Tuesday, November 18, 2014

Tuesday Real Estate and Mortgage Market Update

It looks like Spring is close behind The Woodlands, but exceeds some of the national averages.

A much better open in the bond and mortgage markets this morning, even with October PPI stronger than forecasts. Oct PPI expected to be down 0.1% increased 0.2%; the core (ex food and energy) expected up 0.1% jumped 0.4%. Yr/yr PPI +1.5%, the lowest since last Feb; yr/yr core up 1.8% from +1.6% in Sept. On the surface wholesale prices are increasing, at least in Oct. The increase due to the largest gain in services since July 2013. 

Better news from Germany this morning, investor confidence increased for the first time in 11 months. In Japan, after retreating into recession on increases in taxes, the prime minister today said he would call for early elections to measure voters confidence and suspended a sale tax increase. Both the yen and euro currencies rallied this morning. Europe’s stock markets also trading better.

17 days and still counting; the 10 yr and MBS markets have not moved. The key 10 has been in a very narrow range since the end of October, trading between 2.38% and 2.30% with the majority of trades between 2.36% and 2.32%. All technical we monitor are still throwing off neutral readings. Early this morning the 10 fell to 2.30% briefly (5 minutes) but once again didn’t attract enough momentum to crack the rock-hard resistance. This kind of narrow trading usually leads to a big move once the narrow range is broken. Most economists remain confident that the 10 and mortgage rates will increase by the end of the year; the reason of course is that the Fed is going to increase rates sometime in 2015. Most of the talking head Fed officials are saying that the FF rate will be increased by the middle of 2015. We have to go with the flow now, however we have not given up on a major stock market decline soon; maybe not this year, but it is coming. 

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