FHA 30 year fixed mortgage rates
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Bill Gross on the future of Bonds. If he is correct, mortgage rates could be moving up soon.
CNBC interview with the largest bondholder in America.
FHA mortgage rates hit all time low rates
Current 30 year fixed FHA mortgage rates are at 4.125% after a buying bonanza in the ginnie mae mortgage backed securities market. Bond traders and hedge funds alike have been on a buying spree since early last week pushing yields on these securities, and rates on 30 year fixed rate FHA mortgages to lows not seen since the 1950′s. This is excellent news for home owners looking to save money any way they can while are economy is still on some what shaky ground with ARM mortgage rates set to expire this summer and next for millions of home owners. Economist are predicting another drop of 10% on average in value for home owners across the nation making refinancing now a pressing issue with an underlying sense of urgency everyone should place on refinancing their current mortgage to a lower rate before a potential drop in value could end up costing more money or a higher mortgage rate.
Today’s Market Commentary
Reversing part of Wednesday’s rally, bonds and stocks fell slightly on Thursday but the sell-off was concentrated in long-bonds and in stocks with the ten-year and in segment of the curve moving just a couple of basis points. The morning’s jobless claims data was better-than-expected but still not impressive and durable goods orders were roughly as predicted. In contrast to Wednesday’s poorly received five-year note auction, Thursday’s seven-year auction found plenty of demand and was quite well bid. It sold through the pre-auction bid side of the market with better-than-average indirect bidding and bid-to-cover ratios. Thursday afternoon the focus began to turn to financial regulatory reform which appeared to be entering the final hours of negotiation. Overnight, House, Senate, and White House negotiators reached an agreement on the legislation. Among the last minute agreements include agreements on derivatives, the Volker Rule, and bank capital. The derivatives agreement would require banks to spin off only what the WSJ calls “their riskiest derivatives trading” to subsidiaries and would increase the use of clearinghouses and reporting. The Volcker Rule would limit proprietary trading to 3% of Tier 1 capital and would prohibit banks from bailing out funds in which they are invested (i.e. SIVs). The Collins Amendment on capital would grandfather already-issued trust preferreds for banks with less than $15 billion in assets and mutuals, phase out new trups, and would exempt bank holding companies with less than $500mm in assets (small bank holding companies) from the provisions. While the legislative certainty is seen as lifting a cloud from the industry, much remains to be seen in how regulations and institutions will respond to the sweeping changes. Analysts are already predicting that credit will contract further as a result of some of the fee-related provisions. This morning’s final report of Q1 GDP and personal consumption shaved a touch from growth (to 2.7% from 3%) and consumption (to 3.0% from 3.5%).
Source: Vining Sparks
Today’s market commentary
The big surprise on Tuesday was that existing home sales actually fell in May, in contrast to expectations that the home buyer tax credit would boost sales. That news sent bond prices soaring and pressured stocks lower as it added to the recent data showing the economy to be slowing, or at least struggling. Throughout the nascent recovery, housing has been the weakest sector but now a double dip in housing appears to be occurring before our very eyes. Today’s FOMC announcement will be closely analyzed to see how it addresses two evolving economic situations which had just began to appear when last the FOMC met in April. First, the announcement seems likely to acknowledge the economic slowdown that has hit some segments of the economy over the past 45 days and the lack of improvement seen in areas such as employment. Manufacturing does continue to post gains. Second, the statement seems likely to mention Europe but to express confidence that it’s struggles are not expected to have a significant impact in the US. The June 2011 Fed Funds futures contract is now the first one above 50bp.
Source: Vining Sparks
Today’s market commentary
Yields rose a touch in quiet trading on Friday as gold closed at a new high and stocks inch higher. Over the weekend, China announced that it will allow more flexibility in its exchange rate following two-years in which it pegged the yuan to the dollar. In making the move, China is seeking to head off pressure from the G-20 and help contain domestic inflation while going slow enough to avoid disruptions to the domestic economy. In trading, the central bank allowed a small change in the value of its currency. In addition to recognizing market demands, China’s move appears to be a vote of confidence in the world economy. The move is leading global stocks higher and is putting pressure on US bonds. The coming week will feature a number of economic reports, concentrated in housing. Wednesday’s FOMC meeting will stand as a highlight of the week and could produce a more dovish than expected announcement. This morning, Meredith Whitney, guest hosting on CNBC, said that housing is definitely heading for a double-dip even though she does not see the economy as necessarily heading for another dip.
Source: Vining Sparks
