According to a 2006 study conducted by Wholesale Access, 67.9% of mortgage brokers and direct lenders use Point, a figure greater than all other mortgage automation applications combined.
Provided by Sigma Research, Inc.
Thursday, 8/21/08 10:15 AM
The DJIA -71, NASDAQ -13, S&P -6. 10 yr note -8/32 3.83% +3 BP. MOrtgage prices -7/32.
Weekly jobless claims were down 13K last week to 432K after a downward revision from the week before from 450K to 445K. The 4 week average increased 5K to 445K; the highest level since December 2001. So far this year, weekly claims have averaged 374,000, compared with 321,000 for all of 2007. Continuing claims, or the total number of people receiving benefits, dropped by 17K to 3.362 million in the week ended Aug. 9. No noticeable reaction to the 8:30 report.
At 10:00 July leading economic indicators, expected to be down 0.2%, were down 0.7%.
Also at 10:00 the Philadelphia Fed business index; expected at -13.4, hit at -12.7. New orders component at -11.9 frm -12.1 in July, prices paid indexed at 57.5 frm 75.6 and employment component at -1.1 frm -7.3. Any read under zero is contraction. The report is better than we expected with a huge decline in the prices component that is a reflection of the recent decline in commodity prices. The reaction has added more selling in treasuries that were already under pressure.
Crude oil has apparently completed its technical correction and now prices are moving higher again as we said they would. By the end of the year we are looking for crude to be back to the $140.00 area as demand stays strong. The jump today is about concerns of tropical storm Fay and the thought Russia may cut off oil to the pipeline leading through Georgia; Russia is the second largest oil producer to Saudi Arabia.
The question of the day is, is the market forcing the Treasury to step into Fannie and Freddie? Selling of the two agencies stock since Paulson made his pitch to the Senate on July 15th has driven Fannie stock down 74% and Freddie is down 63% since the law was signed giving Treasury the authority to provide financing to the two. Fannie shares traded at $3.93 at 9:01 a.m. in early New York Stock Exchange trading, with Freddie at $2.88, bringing their combined market capitalization to about $6.8B from $92.6B two years ago. Most of the chatter in the markets deals with current stock holders but leaves the real issues mostly untouched; that Fannie's and Freddie's ability to borrow at rates that will keep mortgage rates from escalating is all but gone. The two have to roll over $233B of notes by the end of Sept, given what Freddie had to pay for just $3B of 5 yr notes the other day (113 BPs over 5 yr treasuries) it sends a strong message to Paulson that investors are not going to step up until Treasury actually takes a controlling position in the agencies.
Normally on the Labor Day weekend, the Kansas City Fed's annual Jackson Hole conference is under way this weekend. The topic will be the same as last year; the credit crisis, and the increasing inflation levels---how to deal with both at the same time without adding to more economic stress. Add in the Fannie and Freddie mess and the conference with global central bankers will have a lot to chew on.
The dollar is being sold today; crude has been up as much as $4.00 already today and the rest of the commodity markets are rallying. Gold up $20.00 at 10:00, crude +$3.50.
Technically speaking: Once again the 10 yr note has failed to hold at or below 3.80% a rock solid resistance level that has proven hard to break. This morning early the 10 yr opened at 3.80 but has failed, sending longs to the sidelines and traders selling it. Conventional mortgages had a strong day yesterday on the Fannie Freddie bailout thoughts; today mortgage prices are under strong selling pressure, following the 10 yr note as usual.