Mortgage Markets^^

http://globalhomefinance.com

The mortgage markets started better this morning after the 10 ye found early support at 1.95% and US stock indexes pointing to a weaker open at 9:30. There are no scheduled economic reports today or tomorrow, and not much else on the calendar. Wednesday is the big day this week; Ben Bernanke will testify at the Joint Economic Committee and the 5/1 FOMC minutes will be released. Also Wednesday April existing home sales are due; sales expected to have increased about 2.6%. At 9:00 this morning the 10 yr note yield down 2 bps at 1.93%, 30 yr MBS conventional mtgs +20 bp while FHAs up just 3 bps. At 9:30 the DJIA opened -22, NASDAQ -7, S&P -2; the 10 yr at 1.93% -2 bp and 30 yr conventional MBSs +21 but FHAs and 15 yr mtgs flat. European stocks were little changed, following four consecutive weeks of gains for the benchmark Stoxx Europe 600 Index. U.S. index futures fluctuated, while Asian shares rallied. Scanning the news wires this morning there was nothing of substance in terms of market interest. The same may be the case tomorrow with no US data being reported. Hard to find anything this morning that might have any impact on the markets. Dallas Fed President Richard Fisher on CNBC early this morning talking about the Fed’s easing’s and how the Fed should begin to exit; slowly with small reductions at a time. He talked about the MBS market, saying he believes the market has righted itself and by innuendo suggested the MBS purchases may be the first to see some withdrawal. Nothing really new in his remarks, everyone knows when it is time for the Fed to take the ‘bowl’ away it will be a gradual move. He, like us, wonders what impact cutting MBS purchases will actually have. Who will want to hold the present MBSs at these low yields when there is no doubt that interest rates are going to increase frm these historic low levels. As for the Fed beginning to exit, it is unlikely Bernanke will want to begin winding down until there is more data that confirms the economy is gaining momentum. So far the last couple of months the preponderance of data has been soft. GE’s finance unit plans to return $6.5B in dividends to the parent company in 2013 as Chief Executive Officer Jeffrey Immelt pursues his plan to shrink the size of the business. GM Capital was hard hit when markets collapsed in 2009. GE Capital resumed the payouts last year, returning $6.4B to its parent, after suspending them in 2009 as frozen credit markets jeopardized its access to financing. Immelt has pledged to reduce the company’s reliance on profit from the financial unit and is tapping it for cash to fund stock buybacks and dividends that are slated to return $18B to shareholders this year. The payments from GE Capital will consist of $2B in earnings dividends and a $4.5B special dividend, GE said today in a statement. GE Capital paid a first-quarter earnings dividend of $447 million on April 19. Markets may see some minor improvement in the bond market and minor losses in the stock market today and tomorrow ahead of Ben Bernanke’s Congressional testimony on Wednesday. Nothing significant, mainly balancing positions prior to any potential market-moving comments frm the Chairman. What would it take to turn the present negative sentiment around in the bond market? Not sure what fundamentals would occur, but the world is anything but relaxed these days as evidenced with the high levels of volatility in the bond and mortgage markets over the last three weeks. Technically, if the 10 yr note yield were to fall below 1.80% that would likely change the bearish mood that is dominate at the moment.