Mortgage Headlines
Treasury yields dip, mortgage rates don't
Weak retail numbers for February rallied U.S. Treasuries securities on Tuesday for the first time in five sessions. A broad-based slide in sales kindled a glimmer of hope that the Fed might be persuaded to relax its rate-hike efforts. In addition, Medley Global Advisors, which provides advice to financial entities, suggested that the Fed is nearing the end of its rate-hike program. Although some analysts dismissed the report, bond traders allowed themselves to believe that relief might be closer than they thought.
Steady buying in Treasuries sent prices up and their yields, which move in the opposite direction of prices, down. The yield on the benchmark 10-year note closed at 4.7 percent - its lowest in 10 days. The dip in yields, which are used to set rates, has not yet affected mortgage rates, which are holding near Monday's levels.
Retail sales plunged 1.3 percent in February - the sharpest decline in six months. Analysts were expecting them to fall 0.8 percent. Excluding auto sales, retail sales were down 0.4 percent. Although weak auto sales contributed to the disappointing numbers, sales were down in almost all sectors. The one positive note was due to a strong upward revision of January sales, which rose to 2.9 percent from the initial report of a 2.3 percent gain.
Business inventories in January rose 0.4 percent - double the 0.2 percent that was forecast, but half of the December increase of 0.8 percent. Business sales, however, jumped 1.3 percent, indicating that manufacturers might have to get busy restocking lean supplies.
Equity markets on a roll
Wall Street looked at falling interest rates and a "wow" quarterly report from investment banker Goldman Sachs and decided it was a good day to buy - a good day, indeed. The three major equity indexes racked up big numbers, while looking past a weak report from Procter & Gamble and rising oil prices, which climbed $1.33 to $63.10 a barrel. Goldman Sachs blew past earnings expectations and boosted the fortunes of other brokerage houses, while strength in airlines, home builders and semiconductors helped the broader market to its best day in quite a while.
Gains in the Dow Jones industrials were due to only four losers rather than a host of big gainers. Procter & Gamble shed 3.2 percent on disappointing guidance, while GM fell 1 percent due to its debt rating being downgraded further into junk status. Ford, not a Dow component, suffered a similar fate.
Interest-sensitive stocks, which have been dragging on the Dow since interest rates began climbing, took leadership positions today. Alcoa and 3M added 1.9 percent and 1.8 percent, respectively, while Honeywell rose 1.6 percent. Caterpillar joined in with a 1.3 percent gain, and Exxon jumped 1.95 percent. But Home Depot took first place, today, outgaining the other 29 components with a 2.23 percent increase.
The Nasdaq was helped by gains in health/pharmaceuticals, fiber optics and big moves by smaller companies such as Lonestar Steakhouse & Saloon, Movie Gallery, Overstock.com and Savvis, Inc. Although most of the tech big caps closed positive, gains were mostly moderate. Yahoo!, Qualcomm, Ericsson and Sun Microsystems stood out, each adding more than 2 percent, and Google finally reversed its direction, climbing 4.2 percent on the day. But Human Genome dragged on the index, falling more than 19 percent on the disappointing test of a new drug.
As of 4 p.m. EST:
The Dow Jones industrial index closed up 75.32 points (+0.68 percent) to 11,151.34; the Nasdaq composite gained 28.87 points (+1.27 percent) to 2,295.90, and the Standard & Poor's 500 index gained 13.35 points (+1.04 percent) to 1,297.48.
The 30-year Treasury bond closed up 24/32 in price with the yield falling to 4.71 percent, from 4.76 percent on Monday.
The 10-year Treasury note closed up 16/32 in price with the yield falling to 4.70 percent, from 4.77 percent on Monday.
The five-year Treasury note up closed up 12/32 in price with the yield falling to 4.68 percent, from 4.77 percent on Monday.
The two-year Treasury note closed up 4/32 in price with the yield falling to 4.64 percent, from 4.72 percent on Friday.
At 4 p.m. EST, average mortgage rates (zero discount points) based on rates collected nationwide were:
The 30-year conventional fixed-rate mortgage was at 6.123 percent, down from 6.153 percent on Monday.
The 15-year conventional fixed-rate mortgage was at 5.742 percent, down from 5.751 percent on Monday.
Coming up:
The big report for Wednesday will not be an economic indicator, but rather the so-called beige book from the Federal Reserve. This report, which is released roughly every six weeks, is an overview of economic conditions in each of the nation's 12 federal districts. It is studied by the financial markets, and especially bond traders, for insight into what the Fed might do regarding interest rates.
Also on tap is the Federal Reserve's New York Empire State index of March manufacturing conditions, which is expected to come in at about 20. This would be a slight dip from the 20.3 posted last month. This report can impact the markets and is sometimes a precursor to the more-important Philly Fed index, due on Thursday. U.S. price indexes for February imports and exports also are slated, but usually are low in impact. Net foreign purchases and crude oil inventories are also scheduled for release.
Mortgage rates could tip down a few basis points overnight and into Wednesday, due to today's big slide in yields. It is unlikely, however, that they would move down enough to make much of a difference in actual rates.
Carolyn Siegel
Carolyn@interest.com
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