Market Snap Shot for Fairfax, Virginia

Jeff Thomas — Tue, 02 Mar 2010 22:21:31 +0000

Market Snap Shot for Fairfax, Virginia Mortgage Interest Rates and Local Real Estate

By Sigma Research
By Tuesday, March 02, 2010

Treasuries and mortgages started weaker this morning with the stock index futures pointing to a nice open in equities at 9:30. No real data this morning, the only thing on the schedule is Feb auto and truck sales that will be out this afternoon. At 9:00 the DJIA +44, 10 yr note -10/32 3.65% +3 BP and mortgage prices for 30 yr fixed -5/32 (.15 bp). At 9:30 the DJIA opened +38, 10 yr note -7/32 at 3.64% and mortgages -3/32 (.09 bp).Four days and counting to the Feb employment report for Fairfax, Virginia Interest Rates. Always the key report each month, and each time there is some event or circumstance that makes it even more important—if that is possible. This report has a lot of weather related elements with the continual snow that crippled the mid-Atlantic and East coast; but the main event that traders are thinking about is the huge decline in consumer confidence in Feb and the big fall in new and existing home sales. How, if at all, will all that impact the employment picture? There is the theory that consumer confidence plunged by 20% because of more job losses. Long ago we gave up trying to anticipated non-farm jobs data, throwing darts blind folded is more accurate. Current estimates continue to be a small decline of 20K jobs in the month with the unemployment rate at 9.8% up 0.1% from Jan.Greece‘s financial problems are well documented; next up according to what we are seeing is Great Britain. Investment mangers in England are bracing for a run on the British pound as its economic outlook remains dire. Britain’s debt amounts to 12% of output, about the same as Greece’s debt to output. Moody’s Investors Service and Standard & Poor’s said last week they may cut Greece’s credit rating; now fund managers in Britain are worried the same fate may befall England as its economy is struggling to get some traction. The take away from the continuing debt problems in Europe (Spain and Portugal) and now Britain is adding support to US treasuries as a safe place for parking money.

Markets and traders continue to expect US interest rates will increase this year as the US economy solidifies and consumers and the housing sector slowly improve. The Fed, with the exception of one or two Fed officials, is dead set on keeping the Federal Funds rate at near zero for that “extended period” which is markets are beginning to quantify as no rate increases until the Nov FOMC meeting. We noted yesterday we were hearing four more FOMC meetings before the Fed moves. A recent survey by Bloomberg of bankers was 46% chance the increase would be at the Nov FOMC meeting. What must be kept in mind is that the bond and mortgage markets will be out front of the Fed on any increases; given the preemptive move interest rates will begin to discount the increase by August. We expect mortgage rates to increase in Fairfax, Virginia by year end will be 50 basis points higher than at present levels; the 10 yr note to move to 4.15%.

Through the later half of Jan and the early part of Feb the 10 yr note tried 10 times to move below 3.60%/3.58% range; each time it failed. Yesterday the 10 yr hit 3.58% at mid-day but again failed to crack the wall. This morning at 9:00 the 10 yr was back to 3.65%; the FNMA 4.5 coupon is registering overbought readings on the relative strength oscillator. The bond market today will, as is the case recently, take its lead from how stock indexes trade. No data until this afternoon with auto and truck sales; but the remainder of the week has data everyday with of course the Feb employment on Friday. On Thursday Treasury will announce next week’s auctions of 3 yr, 10 yr and 30 yr borrowings

Jeff Thomas » Interest Rates In Fairfax

Market Snap Shot for Fairfax, Virginia