The Weekly Rap! Friday Mar 8, 2013

Ok, it’s the beginning of a new season, well sort of… We turn our clocks back and lose an hour, but it’s all for the best right?  We do gain an extra hour of daylight, and the days are getting longer.  Somehow I thing we have this backwards, we should lose an hour in the winter time when we don’t care as much and gain an hour in spring when we have more energy.  Then again I don’t write the rules I just attempt to follow them.  Just ask my wife.

The Dow is currently trading at 14,367 higher by 277 pts after hitting an all-time high this week.  The S&P 500 is trading higher at 1,548.  Gold is trading at $1,576 an ounce, another six month low, while oil futures at $91.46 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.93/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, are trading at 2.05%.  30-year Treasury Bond yields are trading at 3.25%.  The MBS (Mortgage Backed Security) FNMA 30-year fixed 3.0% coupon, containing 3.25-3.625% mortgages, pretty much the benchmark or how rate sheets are priced these days  is currently at 102.28 which is 1.25% worse than last week.

Mortgage Bonds have been in a downward trend (higher rates) since Dec 5, 2012 and after breaking out of the current range last week have since retreated back towards the bottom.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.  Think of anything above 100 as a credit.  The higher the number (price), the better the rate.

In economic news this week;

On a national level home prices advanced by a mere 0.7% in January to stretch the year-on-year advance to 9.7%,  the largest year-on-year gain since April 2006, according to CoreLogic. One would be tempted to ask, with these gains, is the housing market poised to enter the spring selling season on sound footing?  From the peak, prices nationally have shrunk by 26.4%, or a 19.9% when distressed transactions are excluded.  But we have to pose the question; are housing prices truly on the rebound, or is it simply supply and demand due to the fact that with so little inventory this the real reason prices are rising so rapidly?

On the economic front; service-related companies grew at a slightly faster pace in February and expanded for the 39th straight month, according to the Institute for Supply Management. The ISM reported its survey of purchasing managers – the executives who buy supplies for their companies – rose to 56% last month from 55.2% in January. Reading over 50% indicate more companies are expanding instead of shrinking.

The government is apparently getting in the way of a sustainable economic recovery, according to the Fed’s  Beige Book report (which truly gets its name from the traditional color of the top page) a survey of business contacts in several of the Fed’s 12 districts, reported that fiscal and health-care policies are holding back private spending and hiring. Retail sales slowed in many districts through late February, and the Fed contacts cited fiscal policy and higher gasoline prices as the reason. Labor-market conditions were reported to have improved modestly.  The Beige Book survey is essentially a collection of reports on the economy prepared in advance of the Fed’s March 19-20 meeting. It’s designed to give officials a feel for conditions on the ground

The Jobs or employment report was the big news of the week with the economy creating 236,000 jobs in February and the unemployment rate fell to the lowest level since late 2008, bucking expectations that higher taxes, federal spending cuts and a big snowstorm might dampen hiring. The pace of job creation last month was the fastest since November and the good news is that it spread across many sectors, suggesting the economy remains on a steady albeit slow, course despite a number of headwinds early in the year.  The unemployment rate, meanwhile, fell to 7.7% from 7.9%. The last time the jobless rate was that low was in December 2008, the month before Obama took office.

I need an app that will go around my house, office, cars, etc… and change all the clocks this weekend and then bring me strong enough coffee to recover the hour I lost.

Please visit my website at: http://bill.bartok.stanfordloans.com/agents/Blog
Sincerely,

Bill Bartok

Mortgage Advisor NMLS 445991

 

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