March 2011

Friday Prediction: Rates Up As New Jobs Exceed +188k Expectations

Stocks are flat today (S&P -.17, Dow +1.51) as are bonds (10yr Note +6 bps, FNMA 30yr 4% coupon +9bps) as markets prepare for the Bureau of Labor Statistics (BLS) jobs report tomorrow. Consensus estimates call for +188k non-farm jobs to be added to the economy in April, but that number could be meaningfully higher.

Updates On TARP, Gov’t Loan Modifications, Finreg for Lenders

Yesterday I summarized new Finreg rules requiring banks to retain at least 5% of loans they sell into secondary markets, and outlined which Qualified Residential Mortgage (QRM) loans will be exempt from this rule. The exemption debate rages, and here’s the Mortgage Bankers Association’s “profound concerns” on the matter. The QRM proposals are now open

Rate Up-Trend On Optimistic Jobs Outlook & Weaker Bond Auctions

Mortgage bonds are trading higher today (FNMA 30yr 4% coupon +28 basis points) which helps make up for yesterday’s 43 basis point loss. The two day net loss on bond prices means a slightly upward rate trend because rates rise when bond prices decrease. Yesterday the Conference Board’s March consumer confidence showed a decline, confirming

Ugly Housing Stat Roundup: Prices, Sales, Construction (CHARTS)

Yesterday’s S&P Case Shiller January 2011 report of existing home prices showed average U.S. home prices declined 3.1% from January 2010. Also January was the sixth straight month with a lower reading from the prior month, which reflects sustained foreclosure volumes and high unemployment. U.S. home prices are now at similar levels to what they

A Word On Inflation Expectations

Do rates tend to rise on inflation and fears of inflation? Remember that the real interest rate includes both inflation and the nominal rate of interest. In the case of a loan, it is this real interest that the lender receives as income. If the lender is receiving 3.5% percent from a loan and inflation

A Word On Inflation Expectations

Do rates tend to rise on inflation and fears of inflation? Remember that the real interest rate includes both inflation and the nominal rate of interest. In the case of a loan, it is this real interest that the lender receives as income. If the lender is receiving 3.5% percent from a loan and inflation

Higher Inflation & Pending Home Sales Leave Rates Flat

Stocks are up slightly and bonds are even today after slightly higher consumer inflation and better than expected pending home sales reports are washing each other out. This even-rate, higher-stock mood kicks off a big week of inflation, home price, and employment data that could push rates up. The Fed’s preferred measure of inflation, the

26 Failed Banks in 2011

Twenty-six banks have failed in 2011. Friday the FDIC closed Advantage National Bank Group (IL) assuming all the deposits (liabilities) of the Bank of Commerce (IL). Which brings up the question, “Do regulators see trends in problem banks?” Generally speaking, regulators see some key characteristics they frequently find in these institutions, none of which be