Special Update: Fed Meeting

2017-12-20T17:34:11+00:00 September 14th, 2015|Categories: Special Update|Tags: , , , , , , , , , , |

Fed day is coming up on Thursday. The Statement will be released at 2:00 ET, and Fed Chair Yellen’s press conference will follow at around 2:30 ET. Fed members appear divided about raising the federal funds rate at this meeting. Investor expectations are mixed as well. With no apparent consensus, whatever the Fed decides will likely cause a significant reaction in the markets. More important than the decision about hiking rates may be what investors learn about the Fed’s view of the economy and how that may influence future Fed policy.  What impact will this Fed meeting have on mortgage rates? The answer is not at all clear. It will depend on how the Fed’s decision and comments alter investors’ outlook for future Fed policy.  

Special Update: Fed Meeting

2018-01-02T18:47:25+00:00 December 17th, 2014|Categories: Special Update|Tags: , , , , , |

The FOMC statement and Fed Chair Yellen's press conference has created some volatility, but resulted in just a small net reduction in MBS prices. The statement included some change in language but Yellen pointed out that it did not "signify any change" in the Fed's "intentions" for monetary policy as indicated in prior statements. The phrase "considerable period" remained in the statement, and the term "patient" was added to describe the Fed's attitude in changing monetary policy. The forecasts from Fed officials for the pace of future fed funds rate hikes were lowered a little from their forecasts at the September meeting. Yellen said that the Fed is unlikely to start raising the fed funds rate for "at least the next couple of meetings". The Fed's view is that the economy is improving and that the slack in the labor market is diminishing. According to the Fed, the downward pressure on inflation from lower oil prices is "transitory" and will have little impact on long-run inflation levels. Yellen emphasized that future monetary policy will remain heavily dependent on incoming economic data.  

Special Update: PPE Inflation

2017-12-20T17:34:12+00:00 May 14th, 2014|Categories: Special Update|Tags: , , , , , , , , |

At the beginning of the year, a change was made to allow the Producer Price Index (PPI) to capture a wider range of items. PPI now focuses on the increase in prices of intermediate goods AND services used by companies to produce finished products. Services were not included before this year. One result of the change was to make the data more volatile month to month. Investors likely will look at longer-term trends in PPI, but they may not react much to monthly changes, as was seen today. To determine trends in inflation, investors rely more heavily on the Consumer Price Index (CPI), which measures price changes for finished goods, and the Core PCE price index, which is favored by the Fed.    

Special Update: Fed Statement Little Changed

2017-12-20T17:34:12+00:00 July 31st, 2013|Categories: Special Update|Tags: , , , , , , , |

There was very little change in today's Fed statement from the prior statement released on June 19. Investors viewed this as good news for MBS, since the most likely potential changes would have been negative for MBS. For example, some investors thought that the Fed would provide more concrete guidance on the timing to begin to taper its bond purchases. Instead, by avoiding specifics, Fed officials left the timing more open-ended. A decline in the quantity of Fed bond purchases will be negative for MBS.  The primary change to the statement was the Fed's description of the economy. The statement said that the economy is growing at a "modest" pace, while the last statement said that the pace of economic growth was "moderate". The statement noted that Fed officials expect inflation to rise moderately over the medium term, but that there is a risk that it will decline to undesirable levels. The consensus view is still that the Fed will begin to taper its bond purchases in September, unless economic growth weakens significantly. Friday's Employment report will be one of the major upcoming data points which will influence future Fed policy.

Special Update: 2.5% 30 Yr Agency MBS prices now available!

2017-12-20T17:34:12+00:00 November 20th, 2012|Categories: In The News, Special Update|Tags: , , , , , |

Are any of you looking for 2.5% 30 yr Agency MBS prices?  MBSQuoteline now makes them available as part of its mortgage market information service.    Not only can you see live MBS prices at any time during the day,  you can see the path of price movement throughout the day.  The prices are conveniently available on your desk top, as well as your smartphone.  Go to www.mbsquoteline.com to start a free trial to see how this information and more can be a benefit to you.

Special Update: Update on G-Fees

2017-12-20T17:34:14+00:00 November 1st, 2012|Categories: Special Update|Tags: , , , , , , , |

We have received a few questions today about why mortgage-backed securities (MBS) prices do not show the same drop in prices as seen from the Fannie Mae window. The reason is that Fannie Mae, this morning, built into their whole loan prices an increase in their required guarantee fee (G-fee). Since G-fees are paid from the borrower's loan rate and not by the owner of an MBS, MBS prices are unaffected by a change in G-fees. Most lender rate sheets began reflecting the increase in G-fees over the last few weeks, depending on lock term and delivery method.

In The News: Greek Debt Negotiations 1.24.12

2017-12-20T17:34:14+00:00 January 24th, 2012|Categories: In The News|Tags: , , , , , , |

Greece has experienced the worst debt troubles of any European nation, and its debt burden is clearly unsustainable. European officials and bondholders both want to avoid a default, so they have been negotiating a "voluntary" agreement to reduce Greece's debt burden by 50%. As usual, though, the sticking point for the two sides is price. In the case of bonds, this means the yield on the new bonds. Bondholders want the highest possible yield. A higher yield means higher debt payments, however, and Greece will require financial aid from the IMF and other European Union countries to make the payments. A default would trigger many costs and raise the level of uncertainty for investors, possibly raising yields for other European countries, which gives bondholders some leverage. On the other hand, if the Greek government defaults, there is little reason to give bondholders anything. The lack of progress has caused a flight to safety, which has helped relatively safer investments, including US mortgage-backed securities (MBS). Mortgage rates are largely determined by MBS prices, and a "messy" deal or a default would likely cause US mortgage rates to move lower. If bondholders agree to a deal at a yield which Greece can [...]

BlogTalkRadio Podcast – June 14, 2010

2017-12-20T17:34:16+00:00 June 17th, 2010|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , , , , , , , , , , |

This week on BlogTalkRadio/Lykken-on-Lending: What drives mortgage rates?  Inflation and uncertainty.  Inflation is not present right now and according to the majority of the Federal Open Market Committee members it is not expected to be much of a concern for the near future.  Uncertainty, though, is alive and well.  Continuation of the recent economic improvement in the US is considered anything but certain.  Global economic growth has been a question mark.  The ability of several European nations to satisfy their debt obligations is uncertain.  This uncertainty has resulted in tremendous volatility in the stock market, which has caused tremendous volatility in mortgage-backed securities prices. Daily, global headlines suggest to  investors its time to shift assets to more or less risky investments.  That is what happened last week.  After reaching the highest level of the year, mortgage-backed security prices were beat down on Thursday based on headlines from Australia, China, and Europe, all which suggested improving economic conditions.  Investors sold low risk bonds and bought higher risk stocks.  The Dow gained 270 points.  MBS prices lost 25/32nds.   This pattern has been in place now since April when the European debt crisis raised its ugly head.  Look for volatility in mortgage-backed security [...]

BlogTalkRadio Podcast – Apr 19, 2010

2017-12-20T17:34:18+00:00 April 22nd, 2010|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , , , , , , , , , , , |

MBS prices are down 3/32nds this morning.  Leading Indicators were released at 10:00 a.m. et and were a little stronger than expected.  Last week was another good week for mortgage rates.  Mortgage rates fell about 10 basis points during the week.  The Fed Beige Book painted a pretty picture for mortgage rates, slow growth and low inflation.  CPI confirmed the low inflation part as it reported prices in March rose at a 1.1% annual rate.  Volatility continued during the week.  Volatility has persisted since the end of the MBS purchase program on March 31st.  As the Fed is no longer a consistent big buyer, the market is functioning more naturally and that includes reacting more significantly to economic announcements and changing sentiment. Mitch Kider, of Weiner Brodsky Sidman Kider PC, joined the show to discuss the result of a recent Department of Labor ruling which changes an interpretation of labor laws as it relates to loan originators (LOs) and overtime.  The new ruling overrides previous rulings that allowed LOs to be exempt from overtime as they were considered to be performing administrative duties.  Now their duties are not considered administrative and the labor laws says, if they do not meet [...]

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