Posts Tagged ‘Greek bailout’

Market recap for week ending 11/30/2012

Posted on: November 30th, 2012 by Fred Bohman No Comments

At the time I am writing this mortgage interest rates are almost 1/8th of a percent lower than they were last Friday.

This week was dominated by news about the Fiscal Cliff and the Europe debt crisis. Politicians still can’t come to an agreement about how to avoid the approaching Fiscal Cliff when the all of the Bush tax cuts are set to expire. Both sides want to extend some of them, but can’t come to an agreement of which to extend and which to let expire. As of today we have 1 month left for the politicians to come to agreement. As long as there is uncertainty the market will remain volatile. My guess is that they will wait to the last minute then come to a short term agreement, basically extending the problem until the new Congress starts.

In Europe, Greece is back in the fore front. This week Greece was approved for a $44.6B loan in December to keep the country from defaulting on their debt. I am not sure how giving a country that is already drowning in its debt more debt is going to solve anything, but that’s what the Euro finance ministers decided was best.

Over the last month interest rates have stayed in a narrow range going slightly up but then back down. It seems that rates have bottomed out for the time being. Events that would have normally caused rates to drop have had a muted effect. If you have been holding on to see if rates can go any lower I would recommend taking action now.

Market recap for week ending 11/23/2012

Posted on: November 23rd, 2012 by Fred Bohman No Comments

At the time I am writing this mortgage interest rates are less than 1/8th of a percent higher than they were last Friday.

This week was a short week with Thanksgiving on Thursday and lack Friday today. Yesterday the markets were closed and today was a half day. Many traders left early on Wednesday and are not returning till Monday so we saw light volume of trades for half the week.

Europe is still struggling with their debt problems. European leaders are trying to come to an agreement of what to do about Greece, as they are once again on the brink of defaulting on their debt. As long as there is a threat of Greece and other struggling Euro countries defaulting on their debt it will be considered good news for US interest rates.

In the US we are still dealing with the approaching Fiscal Cliff and politicians on both sides are trying to come to an agreement. My guess is that they will come to a short term compromise, which will just delay the problem a few months until the new congress starts.

Today being black Friday starts off the holiday shopping season. Investors will be watching the spending numbers closely to judge how our economy is doing. If holiday spending is high, it will be bad news for interest rates and vice versa.

Market recap for week ending 11/09/2012

Posted on: November 9th, 2012 by Fred Bohman No Comments

At the time I am writing this mortgage interest rates are about 1/8th of a percent lower than they were last Friday.

The big event this week was the election on Tuesday. On Monday the market were quiet, but on Tuesday we saw a spike in interest rates on rumors that Romney was going to win the election. On Wednesday after it was confirmed that Obama won we saw a drop in rates that cancelled out Tuesday spike and then some. There are two factors that caused this drop. First, since Obama does not want to extend the Bush capital gains tax cuts that are set to expire at the end of the year, many investors in the stock market are selling off in order to take their gains now at a lower tax rate. Whenever money flows out of the stock market it usually flows into bonds thus driving rates down. Second, Obama is seen as more likely to support the continued quantitative easing which is also keeping interest rates low.

Europe is back in the headlines and once again Greece is in the fore front. Greece is running out of money and is getting closer to defaulting on its debt unless they get more bailout funds. Also financial reports from across Europe confirm that most of the region is slipping back into a recession. Bad news out of Europe is mostly considered good news for US interest rates as investors will move their money to safer US investments.

Looking forward, now that the election is over we have the approaching “financial Cliff. All of the Bush tax cuts are set to expire at the end of year unless Democrats and Republicans can come to an agreement on which ones to extend and which ones to let expire. The closer we get to the deadline the more anxiety investors will get and the more volatile the market will become. Hopefully our country’s leaders can get their act together and get something done quickly.

Greece EU exit looks more and more likely

Posted on: May 21st, 2012 by Fred Bohman No Comments

Mortgage rate outlook and market preview for the week starting May 21st 2012.

The bond and mortgage markets started slightly weaker this morning but have managed to hold close to unchanged with stock indexes trading a little better. There are no economic reports today. This week Treasury will auction $99B of notes beginning tomorrow through Thursday; with rates now at historic lows the demand will be the measurement of how well the auctions go off. Economic reports this week have April existing and new home sales, durable goods orders and of course weekly jobless claims.

In Europe the EU summit starts Wednesday. German and French finance chiefs are scheduled to meet in Berlin before the summit meeting. Concern Greece will exit the euro erased about $4 trillion from global stock markets this month. There is a strong desire for keeping Greece in the 17 county currency, although Germany still holds court with its insistence for severe austerity. Greece will have another election in June, in essence to determine whether voters want to stay or go; while the election isn’t framed as a do or die thing, that is what it will be. Hedge funds reduced wagers on a rally in commodities to the lowest this year on mounting speculation that Greece will leave the euro, slowing global growth and curbing demand for everything from copper to soybeans. US stock indexes trading higher on comments from China it would support the economy and German and French officials prepared to meet before a summit. There is an increasing belief that Greece will leave the euro currency, that belief will keep US interest rates from increasing much. According to one report 90% of respondents now believe Greece will go. On Saturday at Camp David G-8 leaders urged Greece to stay within the euro area as polls in the country showed a close race between parties supporting and opposing the European Union’s bailout deal.

Speculation has risen that the Fed may need to add to the $12.8 trillion already spent to avert a second recession in three years after reports showed jobs are growing more slowly than forecast and Bernanke said April 25 that the Fed “remains prepared to do more as needed.” For first time since it announced Operation Twist in September, the Fed’s preferred gauge of measuring traders’ inflation expectations is poised to fall for a second straight month. Six weeks frm now the Fed’s Operation Twist is set to end, with inflation not a factor and the weakening global and US economy there is likely to be increasing speculation the Fed will either extend it or have another plan to keep interest rates from increasing.

At 9:30 the DJIA opened +25, NASDAQ +5; Facebook trade started lower than its IPO price last Friday -$3.00 frm the IPO price of $38.00. The 10 yr note -3/32; mtg prices traded about unchanged from Friday.

Interest rate markets continue their bullish bias, mostly on the inability of Europe’s leaders to come to any significant plan to keep Greece in the EU while softening and supporting moves to boost growth with spending increases. Two plus years and counting as the region chokes on debts it can’t pay and disagreement on how to create a miracle that will save the EU. If Greece leaves the fear of contagion to Ireland, Portugal and Spain will increase exponentially. The remainder of the day the bond and mortgage markets will take their lead from the US stock market; At 10:00 the key indexes are slightly better but appear to be struggling to hold gas.

Greece on their way out of EU?

Posted on: May 14th, 2012 by Fred Bohman No Comments

Mortgage rate outlook and market preview for the week starting May 14th 2012.

This Week; interest rates are likely to continue lower on increasing fears Europe is facing defaults from Greece and increasing likelihood Greece will depart the EU. If Greece were to exit the EU it may set up a domino effect with Ireland, Portugal and Spain; Europe’s attempt at severe austerity in efforts to bring countries’ fiscal spending under control has failed. In Germany over the weekend Angela Merkel’s party suffered another defeat in local elections, last weekend another local election went against her. Germany is the rock in Europe and voters are showing their resistance to any additional help from the country. In Greece over the weekend the attempt to form a coalition government has failed leading now to another general election; most Greeks are rebelling against the austerity pledge Greek officials agreed on a few months ago.

This week after a week with little domestic economic data, there are a number of key data points on Tuesday, Wednesday and Thursday. April reports for the most part; retail sales, CPI, housing starts and permits, industrial production and factory use, the Philly Fed May index. The minutes from the 4/25 FOMC meeting will get a lot of focus, looking for clues about another possible QE; we still hold the Fed will not initiate another QE but there are many analysts and economists thinking the Fed will ease one more time. If the Fed were to ease again it would likely have to happen at the next FOMC meeting in June, after that the Fed will likely refrain with elections coming in November.

All eyes and ears on the FOMC statement this week.

Posted on: March 12th, 2012 by Fred Bohman No Comments

Mortgage rate outlook and market preview for the week starting March 12th 2012.

This week we have a FOMC meeting followed by a statement, 5 relevant US economic reports, and some Treasury auctions. It will be interesting to see the statement after the FOMC meeting tomorrow as the members seem to be divide on how our economy is doing and what needs to be done. Some members are calling for rates to be raised before the 2014 mark which was set at the last meeting, and other are calling for more quantitative easing which would keep rates low. The economic reports being released this week are PPI and CPI, Philly Fed business index (expected to have improved in March), Feb retail sales (+0.7%), and Feb data on manufacturing with industrial production and capacity utilization.

As far as Europe and their debt crisis, Greece got its bail out money so it could avoid a default, but many are still considering it a default because of the large write down bond holders had to agree to. At the time I am writing this the 10 year US Treasury bond yield is just over 2% and is still in the narrow trading range it has been stuck in since November. Unless there are any shocking announcements made after Tuesday’s FOMC meeting I don’t see mortgage rates moving much this week. As I have said before I think we have seen the low for mortgage rates, but I don’t think they are moving higher for a while.

Greek bailout package in jeopardy and world economies are slowing.

Posted on: March 5th, 2012 by Fred Bohman No Comments

Mortgage rate outlook and market preview for the week starting March 5th 2012.

At the end of last week we saw a run up in the 10 year US Treasury yield and mortgage rates due to positive news coming out of Europe and also some positive reports out of the US. The 10 year yield is now back under 2% which is good for mortgage rates. China which has been on a strong 8% growth since 2005 announced today that it cut its target growth rate to 7.5%. Also announced was that European manufacturing output slowed in February and January’s numbers were revised lower showing more proof of an economic slowdown in Europe.

There are 2 major events this week that can shake up the market. Private investors that are holding Greek bonds are voting on whether to accept the mandated debt writes-downs. The terms of the write- downs according to the current bailout plan is that current investors will forgive 53.5 percent of their principal balance in exchange for new Greek bonds and notes from the European Financial Stability Facility. If investors don’t accept the write-downs then the entire Greek bailout plan will be derailed. The other major event this week is Friday’s unemployment numbers which are expected to show 207K non-farm jobs and 220K no farm private jobs. If the report varies substantially from estimates it could shake up the markets. Both mortgage backed securities and the 10 year yield has been contained in a tight range for the last 3 months and look for this trend to continue unless we see any major shocking news out of Europe or the US.