While day trading occupied the minds of fixed income market participants yesterday, prices of mortgage backed securities managed to tick higher, despite considerable gains in stocks. Rates moved higher in the opening hours of the session, however as losses were recovered later in the day, several lenders reissued rate sheets, passing along better pricing, by day's end.
The economic calendar really picked up today.
First report to be released was revised third quarter Gross Domestic Product data. GDP is the broadest measure of total economic activity, covering every sector of our economy. In other words, it is the report card for our economy. The advanced reading, which we received last month, showed a stronger than expected gain of 3.5%. This was the first positive reading since 2008. Economists’ surveyed for today's release were expecting a 2.9% growth rate. The 8:30 release indicated that the preliminary read of 3Q GDP was slightly below expectations at +2.8%. So, our economy did not grow as fast as originally forecast last month.
The S&P/Case Shiller Home Price index was released this morning. This report tracks the monthly change in values of residential real estate in 20 metropolitan regions across the country. Many economists believe that until home prices firm, it will be extremely difficult for our economy to recover from the current recession.
The data shows home prices improving les than expected with a month over month gain of 0.3%. For more on this report check out the MND STORY.
The Conference Board released their Consumer Confidence report today. This is a survey of consumer attitudes on current economic conditions and their outlook on the future. An optimistic consumer is much more likely to spend money while a pessimistic consumer is more likely to save. Since our economy is driven by consumer spending, a more optimistic consumer is better for stocks while the fixed income sector generally moves higher with more pessimism. Recent readings have shown improving consumer attitudes, but high unemployment remained a concern. Economists surveyed were expecting this month’s report to show a slight pullback in consumer confidence to a reading of 47.0 after last month’s 47.7. The report showed that consumers continue to imprve as as the data came at a better than expected 49.5.
At 1pm eastern, the Department of Treasury will auction $42billion 5 year notes. Strong demand for our nation’s debt is one of the many factors that have attributed to keeping mortgage rates at or near historic lows. Matt and AQ will cover the results once the auction is completed on the MBS Commentary blog.
Finally, at 2pm eastern, the Federal Open Market Committee will release the minutes from its last meeting that occurred three weeks ago. Market participants will scour the minutes for any hint at future monetary policy and the Fed’s outlook for the economy.
Reports from fellow mortgage professionals indicate rate sheets to be marginally improved this morning. The par 30 year conventional rate mortgage has fallen to the 4.50% to 4.75% range for well qualified consumers. To secure a par interest rate you must have a FICO credit score of 740, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee. If you are seeking a 15 year fixed rate, you should expect a par interest rate in the 4.125% to 4.375% range with similar costs.
Today’s rate sheets are as good as they have been for quite some time. LOCK, LOCK, LOCK!!!!