Mortgage Market News

The tensions in Syria are pushing Stock prices lower today and is shifting investing dollars over into the Bonds markets. U.S. allies are readying plans for an air strike against the nation after 100,000 people have died and 1 million children have become refugees.
Over in the housing sector, the Case Shiller Home Price 20-city Index rose by 12.1% in the year ended in June, just below the 12.2% registered in May. From May to June there was a 2.2% increase, but that is down from the 2.5% recorded from April to May. The report signals that the housing recovery continues, but at a slower pace.
Consumers remained optimistic in August despite the growing debt ceiling woes and as the fed readies to ease back on stimulating the U.S. economy. The Conference Board reported this morning that the Consumer Confidence Index rose to 81.5 in August from the 81.0 recorded in July. A spokesperson for the Conference Board said consumers were moderately more upbeat about business, job and earnings prospects

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Americans filing for first time unemployment benefits rose in the latest week, but filings have been declining and remain near six-year lows. The Labor Department reported that Weekly Initial Jobless Claims rose by 13,000 in the latest week to 336,000 and just near expectations.
The Federal Housing Finance Agency (FHFA) reported this morning that home prices across the nation rose 7.7% in the year ended in June and up 0.7% from May to June. For the second quarter of 2013, prices were up 2.1% for the eighth consecutive quarterly increase. A spokesperson for the FHFA said the housing market "experienced one of the strongest quarters since the boom in the middle of the last decade."
The minutes from the July 31 Federal Open Market Committee meeting were released yesterday and didn't give clarity as to when the tapering will begin. In addition, the Fed members were split on the subject. The uncertainty surrounding the minutes led to a sharp sell-off in both Stocks and Bonds. The Fed is currently purchasing $85 billion per month in Treasury and Mortgage Backed Securities in an effort to promote economic and job growth along with keeping long term interest rates low.

Mortgage News

The Mortgage Bankers Association reported today that its Market Composite Index, a measure of loan application volume, fell by 4.6% in the latest week as home loan rates rose 12bp to 4.68%. The refi index fell 8% while the purchase index was up 1%.
The housing sector got a boost this morning as Existing Home Sales rose 6.5% from June to July to 5.39 million units annualized and above the 5.10 million expected. On a year-over-year basis, sales are up 17.2%. The median home price is up 13.7% since last year this time to $213,500 and was the 17th monthly rise.
Package carrier UPS announced today that it will be removing thousands of spouses of white collar workers from the UPS healthcare plan who can receive health coverage at their employers beginning this fall. UPS said that it will impact the spouses of 15,000 employees and cites the new health care laws as one of the factors behind the move.

Mortgage News

There are no economic reports set for release today and the rest of the week's calendar is on the light side. Readings on Existing and New Homes along with Weekly Initial Jobless Claims will be the highlights. Stock prices begin the new week slightly higher while Bond prices are lower.
The big event this week will be the minutes from the July 31 Fed meeting, which will be released at 2:00pm ET on Wednesday. The markets will be eagerly waiting to hear if the Fed may begin to ease back on its current massive stimulus program. The Fed is purchasing $85 billion per month in Treasury and Mortgage Backed Securities in an effort to keep long term interest rates low and to promote economic and labor growth.
The National Retail Federation predicts that families across the nation will spend an average of $634.78 on back to school items such as apparel, shoes, supplies and electronics. It is expected that total back-to-school, which includes college, spending should hit $72.5 billion this season. Elementary and middle school school parents are expected to pay a 5.3% increase in 2013 from 2012 and will see a 9.5% increase for high school students.

Mortgage Market Guide

Stocks and Bonds are both trading lower today as the looming talk of tapering the Fed's stimulus program weighs on the minds of investors. The Federal Reserve has been purchasing $85 billion a month in Treasury and Mortgage Backed Securities in an effort to promote economic recovery, keep long term interest rates low and to spur on job growth. The Fed could signal the pullback at the September 18 Federal Open Market Committee meeting.
Consumers continued to open their wallets in July signaling that the U.S. economy is on track for a recovery. The Commerce Department reported that Retail Sales in July rose by 0.2% and was essentially inline with expectations. However, when stripping out autos, sales surged by 0.5%, the fastest pace in 7 months. Consumer spending is one of the biggest drivers of the economy and accounts for about 70% of the national output.
Another key gauge of the U.S. economy showed some improvement in July. The National Federation of Independent Business Small Business Optimism Index showed a modest increase of 0.6 points to 94.1. It was the fourth highest reading since the December of 2007 reading of 94.6, but below the average 100 reading in the prior 35 years.

Improving Jobs and Housing

The job markets continue to improve and this morning the Labor Department reported that Americans filing for first time unemployment benefits rose slightly in the latest week as weekly initial jobless claims were up 5,000 to 333,000. Looking back to 2007, weekly claims in August of that year were 316,000. Then claims moved to 670,000at the height of the recession back in March of 2009...what a comeback to current levels.
Over in the housing markets, the National Association of Realtors (NAR) reported that home prices rose in most Metro areas and showed the best gains in 7 1/2 years. This despite the recent rise in home loan rates. The median home price in the second quarter was $203,500, up 12.1% from the $181,300 registered in the same period last year. A spokesperson from the NAR said that buyers continue to outweigh sellers with multiple bids common in some areas of the country.
Banking giant JPMorgan is under investigation for both criminal and civil charges surrounding its sales of Mortgage Backed Securities dating back to 2005 through 2007. In its preliminary conclusions, the Justice Department stated that the bank broke the law. This comes after similar alleged offenses by the Bank of America earlier in the week. The financial community is waiting for the next shoe to drop, investigations into the rating agencies.

Economy Strong?

Strong economic data this morning has pushed the closely watched S&P 500 Stock Index to an historic record level of 1,700 today as investors shifted over to more riskier assets.
First up was a government report from the Labor Department that showed Americans filing for first time unemployment benefits declined by 19,000 in the latest week to 326,000, below the estimate of 345,000. That was the lowest level since January of 2008 as the jobs market continues to improve. However, seasonal factors increase in July due to factories opening and closing for periodic shutdowns for retooling.
Over in the manufacturing sector, the ISM Index surged to 55.4 in July, above the 50.9 recorded in June and was the highest level since June of 2011. Within the report it showed that the employment component rose by 5.7 points to 54.4. A reading above 50 indicates that the manufacturing economy is generally expanding; below 50 indicates that it is generally contracting.
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