Real Estate and Mortgage updates

Similar to the last few days, the bond and mortgage markets started a little lower in price. There are no economic releases today and not much news. At 9:00 the 10 yr traded at 2.85% and still in its extremely narrow range again this morning, 30 yr MBS prices at 9:00 -16 bps frm yesterday’s close. Bad weather in the East today will likely keep the trading activity at low volumes.

Scanning the wires, perusing the WSJ and other news outlets; there isn’t any news that directly impacts US markets, or global markets either. Days like this don’t have anything significant to report or debate. The only news out there is the weekly MBA mortgage applications.

Mortgage applications increased 4.7% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 17, 2014. The Refinance Index increased 10% from the previous week. The seasonally adjusted Purchase Index decreased 4% from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 15 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 64% of total applications, the highest level in a month, from 62% the previous week. 

It is news but not market-moving. Mohamed El-Erian, widely viewed as the successor to Pacific Investment Management Co.’s Bill Gross, resigned after six years as the firm struggles to stem record redemptions from the world’s largest bond fund. PIMCO has seen $41B in withdrawals in 2013 frm the $237B PIMCO total return fund.

The DJIA opened -23, NASDAQ +8 and the S&P +2; the 30 DJIA stocks are under pressure for the second day but the broader indexes still doing well. The rest of today for the interest rate markets is likely to be set by how the key stock indexes perform, If the indexes come under pressure the 10 yr and mortgage prices should improve a little but not much. It is all about next week’s FOMC meeting now; most expect the Fed will announce another $10B reduction to its monthly purchases of MBSs and long-dated treasuries, taking the monthly total to $65B with another $10B cut coming on March 20^th
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Getting a little to touchy to float now; we have been floating for the last four sessions and haven’t experienced any losses but I believe we have pushed the limit for the moment. The 10 cannot decline below 2.82% while the upside for rates is equally stuck at 2.86%. The bet in floating today is on how the key stock indexes will perform, selling in stocks will support the bond market but a strong rally will be difficult for the bond and mortgage markets to overcome

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