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1. Rates Hold in Spite of Selling in Treasuries
The biggest gain in retail sales since October and apprehension prior to Federal Reserve Chief Alan Greenspan's testimony before the Senate banking committee on Wednesday spurred a a moderate sell-off in U.S. Treasury securities on Tuesday. The headline number on retail sales in January showed a 0.3-percent decline -- less than forecast -- but when auto sales were excluded sales rose a stronger-than-expected 0.6 percent. Bond traders worry that a sharp increase in retail sales can not only speed economic growth but also stir inflationary pressures. Those outside the bond pits, however, saw the increase as encouraging but not inflationary. And everyone will be listening to Greenspan's comments regarding the state of the economy and hints on the Fed's intentions regarding interest rates. Although sellers of Treasuries out-paced buyers and yields, which move in the opposite direction of prices, edged up on the 5- and 10-year notes, the moves were not strong enough to influence significant changes in mortgage rates.
2. Treasuries Mark Time -- Rates Steady
U.S. Treasury securities marked time on Monday ahead of economic news with market-moving potential due out on Tuesday and Federal Reserve Chief Alan Greenspan's testimony before Congress on Wednesday and Thursday. Traders will be waiting to hear if Greenspan hints that the Fed will change its stance on tightening. There is also anxiety about whether "accommodative" and "measured" might be removed from future Fed statements. Accommodative refers to keeping rates low enough to allow the economy to grow, while measured assures that rate increases will be small but steady. Any change in this seven-month pattern is sure to rattle the markets.
3. Rates Hold at Lowered Levels
Mortgage rates held their ground on Friday in spite of an early sell-off in prices of U.S. Treasury securities. Selling began on Thursday and continued into the early hours of today's session amid fears that the Federal Reserve might end its tightening cycle. There is much speculation regarding the Fed's intentions in the wake of recent speeches by Fed officials and ahead of Fed Chairman Alan Greenspan's testimony before Congress slated for next week. Over the past six months, short-term Treasuries having been sold and their yields, which move in the opposite direction of prices, have risen in response to Fed rate hikes. At the other end of the spectrum, the benchmark 10-year note and the 30-year bond have attracted buyers as the rate increases have kept inflation -- an enemy of fixed-rate assets such as bonds -- at bay. These movements resulted in what is called "curve flattening," which occurs when the difference between the yield on the two-year note and the 10-year note narrows. Some analysts chalked up today's early selling in Treasuries to a "correction" after flattening and left it at that. In spite of the ups and downs during the session, Treasuries ended almost unchanged from Thursday's close. This allowed mortgage lenders to keep most of their rates at newly loweredlevels.
4. Rates Edge Down as Yields Rebound
Yields on U.S. Treasury securities bounced back up to levels of last Friday thanks to a big decline in first-time jobless claims and an auction of $14 billion in 10-year notes that failed to meet expectations. Profit-takers also may have entered the market as Treasuries have been on a non-stop rise since the release of a weaker-than-expected January employment report on Feb. 4. During that run the yields on longer-term government debt, which move in the opposite direction of prices, fell by close to 20 basis points. The steep decline in yields allowed mortgage lenders who use them to set rates edged rates down on most mortgage products.
5. Yield on 10-Year Note Dives Below 4 Percent
A sell-off on Wall Street and a successful auction of 5-year Treasury notes sent money flying into the bond market on Wednesday. Prices of Treasuries climbed across-the-board and their yields, which move in the opposite direction of prices, continued to fall. This is the second consecutive day of strong buying in Treasuries, and much of the enthusiasm was based on a good response from indirect buyers (primary dealers and foreign central banks), who bought 40 percent of today's offering and a respectable amount on Tuesday. The last of the three such events will be held Thursday when $14 billion worth of 10-year notes go on the block. Strong selling in technology stocks, spurred by Cisco System's disappointing quarterly report, spread throughout the equity markets. This ignited additional safe-haven buying in Treasuries, and the yield on the benchmark 10-year note that lenders use to set mortgage rates hit a 20-week low. This influenced lenders to keep rates at attractive levels.
6. Rates Edge Down as Treasury Yields Slide
Mortgage rates continued to trend downward on Tuesday in response to steady buying in longer-term U.S. Treasury securities. The price of the benchmark 10-year note climbed and its yield, which moves in the opposite direction of price, fell to its lowest level since the end of October. This allowed mortgage lenders who base their rates on yields to keep them low on some mortgage products and edge them down others.
7. Mortgages Hover Stable, Longer Treasury Maturities See Yields Dip
Prices of U.S. Treasury securities hovered stable in the short end but rose in the longer maturities on Monday, buoyed by the dollars advance, perceptions that U.S. budget deficit might not worsen and further optimism that inflation will not flare. Steady Treasury yields allowed mortgage rates to remain basically unchanged from Friday's levels.
8. Mortgages Hover Stable, Longer Treasury Maturities See Yields Dip
Prices of U.S. Treasury securities hovered stable in the short end but rose in the longer maturities on Monday, buoyed by the dollars advance, perceptions that U.S. budget deficit might not worsen and further optimism that inflation will not flare. Steady Treasury yields allowed mortgage rates to remain basically unchanged from Friday's levels.
9. Employment Report Spurs Bond Rally -- Rates Edge Down
U.S. Treasury traders went wild Friday on news that only 146,000 jobs were added to non-farm payrolls in January. Buying in Treasuries was aggressive as worries about bigger Fed rate hikes evaporated. Prices, especially on long-term debt, soared and yields, which move in the opposite direction of prices, plunged. The weaker-than-expected January employment report calmed fears that big increases in payrolls would drive up wages and spawn inflation -- the sworn enemy of fixed-rate assets. The unemployment rate also dropped to 5.2 percent -- its lowest level since September 2001. This number is obtained from a separate survey and does not carry the weight that job additions do. The Labor Department also reported that hourly wages increased by a modest 0.2 percent, and December payrolls were upwardly revised to 133,000 from 112,000. This news did not deter buying, although Treasury yields did close off of their lows of the day. The steep decline in yields, which lenders use as a guide to set mortgage rates, pushed the rate on the 30-year fixed to 5.375 percent and had a positive effect on other products as well.
10. Rates Hold Firm Ahead of Jobs Report
There was a lot of news for the financial markets to digest the day prior to the January employment report. Wall Street was disappointed by weaker-than-expected earnings from some top companies, while bond traders worried about a slide in productivity and an increase in costs that could ignite inflationary fires. A drop of 9,000 filing for jobless benefits also raised a yellow flag about the strength of the labor market. While selling in U.S. Treasuries was not aggressive, prices on most government debt edged down and their yields, which move in the opposite direction of prices, rose.

posted @ 1:05 AM