Rate increase likely in the morning…bonds DOWN…where is the fed money? Purchasing bonds that support 5.5 – 6.0% mortgage rates…according to last Thursday's spending report. Hopefully we can find enough "organic" interest in bonds that support the 5% range on the 30 year fixed notes for a short time longer.
Have you metChad?
FNMA 4.5% : DOWN 34 bps…continued erosion. Some of the "blame" going to the MUCH better than expected pending home sales report (see below: what is it?) HUGE supply to the bond market anticipated this week with 3, 10 and 30 year T-note and Bond auctions scheduled. Oversupply seems to depress values. Hopefully foreign participation in the auctions will continue to be close to normal. Foreign participation is crucial and can be an indicator of perceptions of our economy by foreign investors. (When they feel good about us: they invest in us…) As I have mentioned we COUNT on them to be there and "normal" foreign participation is just over 30% for many of the bond auctions.
DOW: UP 141 points! This is despite GM's reporting today that sales were down 50% for the month of December. Pending home sales credited with a surge of optimism by investors today. Remember: when money is pulled from the bond market and placed with stocks: rates tend to go up.
DJIA 8,078.36 +141.53 NASDAQ 1,516.30 +21.87 SP500 838.51 +13.07
HOUSING:
Pending home sales reported an increase of 6.3% vs expectations of a 0.00% reading (no change)…this is in contrast to a NEGATIVE 3.7% number from the month before. This INCREASE in pending home sales of 10% nationwide is HUGE and could signal some semblance of good news in the housing sector as inventory continues to be "soaked up".
Housing starts reported for December were the lowest ON RECORD…but that is actually GOOD news. Once we soak up the extra inventory…housing prices should start to stabilize…and we are evidently adding less to that inventory with new homes being built. Remember supply and demand? That is the "economics" version of "location, location, location."
PRICE OF CRUDE: STILL in the 40 dollar range…HOWEVER: refineries are reportedly HOLDING up supply and creating a reason to raise fuel pricing. OPEC has also restricted supply which is not seeming to get any traction with the price of crude oil. Remember that crude oil helps to produce many, many products with fuel being only one of them. See the latest "crude inventories report" by <clicking here>.
WHAT IS IT? Pending home sales report This report comes out once a month and notes homes with "pending sales" listed as their "status" on MLS's nationwide. Pending home Sales helps us to understand what the "Existing and New Home Sales" reports may look like in a few months. It makes sense: "pending" home sales...are homes under contract...which hopefully will close and later be reported as "existing home sales".
Haveagreatday!
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Chad Schauers
Have you metChad?
MetLife Home Loans
406.522.0922
406.522.0924 (fax)
1924 W. Stevens, Ste. 202
Bozeman, MT 59718
Cell: 406 799 8613
ccschauers@metlifehomeloans.com
