kocherlakota at 1:00 Tuesday, Janet Yellen Vice Chair at the Fed at 3:00 Tuesday. On Wednesday at 9:00 am Jeremy Stein, Fed governor, at 9:30 St Louis Fed Pres. Bullard and Eric Rosengren, Boston Feb President at 12:00 pm. The discussions about the QE continues with varying comments frm numerous Fed officials, pro and con. At 9:30 this morning the DJIA opened -34, NASDAQ -17 and S&P -5; the 10 yr note at 1.71% -2 bp, 30 yr MBSs +6 bps. At 10:00 the April NAHB housing market index was expected at 45 frm 44 in March; as reported the index dropped again, the second drop in the last two months to 42. The pivot between gains and weakness is 50. Very disappointing, especially when most have begun to believe the housing sector would pull the economy upward. Tomorrow March housing starts and permits are on the schedule.   Gold is collapsing again this morning; Friday selling dropped the metal $77.00, this morning early gold was off over $100.00, at 10:00 down another $90.00. Investors are being forced out of long positions as the exchange will likely increase margin rates. Deflationary fears frm China, last week’s outright sell recommendation frm Goldman/Sachs and talk that Cyprus will begin selling its gold reserves are joining to drop gold that traded at $1570 a few days ago now at $1412.00, (-$170.00 since last Thursday’s close). And not only gold falling, crude oil is down $2.00 this morning and down $9.00/barrel in the last two weeks. The recent drop in the rate on the 10 yr note, frm 1.90% on the first of April to 1.70%, is working on the low this morning. The stock market is under pressure so far today, but we don’t put much emphasis on it until later this afternoon. These days it is more the norm than unusual that movement in the key indexes have a pattern of weakness through the day but recovering in the final hour. At 10:00 today the 10 yr, after being down 2 bps in yield earlier, is trading unchanged frm Friday at 1.73% with MBS prices about unchanged frm Friday.

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