Mortgage Headlines
Mortgage rates refuse to move
U.S. Treasury securities attracted buyers on Monday in the wake of a weak housing report, but it wasn't long before the focus turned to Tuesday's jam-packed economic calendar. The half-dozen releases due tomorrow can have high impact, so bond traders are adopting a wait-and-see attitude before making any moves.
Additionally, some traders opted to sell in order to position themselves for the issuance of corporate bonds later this week. Corporate bonds generally pay better than Treasuries due to the riskier nature of the investment. Earlier Treasury gains turned to losses, sending yields, which move in the opposite direction of prices, up slightly. The moves, however, did not influence mortgage lenders to change rates in any measurable way.
New homes sales in January rattled the markets, falling 5 percent to an annual rate of 1.23 million units. This was below market estimates for 1.26 million units and the second decline in the last three months. Although the median price for a new single-family home rose to $238,000 from $229,000 in December, so did inventories - hitting a new high. After five years of record-setting sales, however, a slowdown in housing has been widely expected. Increasing mortgage rates over the past year have also taken their toll. The Dow Jones new construction index tumbled on the news.
Stocks move higher
The three major stock indexes closed well into positive territory on Monday, bolstered by impressive earnings and a sharp decline in oil prices. Oil fell $1.91 a barrel to $61 as tensions eased in oil 'hot spots' in the Middle East and Nigeria. The Standard & Poor's 500 index closed just a hair below a five-year high.
Lowe's Companies, Inc. - not a Dow component -- inadvertently helped the Dow Jones industrials. The number two home improvement retailer added 5.8 percent on better-than-expected earnings and provided strong guidance for first-quarter and 2006 earnings. Home Depot, the home improvement leader and a Dow member, rode Lowe's coattails to a 2.1 percent increase.
Verizon helped the Dow by offering a higher-than-expected operating earnings outlook for 2006. A number of tech shares also were on the Dow's list of movers - namely, Hewlett-Packard, Microsoft and Intel, which added 4 percent, 1.7 percent and 1.3 percent, respectively. Disney gained 1.5 percent on speculation that Apple might try to buy it. Eight Dow components closed in negative territory and only two posted substantial losses. Alcoa fell 1.8 percent, while Exxon shed 0.7 percent.
The Nasdaq ended with strong gains due to good performances by tech big caps, such as Dell and Qualcomm, as well as the above-mentioned Microsoft and Intel. But SanDisk, a flash-memory card developer, closed with an 8.4 percent gain thanks to an upgrade. Several smaller technology companies added to the upswing.
As of 4 p.m., EST:
The Dow Jones industrial index closed up 35.70 points (+0.32 percent) to 11,097.55; the Nasdaq composite gained 20.14 points (+0.88 percent) to 2,307.18, and the Standard & Poor's 500 index rose 4.69 points (+0.36 percent) to 1,294.12.
The 30-year Treasury bond closed down 8/32 in price with the yield rising to 4.54 percent, from 4.52 percent on Friday.
The 10-year Treasury note closed down 4/32 in price with the yield rising to 4.59 percent, from 4.57 percent on Friday.
The five-year Treasury note closed down 2/32 price with the yield rising to 4.65 percent, from 4.63 percent on Friday.
The two-year Treasury note closed unchanged in price with the yield holding at 4.73 percent.
At 4 p.m. EST, average mortgage rates (zero discount points) based on rates collected nationwide were:
The 30-year conventional fixed-rate mortgage at 5.978 percent, down from 5.996 percent on Friday.
The 15-year conventional fixed-rate mortgage at 5.588 percent, down from 5.597 percent on Friday.
Coming up:
A revised report on fourth-quarter gross domestic product will be out early Tuesday. Analysts expect economic growth to be nudged upward to 1.6 percent from the advance reading of 1.1 percent. The chain deflator, however, should remain at 3 percent.
February surveys from the Conference Board, which compiles the monthly consumer confidence report, and the Chicago Purchasing Managers Institute, or PMI, index on business conditions are also due. Consumer confidence is expected to fall to 104, from the 106.3 posted in January. If analysts were correct in their forecast, it would be well received by bond traders. The PMI is predicted to come in at 58.6 -- barely changed from January's 58.5.
The release of existing home sales for January will follow, with sales forecast to hold at an annual rate of 6.6 million units.
Relative steadiness in Treasury yields should allow mortgage lenders to leave rates unchanged overnight and into Tuesday.
Carolyn Siegel
Carolyn@interest.com
Source: Interest.com All rights reserved. Copyright Interest.com