Concerns of fiscal tightening across Europe, which would limit growth, sparked another flight to quality into Treasuries yesterday. The European outlook also has Treasuries up again this morning even after the retail sales report came in higher than forecasted.
Sen. Al Franken has proposed an amendment to create an Office of the Homeowner Advocate within the Treasury department, designed to help homeowners navigate the Obama administration’s Home Affordable Modification Program (HAMP).
Yesterday, Treasuries ended the day slightly lower as continued stabilization of the European bond markets slowed the move of money into the safety of bonds. Today’s weekly jobless claims report was expected to show a small improvement in the U.S. labor market. Both the initial and continuing claims reports were expected to fall by -4k. Both numbers came in higher than expected.
Rates on Adjustable Rate Mortgages (ARMs) are really low right now. Current homeowners looking to complete a mortgage refinance or home buyers looking for the most competitive rate can benefit from a low mortgage rate such as 2.99% (3.497% APR) on a 5-year ARM.
Yesterday’s 3-year Treasury auction had higher than average demand and spurred a rally in bonds. This morning we are fairly flat ahead of today’s $24 billion 10-year note auction. In economic news, the March trade gap widened to $40.4 billion, and mortgage applications showed a 3.9% increase week over week.
The European Union’s $955 billion bailout plan to avert a world-wide public debt crisis fueled rallies in financial markets around the globe yesterday. Some economists worry that the agreement to bail out troubled members will saddle the euro zone with huge debts.
The European Union announced a bigger-than-expected stabilization package of almost $1 trillion on Sunday. Also unexpected was the European Central Bank’s decision to purchase debt in an effort to lower rates.
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Money was moved to the relative safety of the U.S. debt Thursday as Greece riots and contagion fears spread across the markets again. Treasuries and mortgage bonds opened lower today as the Employment Report showed U.S. employers added jobs for the third time in four months. The expectation was for April payrolls to show an increase of 190k. The actual increase was 290k, with an upward revision to next month’s expected number.
It’s seldom a good thing when something drops unexepectdly. Usually it’s bad news.
Mortgage consumers got a pleasant surprise today when mortgage rates took an unexpected drop downward. There are lots of reasons why rates dropped, but to summarize – the market demanded lower rates.