Loan Biz Blog

Isn’t it funny what a trillion dollars can do for you? Well, that’s what the European Union threw at countries such as Greece, Spain, Ireland, and Portugal in a move that mimicked what our Federal Reserve and Treasury departments did a little over a year ago. Stocks took off in stealth fashion across the globe. When stateside trading opened in NY, the Dow jumped 400 points at the bell. Currently, the Dow is up 406 while the Nasdaq is plus 102 points. It is too early to call the close which will be important. We’ll want to see if traders are buying the bailout given passage is still needed by all 16 countries and the austerity measures (wage cuts, layoffs, retirement age rising, etc. etc.) have yet to be implemented in Greece. They (citizens) could just be taking a rest before the street fighting once again begins. Overall, the move has hope and removes a negative for growth round the globe. Bonds, notes, and mortgage backs have felt the pinch but mortgage backs have held up quite nicely. 10 year note is off 33/32’s (yield 3.55%), 30 year bond is off 74/32’s (yield 4.42%), and yet MBS are down 8/32’s. We tried to sharpen pricing this morning due to the Friday IT snafu. Seems that a mouse chewed through the power strip which all the servers were plugged into. Shoulda called the Geek squad. The week ahead is light on data with Retail Sales, Industrial Production, and Michigan Sentiment survey being the heavy hitters on Friday. We will however have supply to contend with this week as the Treasury auctions 38 billion of 3 year notes tomorrow, 24 billion of 10 year notes on Wednesday, and 16 billion of the 30 year bonds on Thursday. Stock pricing and movement will hold the key to how well the paper is received. Technically, the weakness today has taken the chart back to pre-Europe chaos levels and forced sell signals to emerge on 60 minute charts. Daily charts however are not giving us a new bear trend. When you have this type of divergence, the market is trying to tell us that it will take time to show its true colors as nothing is in harmony. In English, this means that mortgage rates and pricing can go one way or the other in short order but most likely hold steady at current levels. Best to stay on defense as stocks certainly look better, Europe looks better, and the Federal Reserve Chairman hints of Fed Funds rate hikes sooner than later. Personally, we like the chart (better chance of lower mortgage rates/better pricing) but the fundamentals (economic data) points to a steady recovery. A tug of war for interest rates seems in the cards.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

New day, same story. Sovereign debt remains the primary focus, taking stocks hostage for the fourth day in a row. Never mind that Q1 Productivity was up 3.6% while Unit Labor Costs fell 1.6%. Or that Weekly Unemployment Claims fell 7K to 444K. Even the Monster Employment index rose 8 points. The Greece fire has put a smoke screen in front of conventional wisdom, driving traders to safe have investments such as treasuries, the dollar, and gold. Today’s early trade pushed treasuries to higher yields and worsened mortgage pricing, but only slightly. That occurred on a flat to slightly higher open for the Dow. Currently, the big board is off 68 points as seller are still looking for any strength to get out. Reasons being that as Greece is on the edge of the cliff, global slowing will occur or even worse, a default in the Euro zone that could really put a pinch on global credit and stock earnings. Our mortgage back market opened off a tick or two but has recovered to unchanged levels. 10 year note trades a 3.52% yield. The tactical bias for today is neutral as we expect the chart to stay within yesterday’s highs and lows. Traders call this an “inside day”, typical structure on the day before a big risk event (Employment Report for April 7:30 am cst Friday). Overall conditions remain bullish but are over bought and need a stall or correction to bring their levels back into harmony. With the Big Daddy of all data out tomorrow and the market rallying smartly into it, the risk reward for additional gains is possible but a low probability bet. With expectations for a positive jobs number tomorrow, it’s only a matter of time before we get over Greece and focus on economic fundamentals. We will discuss expectations for tomorrow’s jobs report later today. Take a little caution with you into tomorrow. Remember, it’s better to be a live dog than a dead lion!

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Stocks and bonds look to be the tale of two fables. Stocks on one hand continue to tell the story of positive earnings data as day after day, the majority “beat the street”. Apple reported after the bell yesterday, blowing the doors off expectations. Morgan Stanley and Wells Fargo posted earnings beats as well with comments from the Stage Coach company that credit deterioration is improving and has “turned the corner”. Fixed income products (notes, bonds, and mortgage backs) our on a different page with yields falling/mortgage pricing improving on a continued and heightening sovereign debt crisis. Yields on the Greek 10 year note are over 8.0% as the German Finance Minister expects the country to ask for aid. He also hints that “creditors may need to assume some of the risk”. As you can see, we have stocks and their earnings along with bonds and their flight to quality bid both driving the rally bus. No economic news today. That will change tomorrow with Weekly Claims, PPI (inflation at the wholesale level), Existing Home Sales, and the House Price Index all on the leader board. Out right money flows or price action has been light and two way. We are not seeing the volume in notes and mortgage backs to give us confidence in a continued rally. That said, we do not expect much of a pullback either. Currently, the 10 year note is up 10/32’s to yield 3.76%, very close to our range high (low yield) expectations of 3.75%. Mortgage backs are plus 4/32’s on the day, right where Big Joe took a mark for your pricing. Stocks are up a baker’s dozen on the big board as very overbought conditions are in a dog fight with stellar 1st quarter earnings. Looks like one of those rare days when everyone is happy. One more thought. Take a look at the chart below. This is a classic example of a triangle pattern on a long term time horizon (weekly chart). Patterns like this start out as big range trades, slowing winding themselves tighter and tighter until they reach the apex. At that point, a “breakout” occurs. The measured move that usually happens is at least ½ the distance of the pattern. In this case, the longer term pattern has traveled 2 points in yield on the 10 year note.

Given the charting principals we live by, the movement on the note would be at least 1 point. Given the basis equivalent on MBS and your mortgage pricing, the move would improve or hurt pricing by about .75 bps. In other words, about .25% to .375% in rate. This is not today’s story but one that should resolve itself before year end. Given the underlying fundamental stability in the economy, the odds on favorite would be for mortgage rates to move .25% higher but with soooooo many factors yet to play out, we’ll just have to see what happens. School’s out for today.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

As much as everyone and their brother has been looking for a market top in stocks, the reality is it just ain’t so. Up 70% to 100% from the March 2009 bottom, depending on the index or individual stock you’re looking at, one would think a major correction is near. Even with good reasons abound; Greek insolvency, Goldman Sachs fraud allegations, China’s slowdown, health care reform, financial reform, and more taxes coming our way than you can shake a stick at, the trap door just won’t open. Just when Goldman looked to be on the ropes, they reported earnings that blew away the street. $5.59 versus analysts expectations of $4.01 is not a bad quarter. Apple and Yahoo will release today after the close. Wait until you see Apple’s numbers. What we’re seeing here is an unwind of the flight to quality bond buying that happened Friday and early Monday. Treasuries have been volatile the last 24 hours with traders more than willing to sell any strength. From our technical view, the selling has followed a typical pattern of forced buying (rally) followed by corrective action that trades to retracement levels. Currently, we sitting on the 62% retracement represented by a 3.82% yield on the 10 year note. Mortgage backs took it on the chin for 8/32’s yesterday and are off another 2/32’s as we speak. Nothing huge but then again we see no reason for a rally. This type of overlapping, corrective price action often times leads to a triangle or large range pattern, one that the bulls need to defend and hold at 3.83% or lower. With no news until Thursday, we’ll take a back seat to stocks and most likely go the opposite direction. Don’t go to sleep out there, that’s when the market can pick your pocket! Check out the piece on the Abacus deal (Goldman). It’s a doozeeee.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

For the most part, both fixed income and equity markets are quiet following the wild Goldman Sachs induced ride we had on Friday. Bonds, notes, and mortgage backed securities seem to be at a crossroads, trying to handicap the ramifications of Goldman’s alleged fraud. That alone will keep a flight to quality bid in the market. Greece is a helper on that front as well with more uncertainty, adding 35 bps to their yield (10 year debt) and then there’s China, tapping the brakes on real estate lending. That sent the Shanghai index down 5% in early trading. Stateside focus is clearly Goldman but also on 1st quarter earnings. Citi reported before the bell, actually making a profit of 14 cents a share. Guess the bake sale held by the mortgage unit helped. At any rate, it’s a good thing for the tax payers since we own a big chunk of the company. Leading Economic Indicators were also released, up 1.4%. The print was .4% better than market expectations but in reality, the index is such a rear view mirror piece of data that most traders blink as it goes by. Speaking of data, it’s a light week with the next release due for Thursday and Friday. See attached. Existing Home Sales, New Home Sales, and Durable Goods Orders will be the headliners. The tactical bias for mortgage rates and pricing is to remain neutral, trading a range on the 10 year note between 3.75% and 3.82%. Stocks want clarity on the Goldman/SEC issue which will lead bonds to react accordingly. Our work on the 10 year note chart is providing neutral to bullish trend signals and overbought conditions at the same time. Classic example of a mixed bag. Currently, the 10 year note is off 3/32’s (yield 3.78%), mortgage backs off 3/32’s, and stocks off 8 points on the big board. One word of caution, Big Joe took a mark and priced with the 4.50% security unchanged. With that coupon now off 3/32’s, he’s probably “fixin’” to pull that six shooter out of the holster and unlock the safety. I’ll try to keep him under control!

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

The market was greeted with a slew of economic data this morning, some too hot, some too cold, and some just right. Weekly Unemployment Claims filled the too cold category as the rose 24K, much higher than analysts had expected. The plus 484K reading is the highest level seen since the snowstorms in late February. Blame has been laid on Easter and Cesar Chavez day. Wonder what will happen to next week’s numbers since April 20th is National Cuckoo day. The New York State Empire Manufacturing Index was also released, up 9 points to 31.86. The print above 30 has happened only twice in the last four years. It looks like manufacturing is getting better in the big apple, switching from a draw down in inventories to a rebuild. Let’s see if it’s sustainable. Industrial Production for March hit the screen up only .1% as utility output fell sharply but was countered by strong mining and manufacturing. The index continues to point out that we still have plenty of slack in the economy. Batting cleanup today was the Philly Fed Survey which rose 1.3 points to 20.2. The index was mixed as new orders were up over 4 points but shipments dropped 8 points. The numbers were disappointing, a bit of a head scratcher when you look at the divergence between Philly and NYC. Bond, note, and mortgage back pricing has been a game of crack the whip, initially dipping on the Empire news, making a comeback on Weekly Unemployment Claims, only to dip again on the Philly Fed news. Currently, we’re on the comeback trail as the market has rallied for no particular reason. After being down as much as 6/32’s this morning (MBS), the market is back to unchanged. We priced down 1/32nd, giving you the advantage of a little better pricing than where others probably took a mark. With cross currents and divergences a plenty, the tactical bias is to stay defensive on the market. Traders look to sell strength but also buy weakness as we see the range (10 year note) between 3.82% and 3.92%. Happy tax day!

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Stock market strength has pressured bonds, notes, and mortgage backs as we head towards the close. With the Dow up 96 points trading well over 11,000 and S & P’s over the 1200 level (which was good resistance and very psychological), the path of least resistance is for additional improvement. JPMorgan gave stocks the boost from the get go, beating earnings expectations by 10 cents and saying all the right things about credit quality improving etc. The 10 year note opened in the red but by only a few 32’s, holding onto the breakout level below 3.83% yield on the 10 year note. As you can see from the chart, that bullish momentum has been challenged as we are now trading at 3.86%. Technically savvy traders call the formation a “double top” that you can see by the horizontal line across the top. Confirmation is now being made as we have taken out the base from which the last leg of this rally started. In chart terms you can see this is the level below 116 10 (closed futures session at 116 09). Traders call this a “bear trap”, stranding the bulls on the expected breakout above 116 10. Further confirmation of the next move being to worsening mortgage pricing can be found in the fact that we failed to hold above both the 8 day and 21 day moving averages. They cross the right side of the chart at 116 12. SStochs have also made a bearish cross and I’d even bet that Barry’s candlestick malarkee shows a spinning top (reversal in process). In proper context, the selling today has been a function of overbought readings and the need for consolidation. We do not thing its anything huge but will most likely correct to 115 31 on the chart (yield equivalent of 3.92%). Mortgage backs are now down 11/32’s on the day and will probably give up at least another 8/32’s before we reach our target. Time to be careful out there.

RE: Where's the Beef (Loan)

Just got off the phone with the powers to be regarding USDA. The bill was introduce yesterday in the House by Representative Capito. Process time to clear the House should be 7 to 10 working days. Then on to the Senate where you know who is in charge of the Finance Committee (Barney Frank). By the way, he is in favor of the funding which will not be funding at all. The bill being presented will raise the MIP to 3.50 and then be adjusted on an annual basis to make the program self sufficient. Makes perfect sense and is budget neutral. Seems like a layup but then again, we talking about the Apple Dumpling Gang here. Passage in the Senate should take about 2 week (working days). Given the calendar and my math skills, we would project the program to be back in action by May 12th. Given the info I just received, the run dry day for USDA is May 10th or sooner. With any luck, we will open the new door as the old one closes. More as it becomes available.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Earlier today, the February Trade Deficit grew to 39.7 billion. Economists were looking for the number to come in closer to 38.5 billion. The jump was concentrated in the goods deficit rising 1.9 billion. March Import Prices were also released, up .7%. 80% of the rise can be traced to a 2.9% increase in fuel prices. Been to the pump lately? Fixed income prices were strong in early trading as “forced buying” in both the 5 year and 10 year notes took place as the top of the range was breached. Given the move, we priced up 5/32’s in 4.50% securities only to see it erased within the first couple of hours. After going negative, the market has started to boot strap itself back up. If this continues, we should be able to give you back the .125% snared earlier today. From the technical side, trading above the range highs is encouraging but is viewed as “cautiously optimistic”. With Gentle Ben due on the hill tomorrow and most of the low volume trade directed by fast money types and day traders, the market may need time to prove itself. Stocks are up a hand full, mortgage backs up 2/32’s (we priced up 5/32’s), and the 10 year note is trading at 3.81%, all positive elements. At least for today. We’ll call the market neutral/bullish yet still feeling the need to keep both hands on the wheel.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Today’s trade has been one of bullish trending action for both bonds and stocks. Stocks are higher on good earnings expectations and some positive movement on the Greek debt crisis. Word has it that EU/IMF has a plan for 40 to 61 billion EU on a three year loan at 5.0%. Trouble is that it would address their liquidity issues but not their solvency. Treasuries and mortgage backs continue to grind higher (lower yields) due to tactical reallocations and sellers that appear to be “worn out”. One word of caution as you look at the chart. Currently, we’re right up against the top of the range (116 10 in futures and 3.83% 10 year note yield).

For the market to do better (mortgage pricing improvement), we need to breach and close above 116 10 (below 3.83% yield). Otherwise, all that has happened is that we’re tested the top of the range and we’ll once again consolidate, moving back towards the center of the range. Traders like the set up and prefer to short (sell) the market at this level with tight stops. Meaning that if their wrong, they will know quickly and will get out with small losses. You can use the same strategy with the float down program. Good place to sell and if your right, you’ll have caught the top of the range. If your wrong, the rally will extend towards 3.75% yield or 117 22 on the chart. This would get you a float down of approximately .125% or .25% in rate. The economic calendar heats up as well this week. Housing data tomorrow, inflation and Retail Sales on Wednesday, housing, inflation, and Weekly Claims Thursday, and Michigan Sentiment Survey on Friday. As we speak, lower MBS coupon have got a little giddy up in their get along. We’ll improve them for you in a minute.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

2:57 PM (CST) - Just a note as we head into the final hour of trading. After strength took us through the major down trend line, the market failed and made new lows (highest yield of the day) into the CBOT 10 year note futures close (2:00 pm cst). For all you Barry lovers out there, let’s put the analytics into his terms. Open the chart (attached) and you will see today’s trade. The session formed a bearish candlestick that includes a long upper shadow and a bearish real body. The real body also shows some “Harami” traits (reversal). Conclusion without all of the Jack jumped over the candle stick BS is that upside momentum (rally) is not anticipated but neither is strong selling (bearish momentum). Trend intensity is now neutral which fits with our (not Barry’s) Goldie Locks scenario. As we speak, the 10 year is off 6/32’s (yield 3.89%) and MBS off 4/32’s. Expect a range trade to develop.

12:41 PM (CST) - 13 billion of these puppies crossed the block to yield 4.77% with 36.8% going to Indirect bidders. Direct bidders took 25.5% as well. The bid to cover was 2.73 to 1, respectably against the average of 2.50 to 1. The only drawback was that the issue produced a 1 basis point tail, something on the order of a bulldog or a pug. Not bad overall, give it a grade of B. Market reaction was a quick rally back to the day’s best levels, only to reverse in short order to where we repriced. Currently, the 10 year note is down 3/32’s (yield 3.88%), mortgage backs are unchanged, and stocks have gone positive on both the Dow and the Naz. Good news is that the selling of late is moderating. Not so good news is that we do not see a catalyst to rally the market. For the time being, I’d say we are in a “Goldie Locks” market, not to hot, not to cold, but just right. Best to keep both hands on the wheel.

10: 50 am (CST) - Just a quick update as early morning gains are starting to fade. At one time we had mortgage backs plus 5/32’s on the heels of a jump in Weekly Unemployment Claims (plus 18K to 460K). Stocks were also supportive as both the big board and the Naz opened in the red. Stocks have cut their losses in half and now the focus has turned to today’s 30 year bond auction. With the when issued pre-auction price trading right at 4.75%, valuation seems reasonable but worries about Indirect bidders is front and center. The average for this auction has been 40% taken by the Indirect types. Last month’s auction however was a disaster with only 23.9%. Technically, we’re right up against the down trend line. This is where the battle of bulls and bears will take place and the weapon of choice seems to be the 30 year bond auction outcome (12:00 cst). Since we priced plus 5/32’s and are now trading plus 1/32nd, Big Joe has taken the safety off and has his finger firmly on the price change trigger. Just a heads up as traders are getting a touch nervous.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Couple of things I’d like to point out as we close out the trading day. First of all, the market had an “outside day up”. What this means is that we made a lower low than the previous day, only to close above yesterdays high level. In mortgage terms, we had pricing at one time today that was worse than yesterdays only to close above yesterdays best level. Trust me, the pattern is bullish. Next, with respect to pricing, the market is rich to our levels. Meaning that if the market was just opening, pricing would be about .125% better. We are going to improve pricing now to bring it in line. The tricky part of hedging product within the context of a bear market is that it can turn at any time. Look at the chart.

You will see the down trend line that began in late February. Way on the right side, you will see that last bar of the chart has reversed and is now ascending on that down trend line. Also, if you look at the oscillator SStoch, meaning slow stochastic, you’ll see that it has yet to cross. A cross is needed to confirm that the sellers have lost their edge. RSI and MACD are neutral and of little help. The point I’m trying to make is yes, we’ve had a good day but no, do not trust it. It’s looking better and the bears will need to prove themselves tomorrow. If they don’t, we’ll feel allot better about a range developing between 3.75% and 4.0%. One more thing, for those of you who would like to know more about a tool we use call Fibo Retracement Levels, I’ve put them on the chart. Notice that we start at the highs which represents the top or 1.0 and stretch to the bottom labeled 0.00. This would be a full retracement (high to low or low to high). Fibonacci theory relies on measured moves within one standard deviation. Therefore, the most likely targets lie at .375, .50, and .625. We like the way that 3.75% come in at the 50% retracement level. “If” we’ve put in a bottom for this trading turn, that’s the most likely target. If the bears take over, we’ll be on our way to 4.25%. Don’t go to sleep out there but at the same time, you may now exhale. Hope you enjoy and are learning something from this rambling missive.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

The reflex rally we’ve been looking for later this weeks has arrived early. The main driver behind this, beside the very oversold conditions on the chart, has been Asian and European buying of Treasuries due to worsening debt crisis issues in Greece. Greece bonds have been imploding lately, now trading over 400 basis points higher than the German Bund. Call it a flight to quality bid. The only thing on the calendar today, besides 40 billion in 3 year notes on the block will be the 1:00 release of the latest FOMC minutes. The risk in the minutes will be if talk is present about a changing exit strategy. Interest and mortgage rates continue to be bounced around like a pin ball. With the fundamental and technical variables acting as bumpers, the ball is always a moving target. Improving economic fundamentals are leading to higher yields and worsening mortgage rates. Heavy treasury auction supply is also a concern. Sovereign debt problems are not only a Greek problem but are spreading though out the Euro zone. Even Japan looks shaky as debt to GDP is 200%. Stocks seem to be running low on fuel with many calling for at least a 10% correction. Oil heading for $90.00 a barrel or in everyday life, $3.00 at the pump is a tax on the consumer. No matter which poison you pick, this baby is tough to handicap. We see the chart below as just one element in our bias. Notice how we broke out of the triangle pattern that began back in July 2009. Once we pierced the 3.87% yield mark, traders recognized this as a breakout. Risk projects to 4.25%. In the short run, we like the fact that 4.01% was touched yesterday and held. Trouble is, the reaction has been feeble and more to relieve oversold conditions, simply corrective in nature. The bearish trend is firmly in place and suggests that after a short respite, sellers will be back in the market. We will find support somewhere in the 4.0% to 4.25% yield level but to tell you where would be a fools game. Stay on top of your pipeline. With the tactical bias neutral to bearish, with higher yields the most probable, further selling should be limited given the size of the move we’ve already had. As we speak, the 10 year note is up 6/32’s (yield 3.97%), mortgage backs up 6/32’s, and stocks off 9 points on the big board. Hang in there. Just like the dentist, it will be over soon!

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Sorry for the “sticker shock” this morning in your pricing. Friday’s employment report did the damage. The payroll data came in on the plus side, up 162K new jobs with 48K attributed to government consensus workers (temporary positions) yet the unemployment report remained high at 9.7%. Although the market was looking for a good number, the reality put bond and fixed income sellers in motion for the shortened Friday session. Mortgage backs finished the day on Friday off 17/32’s as the yield on the 10 year note heads for our projected target of 4.0%. Now the debate starts as to whether or not the economic recovery is a glass half full or half empty. It looks sustainable but certainly at a sub-par level. Oil on the move, over $85.00 a barrel and heading for $90.00, along with the entire commodity sector (copper, gold, etc.) rallying into the assumption of good growth to come are also in play. The number that was the most profound was last week’s ISM Manufacturing Report. Up 5 points, it points to not only an inventory rebuilt but the reality of inventory coming off the shelves. Today’s ISM non-Manufacturing Report was up over two points as well. We acknowledge the economic improvement but feel that going “cold turkey” on the quantitative easing along with a bottom fishing housing industry will produce a choppy, slow recovery. Overall, the market is entering a value arena on the 10 year note between 3.92% and 4.02%. Currently, the note is down 9/32’s to yield 3.99%. Mortgage backs continue to follow suit, off 7 to 5/32’s depending on the coupon. Price change is nearby. With stock feeling giddy and supply coming this week (71 billion of 3’s, 10’s, and 30’s), along with 8 billion in 10 year TIPS (Treasury Inflation Protection Securities), the tactical bias is to keep your defense on the field. I know they are getting tired. Rumors out there about the Fed raising the Discount rate another .25% aren’t helping either. The good news is that Pending Home Sales (new contracts not closed) jumped 8.2%. We should have more purchase business. They’ll just have to pay a little higher rate to get it. Other good news can be found in our technical work which points to a market that is becoming very oversold. With 60 minute and daily chart oscillators buried and the near term target at hand (4.0% to 4.02%), some sort of reflex rally should occur, probably as we near the end of this week’s auction cycle (Thursday). We would expect investors to find value at current levels, wanting to buy and go long the paper as the debate over economic recovery continues. The last piece of good news is that mortgage rates are still low even with the bashing we’ve taken lately. Conventional fixed around 5.25% and Government fixed around 5.0% to 5.25% are historically low. And for the kicker, the new purchase today at these rates should have an opportunity to refi down the road. Call it a twofer!

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

ADP’s Employment Report shocked the market with its “guess” for Friday’s payroll data estimate of minus 23K. While ADP does not factor in any government hiring, economists had expected their estimate to be plus 40K. With the “street” bulled up for a 200K to 300K positive jobs number, maybe ADP just threw a little cold water on their party. Trouble with ADP is that they have a history of missing the number and by huge margins more often than they get close. To them, within tolerance is 3 standard deviations! Chicago PMI was also released, down 3.8 points to 58.8. The market was looking for a print of 61. Within the index, the production component fell nearly 5 points but new orders fell only slightly. Cutting to the chase, the market rallied off the data with mortgage backs up 4/32’s at their best levels. The green on the screen was short lived as fast money types and hedgers used the opportunity to sell. Fits well with what we’ve been talking about lately. With the 10 year note up 6/32’s (yield 3.84%) and mortgage backs now off 3/32’s (widening spreads), price changes for the worse are in vogue. Don’t miss the bus. More in a few.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

The morning after continues towards the path of least resistance, that being higher yields and worsening mortgage pricing. Certainly the economic fundamentals of a recovering economy, continuously evolving fiscal policy which we feel is more borrowing and less monetary stimulus, and a reluctance of our foreign partners to take on our debt/risk are the heavy weights in this move to higher yields. In this current environment, markets are more complex that ever and the flow of money with it’s associated risk can be powerful and detrimental. The trend is changing and even though we don’t like it, a “new normal” for mortgage rates is in the works. Fundamentals aside, the chart below gives you a good picture of where we’re headed.

The large channel dating back to last year, which gave us a series of lower highs and lower lows in yield has now been breached. Phase two was the triangle formation that was trapped between 3.29% and 3.81%, winding itself tighter and tighter headed for a breakout. That breakout happened yesterday and if you remember our comments a couple of weeks ago, our bias carried a high probability of that breakout leading to higher yields. Wished we were wrong. Damage done, it’s time to move on and get back to business. Earlier today, Weekly Unemployment Claims fell 14K to 422K. Continuing Claims also fell. Both are not indicative of a trend but a better reflection of improving weather across the country and government consensus hiring. Bill Gross, often referred to as the “bond god”, is talking about how he’s bearish on bonds and feels that stocks are a better buy. He also commented that he expects to see the 1 year TBill rate at 1.25% to 1.50% within a year. Today’s rate is .41%. Currently, the 10 year note is off 14/32’s (yield 3.87%), mortgage backs are off 16/32’s, and stocks are on fire, up 100 points on the big board. One thing on MBS, we priced down 9/32’s this morning, telling you that the market is 7/32’s worse that where we priced. Price change of .125% to .25% is right around the corner. With the upward trend gaining momentum, the 10 year note is on a clear path towards 4.0% plus. Best case on any rebound/reflex rally is back to 3.75%/3.77%. We all know why the trend is higher but here’s some of the factors that could stop the selling and improve mortgage pricing. One would be a good 7 year note auction today (12:00 cst). Two is month end buying by hedge funds and money managers to extend duration. Three being weaker than expected Employment Report next week. The market is looking for a gain of 200K. Markets like this are very dangerous. They can travel to higher yields beyond where you think they can. They can stay over sold for long periods of time. The bottom will not be put in until the last person sells. Don’t hold loans hoping for a recovery. It’s bad for your checkbook. On the bright side, market do not go down forever, it just feels like it. Hang in there.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

As we head into the last half hour of trading, price action has been a one way affair and looking to close at the worst levels of the day. Mortgage backs are now off over 1 point as the 10 year note trades a 3.85% yield (down 43/32’s). Just for good measure, the 30 year bond is off over 3 points. This has been one of the more dramatic down drafts we’ve seen in some time, reminding us of just how powerful and heartless the market can be. I have attached the 60 minute 10 year note futures chart. One thing I’d like to point out is that the market traded 3 handles today, 117, 116, and 115. This is powerful stuff and is rare to see. It also tells us that the masses have abandoned long positions (owning treasuries) until higher yields make re-entry more worthwhile. Next point I would like to make is that we took out the longer term trendline dating back to December 2009. That sliced through at 116 16. After making a low (115 28), the market rally that followed was meager (12/64th) in what traders call a “dead cat bounce”, only to slip to the lows as they turn off the lights. With trading volume 140% of normal, this is not a low volume volatility trade. This move is for real. Our work suggests that the market is headed for the February low at 115 14 (yield of 3.91%) before any recovery rally will occur. That could easily happen as a result of the 7 year note auction tomorrow. 32 billion of this odd ball duration will be on the block. All however is not lost. Once we take another beating and auction the paper, our target objectives should have been met. At that time, the market will reassess and most likely find value given the higher yields. One big reason is something I mentioned a few days ago, the Barclays Monthly Fixed Income index. With duration add needs of .16 years (in English this means fixed income funds must buy treasuries, etc.), the big boys will turn buyers late this week or most likely early next week. That will give you a rally to the bottom side of the trend line (on the chart) I talked about earlier. If you have borrowers who have not locked, that will be the best spot. Going forward, this is quickly becoming a sell rallies market so use that mantra in your pipeline management. This should look better in a few days so hang in there.

Market Update - Poor Auction 12:09 PM

5 year notes hit the block at 2.605% with 39.7% going to Indirect Bidders. Bid to cover was 2.55 to 1 and the issue had a T-Rex type tail of 4 bps. To say the least, the bond market did not like it. Mortgage backs off a minimum of 20/32’s and the 10 year is off 40/32’s. The light at the end of this tunnel is Burlington Northern.

Market Update - Slip Sliding Away 11:44 AM

“You know the nearer your destination, the more you’re slip sliding away”. Paul Simon’s lyrics seems fitting today as the market continue to press lower. Maybe it’s that traders are seeing a poor 5 year note auction in the making or maybe it’s just profit taking. No matter, the 10 year note is now off 1 point and mortgage backs are off 15/32’s. Fingers crossed for a good auction results due out in 15 minutes. Careful out there.

Market Update 10:29 AM

Sorry about the lack of market update info yesterday but my multi tasking skills were put to the test, setting me up to fail on delivering you the goods. While yesterday was a ho hum, mainly flat day, Wednesday’s trade has been anything but. It all started across the pond as Germany’s Business Climate Index jumped a few points and Euro zone PMI Indexes (services, manufacturing, and composite) all came in on the plus side. On the flip side, Fitch downgraded Portugal as another one of the PIG countries struggles with its debt. Durable Goods greeted stateside traders at plus .5% while the ex-transportation component was plus .9%. Both were a touch below consensus. Weakness in Durables can be traced to New Home Sales which fell 2.2%, setting a new record low (308K units annually). All of the above has pushed the 10 year note towards the bottom of the range, down 22/32’s to yield 3.77%. Mortgage backs have fared better with spreads tightening (Fed taking 1.25 billion out of the market) but are still off a smooth 11/32’s. Stocks complete the sea of red hat trick, off 20 points on the big board. While the economic data is seen a net neutral, the technical set up on the chart looks more like a pit bull. Reason being is that the selling today has sliced through the trend line that has restricted the downside (acted as support) since December 2009. Couple that with bearish oscillators kicking in and a breach of the 40 day moving average and you have the makings of the “perfect storm”. Today’s day end close will be very important. We need to hold 116 22/64th on the futures chart (yield equivalent is 3.75%) to feel better about the range trade continuing. With current levels at 3.77%, the market needs to boot strap itself back together or further downside (worsening mortgage pricing) will occur. 42 billion in 5 year notes (today’s auction) could be the key. Yesterday’s 2 year auction was a dog, giving traders suspicious minds about the outcome of today’s 5’s and tomorrow’s 7’s. Good participation will go a long way to helping our cause. Given the way we ticked off the Chinese lately, that is not a given. Keep both hands on the wheel. We’ll update you on the auction results (12:00 cst).

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Early selling took bonds, notes, and MBS to the bottom of the range. The move was technical in nature, finishing the bearish trend that started yesterday. Since the first hour of trading, the market has crept back towards unchanged, primarily on weak stocks (Dow off 57 points). No economic news today but plenty to chew on as stocks face a quadruple witching day (options expiration) and the country braces for a Sunday vote on Obama Care. We see the health care vote as net positive for mortgage rates/pricing. In our opinion, stocks will get punished whether the vote is yes or no. A yes vote adds to the deficit along with additional taxes to dividends, capital gains, and personal income. The market will not like that. A no vote will provide further evidence of grid lock and the notion that the Dem’s will regroup and continue to push the issue. The market hates uncertainty. Although a stock market correction looks to be in the cards, that support will be challenged due to Treasury auctions totaling 118 billion (Tues – Thursday). Once again, the market is a mine field so be careful out there. Currently, the 10 year note is up 3/32’s (yield 3.66%), mortgage backs unchanged, and stocks down 57 points on the big board. Some investors are re-pricing for the better as their early bird levels reflected MBS off 4/32’s. We priced with the market unchanged, giving you the advantage of the early market reversal. With so many cross currents in the works; Health Care, Fed MBS purchase program ending, 118 billion of new auction paper, squirrely stocks, never ending sovereign debt issues, and month/quarter end, price action is a tough one to handicap

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Top of the mornin’ to ya Lads and Lassies! For better or worse, Fed policy, as dictated in yesterday’s meeting, will keep the bond market stuck in a range. Given the supply/demand issues with quantitative easing, our mortgage pricing we have seen over the past month could continue for weeks. On one hand we have the Fed stopping its purchase of mortgage backs at the end of the month. They have been buying 10 billion a week. On the other side, the market has built up a sizable short position in MBS from both the portfolio side and the Fannie/Freddie buy back that will last until August. As we mentioned yesterday, all the Fed can do is manage their way to the end game, looking for the private sector to pick up steam so we can get back to “normal”. Earlier today, PPI, inflation at the wholesale level, fell .6% headline while the core index (ex-food and energy) rose .1%. This is the largest decline in seven months. Energy prices were the heavy hitter, falling 2.9% with gasoline prices down 7.4%. Inflation by any standard is a non-issue given this data. Fed Chief Ben Bernanke will be on the hill today, testifying before the House Financial Services Committee. Never know what the gentle one will say. Currently, everyone is wearing green as the 10 year note is up 2/32’s (3.64% yield), MBS up 1/32nd, and stocks up 30 something on the big board. Technically, the 10 year note retested the peak set on February 5th, pulled back a little, but still trades in the upper end of the range. The trade doesn’t seem to have a lot of momentum, telling us that this is more about short covering (traders who bought the market now selling) than it is about new buyers coming into the market. Stocks are at a crossroads as well, grinding higher in what looks like a gravity defying move. “If” the health care bill comes to a vote this week and passes, stocks could very well change their tune. Bottom line here is that most markets are neutral, waiting for something to fuel a trend change. Stay close to your pipeline and don’t let the market lull you to sleep! Enjoy St. Patrick’s day, a day when all the world is Irish! Best of luck to you and yours.

With Permission & Courtesy of Scott O’Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Earlier this morning, Housing Starts fell 5.9% to 575k units while Building Permits dropped 1.6% to 612K. The data was close to economist’s expectations. Regions were mixed with the Northeast declining 9.6% and the South down 15.5%. The Midwest however jumped 10.6% and the West was up 7.9%. Multifamily units fell 76K. The big story of the day will be front and center at 1:15 pm cst. That being the FOMC one day meeting to determine short term interest rates and make any changes to the policy statement. For the most part, it looks like they could have mailed this one in with the only possible change coming in policy language regarding “low interest rates for an extended period of time”. Some analysts are looking for the word “extended” to be dropped. We see no change to rates or policy as we view the Fed to be “out of bullets” given zero percent interest rates and quantitative easing bloated balance sheet issues. In our opinion, all they can do is manage expectations until the economy starts to pick up and then shift to an exit strategy. What happens if all of the above is true? The most likely outcome will be stocks doing better as they view “cheap’ money to continue. That could put pressure on our pricing. If they remove the “extended” language, both stocks and our pricing would most likely suffer as traders attention would turn to Fed Funds rate hikes being priced in (in the near future). As you can see, our best case is for mortgage rates to hold steady so use this time to be a little defensive into the announcement. Currently, the 10 year note is up 6/32’s (yield 3.68%), mortgage backs unchanged to off 1/32nd (widening spreads), and stocks up a baker’s dozen on the big board. We’ll update you in about 37 minutes when the rubber meets the road.

FOMC left interest rates unchanged and did not remove the statement, “low interest rates for and extended period of time”. Treasuries and stocks have improved on the news yet mortgage backed securities are only 1/32nd better. Full press release below.

Release Date: March 16, 2010

For immediate release

Information received since the Federal Open Market Committee met in January suggests that economic activity has continued to strengthen and that the labor market is stabilizing. Household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly. However, investment in nonresidential structures is declining, housing starts have been flat at a depressed level, and employers remain reluctant to add to payrolls. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability.

With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve has been purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt; those purchases are nearing completion, and the remaining transactions will be executed by the end of this month. The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.

In light of improved functioning of financial markets, the Federal Reserve has been closing the special liquidity facilities that it created to support markets during the crisis. The only remaining such program, the Term Asset-Backed Securities Loan Facility, is scheduled to close on June 30 for loans backed by new-issue commercial mortgage-backed securities and on March 31 for loans backed by all other types of collateral.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and financial stability.

Market looks OK but still is tough to trust. More in a few.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Retail Sales jumped .3% and .8% ex-autos, well above economist’s expectations. Gains in food, beverages, and gasoline station receipts led the way. Auto sales pulled down the headline print, falling 2.0%. Traffic was higher for most Retail Stores as well, with notable gains in women’s apparel outlets like Ann Taylor. Rumor has it that Roseanna has been frequenting the store (one of her favorites), helping to drive the numbers. Given the wicked weather in February, the numbers are impressive but suspect. Is the consumer coming out of a two year shell or is it just time to replace some items that have simply worn out? Time will tell. If you’re looking to Consumer Sentiment for the answer, look again. The index fell in this morning’s release, down 1.1 points to 72.5. Both current conditions and future expectations fell with the latter down only slightly. The index is moving sideways, a mirror image of our employment situation. As employment goes, so will our feelings about how fat your wallet is. Reaction to all of the above has been somewhat of a whipsaw. Post Retail Sales, treasuries and mortgage backs fell like a rock with the 10 year note down 14/32’s at one time. Mortgage backs were off 11/32’s at the same time. Stocks as one would expect, were up 20 something and looking to breakout of upper part of the range on S & P’s (1150). Once Consumer Confidence was release, traders threw cold water on stocks and our fixed income paper started a comeback. Currently, the 10 year note is up 1/32nd but mortgage backs are still off 7/32’s (we priced down 8/32’s). Technically, the early selling triggered a new bearish trend (higher interest rates) but 10 year notes and 30 year bonds remain neutral on this study. Given the volatile trading conditions, a bullish divergence has come into play with the chart now working on an outside day up (bullish formation). Given the trading dynamics of late, we expect any rally to be muted. Over the past week or so, I’ve talked about the triangle formation on the 10 year note daily chart. Looking at that chart below, you can see how the formation is “winding itself” tighter and tighter and will eventually “breakout” into a major trend move. 3.89% and 3.43% mark the extremes (currently trading 3.72%). Until this happens, we expect the market to be range bond between the two extremes.

Given the stabilization in the economy and slowing improving data, the higher percentage odds will be towards higher yields. Time frame on this is tough to call with our most likely guess being the second half of the year. With so many variables to consider, employment, sovereign debt, political rang lings’, and on and on, managing interest rate risk and helping our borrowers with their decisions on mortgage rates is very hard to handicap. Best advice is to use any rally to lock em’ in and leave the driving to us! We’ll try to wrap it up for the week later today.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Market action today has been like watching paint dry. Up a tick, down a tick, just not much volatility. Earlier today, Weekly Unemployment Claims fell 6K to 462K. Continuing Claims went the other way, up 37K to 4.558 million. Both prints were close to economist’s expectations. At high noon, the Treasury auctioned 13 billion of 30 year bonds. The issue flew off the shelves at a yield of 4.679% with 23.6% going to Indirect Bidders and 29.6% taken by Direct Bidders. The direct bid was huge, showing tremendous interest by domestic investors. Bid to cover came in at 2.89% compared to an average of 2.51% (very good) but the best part was that the auction was taken at a yield that was under the yield trading at deadline (4.71%). Traders call this “bidding through the screen” or a “bullet auction”. Overall, give it an A. Even with the great auction, nothing happened with pricing on 2 year through 10 year notes. The 30 year bond has all the action, going from down 2/32’s to up 14/32’s in a nanno second (flatter yield curve). Currently, both the 10 year note and mortgage backed securities are off 1/32nd.

Technically, strong auctions this week have not rallied the market but have kept prices above major support, the 40 day moving average, and above the daily trend line. The problems for bond bulls like ourselves is that almost all daily oscillators show little upside potential (not much chance of a rally). Mortgage backs do however have added support with traders and FNMA/FHLMC continuing to buy back positions. Looks like a tug of war that no one wins. Best to take advantage of current pricing with such low odds of improvement in the cards. Take a look at the chart below. This gives you a long term picture (since 1992) of the channel that has developed ( 10 year note yield). Currently, we’re trading 3.73% with the extremes at 4.62% and 2.0%. Lots of room to run (either way) as the economic picture changes.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

What can you say about a trading day like today? How about we’re glad it’s over or blame it on Barney. Earlier we reported on the purple dinosaur’s confusion during story time. Seems as though he forgot about the commitment made by the Treasury on Christmas Eve that the government would will be explicit about GSE backing. About an hour ago, Mr. Barney back tracked on his previous comments. Probably after someone from the Treasury popped him upside the head. He now supports the Treasury’s intention to stand fully behind the December 24th statement on Fannie and Freddie. Given the shenanigans, mortgage backed paper and mortgage pricing traded like a roller coaster, only to end the day down 8/32’s. It could have been much worse. The 10 year note and 30 year bond did not fare as well, down 21/32’s and 46/32’s respectfully. Even with the steeper yield curve, mortgage backs narrowed (good for us) as the huge short squeeze in MBS paper persists. Going into next week, we like the way the session ended, trading off the lows of the preceding 5 day range. Gives us a good chance for a slight recovery into Monday morning before the market sets up for 74 billion in 3’s, 10’s, and 30 year treasury auctions. Reminds me of why the market is just like a saying of Roseanna Danna’s, “if it’s not one thing, it’s another”. Take advantage of any improvement into early next week as we have yet to find a bottom. It’s not too far away, but not nailed down just the same. Some days this business we have made a career in just doesn’t go our way. It’s easy to get discouraged, think about throwing in the towel and looking for a place where the grass is just a little greener. Many times when I find myself inviting people to my pity party, I think of the overwhelming odds that faced Colonel Travis and his men at the Alamo. He has been called America’s patriot. On the eve of his last day on earth some 174 years ago, I’d like to share his letter with you. Have a great weekend!

The Travis Letter

William Barret Travis, a young lawyer, in his 20's, from South Carolina, was ill-prepared for the monumental task he had at hand. With only limited military experience, his rank of "Colonel" was more honorary than anything else. Seemed everyone was a colonel in the fledgling Texas Army. Yet, he faced the overwhelming odds he found himself staring at with a grim - and bold - determination. It is not often in life that someone, with all on the line, gets to practice what they preach. In his plea for assistance, Travis sets down the rules for exactly that ... and then, he lived it! In this most powerful letter, one of the truly moving documents of our storied past, Travis gets to say what everyone would love to be able to have the opportunity to say. They are not mere words - stirring though they are - for they foretold his destiny. It would not be long before "victory or death" would be at hand. Read this letter slowly ... savor every word ... it is the stuff of legend!

Commandancy of the Alamo

Bexar, Feby. 24th 1836

To the People of Texas & all Americans in the world --Fellow citizens & compatriots -- I am besieged by a thousand or more of the Mexicans under Santa Anna -- I have sustained a continual Bombardment & cannonade for 24 hours & have not lost a man -- The enemy has demanded a surrender at discretion, otherwise, the garrison are to be put to the sword, if the fort is taken -- I have answered the demand with a cannon shot, & our flag still waves proudly from the walls -- I shall never surrender or retreat. Then, I call on you in the name of Liberty, of patriotism & everything dear to the American character, to come to our aid, with all dispatch --The enemy is receiving reinforcements daily & will no doubt increase to three or four thousand in four or five days. If this call is neglected, I am determined to sustain myself as long as possible & die like a soldier who never forgets what is due to his own honor & that of his country –

Victory or Death.
William Barret Travis
Lt. Col. Comdt.

P.S. The Lord is on our side

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Funny thing about snow. Americans from our states that deal with it every winter always seem to get done what they have to get done. Given the Employment data this morning, the weather being a factor just didn’t materialize. For the record, the economy lost 36K jobs while the unemployment rate remained steady at 9.7%. December and January job losses were also revised, improving December by 49K and January by 6K. Job creation in February was mixed with Construction jobs taking the worst of it, down 64K. Temporary hiring improved 48K and generally is seen as a precursor to permanent hiring. Health care and the government added a few thousand jobs yet information systems and financial servicing were a negative. The average workweek fell .1, probably reflecting correctly the affects of Winter’s wrath. Post data, treasuries took a tumble but mortgage backs hung in there, down only 5 to 7/32’s. We expected the short squeeze in MBS to help and for a while, our assumption looked good. Then came the selling as originators and mortgage servicers unloaded on the market. At one time, FNMA and GNMA 4.50% coupons were off 15/32’s. Just when it looked like a “Katie bar the door” day, the Treasury Department came to the rescue, telling Reuters that “there should be no uncertainty about Treasuries commitments to Fannie and Freddie”. Treasury added that Fannie and Freddie continue to play a vital role in the housing market during the current crisis. At the same time, Barney boy confused the markets by telling investors that investors should not bet on a government guarantee for their GSE investments. In this case, mortgage pricing looked like a game of crack the whip, eventually settling down as traders interpreted that Treasury trumps Barney. Currently, we’re off 9/32’s on current coupon mortgages and down 22/32’s on the 10 year note (yield 3.69%). Stocks are having a nice day, up 85 points on the big board. The weakness today has taken prices back into the range that has been forming since January. The center of that range lies at 3.73%, a target we would expect the bears to go for. The failure to continue our recent rally is more reflective of overbought conditions than a new bear trend. Let’s call the market neutral with a slight edge to sellers (bearish trading). With the MBS short trade still in play, our bias is for continued worsening of mortgage pricing but by only .25 tops before we attempt another rally. Keep your pipeline close to the vest until the skies clear. We’ll wrap it all up later today.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Soooooo, let’s see what we have to deal with today; Sovereign debt problems in Greece continue to hold Euro zone hostage, massive short in our mortgage backed securities paper has traders scrambling, economic news such as Productivity, Factory Orders, Unemployment Claims, and Pending Home Sales, Treasury auction supply coming next week, and tomorrow’s weather skewed Employment Report due out at 7:30 am cst. Just another day at the salt mine. Weekly Unemployment Claims fell 27K to 469K as seasonal factors and the weather related snafu has everyone guessing is this real or Memorex. The big picture points to the percentage of eligible people receiving unemployment benefits being 3.5%, well above the reading that creates jobs. Seems to us that unemployment is stabilizing albeit at higher levels. Not the makings of a vibrant economy. Pending Home Sales looked like a Rottweiler as well, falling 7.6% in January. Economists were looking for a plus 1.0% print. Once again, the NAR Chief Lawrence Yun blames the weather for affecting home shopping. Maybe we’ll get a clear read in July. For the record, all regions were in the red with the West falling 13.2%. Did it snow in California? Factory Orders were up 1.7% with the ex-transportation up .1%. A 15% gain in transportation orders did this trick for this number. Maybe new accelerator parts for Toyota. Productivity gains were off the chart, rising 6.9%. The flip side was a drop in labor costs of 5.9%. We are putting computers to work, not Joe the Plumber. All of the above has flattened the yield curve with the 10 year note up 4/32’s and the bond plus 13/32’s. Mortgage backs are plus 2/32’s but since we rolled pool months from April to May, pricing stayed the same even though we had late gains yesterday and gains this morning. With the spread between April and May being 12/32’s, blame the timing of the month for taking away your pricing. One positive here is that until we work through this massive off sides market position in MBS, mortgage pricing will be supported, helping to keep pricing stable. Since I will be out this afternoon, I’m going to give you our best guess on tomorrow’s jobs data.

Expectations for the February Employment Report are as follows;

1) Non-Farm Payrolls – Minus 50K

2) Unemployment – Rate 9.8%

3) Hourly Earning – Plus .2 month on month

4) Average Work Week – Minus .2

As we have been talking about, the weather is going to make a mess of the numbers as well as the number of census workers hired by the government. We expect continued job losses in manufacturing, construction, and private services payrolls. Construction should be hit the hardest, probably losing another 50K. Consensus workers are a wild card as the government is expected to ramp up hiring, adding 1.2 million short term workers over time. Using one standard deviation and a dart board, our bias is for 100k in job losses and a 9.9% unemployment rate. JPMorgan has the call at minus 90K and 9.9%, Barclays at Minus 75K and 9.8%, Wells Fargo at minus 80k and 9.7%, and Credit Suisse the outlier at minus 125K and 9.9%. If there is a miss, it will be towards more job losses than less. You may recall that I wrote about John Ryding call that job losses would be minus 250K. Don’t know if he is right but I do know he’s a pretty sharp dude. What will the market do? Most likely blow the numbers off due to distortions in the weather but trade nonetheless in a volatile fashion. Once the dust settles, we would expect that pricing will be close to today’s levels “unless” the number is below expectations. Let’s say we see a -25K or unchanged print. We feel the market would interpret that to be much better than expected once you factor in the weather distortion. Really, this one is a crap shoot. With pricing at some of the best levels we’ve seen, it’s always a good idea to square up your pipelines in front of such a high profile piece of data. Technically, we’re not getting much help as the 10 year note chart has formed a triangle pattern on the daily time frame. We would need to close below 3.45% to turn this into a raging bull (currently 3.61%) so not much help there. Triangle patterns typically wind themselves up, tighter and tighter before a break out occurs. Given the distance in basis points for a bullish outcome, we would side with a break out to higher yields/ worsening mortgage pricing to coincide with the ending of the short squeeze in the MBS market. To put this in English and cut to the chase, be careful out in the days ahead with customers wanting to “float”.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

The bond market seems to be defying gravity despite all kinds of reasons to trade towards higher yields. One reason the Treasury market seems to have found support is that the SIFMA (Securities Industry and Financial Markets Association) is reporting 700 billion in fails to receive/deliver mortgage backed paper. Throw in 70 billion that FNMA and FHLMC bought back in February (delinquent buyback program) and you have a number of investors scrambling to hedge up positions in fixed income portfolios. On a go forward basis, FNMA and FHLMC are expected to buy back another 150 billion. Accelerating prepayment speeds has also given the fast money types a reason to back MBS and flip to another asset class (treasuries) with a more predictable prepayment speed. All of the above will make the set up into Friday’s payroll numbers a dicey affair. Best to take advantage of any price improvement by Thursday afternoon. Technically, the buying looks suspect because it is not endorsed by any daily study turning bullish. All are neutral, telling us that all we’re doing is rattling around in the range. One more thought; as a big fan of western history, today marks an important day for the state of Texas. On March 2nd, 1836, Texas declared independence from Mexico. 59 signers gathered on this day so many years ago in a blacksmith shop at Washington-on-the –Brazos and formally split from Mexico to form the Republic of Texas. The signing came less than one year after the Texas Freedom Fighters fought their first battle in Gonzales, October 1835. Texas won independence when the revolutionary army whipped Mexico at the Battle of San Jacinto on April 21st, 1836. Texas later joined the Union in 1845. So for all ya’ll Texas out there, pull a cork and celebrate the day!

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Lot’s going on, lot’s to do, and no time to do it all. Results of the 7 year note auction just hit the tape to yield 3.078% with 40.3% going to Indirect Bidders. Direct Bidders stayed away, taking only 17.2%. Bid to cover was a respectable 2.98 to 1 with only a .5bps tail. Given it a B and close the book on this week’s financing. As you can read in Gail’s piece, concerns about a Moody’s downgrade for Greece, Unemployment Claims jumping 22K, and Durable Goods (ex-transportation) falling .6% are not the makings of an economic recovery. Stocks feel the pinch, down 156 points on the big board while the flight to quality trade is on in treasuries (10 year note up 14/32’s). Mortgage backs have followed suit, up 5 to 6/32’s depending on the coupon. Technically, the chart gapped higher leaving what we call an “island reversal” behind. Bullish formation that typically leads to a full retracement (revisit the best levels set 2/8). That area is only ½ point away in 10 year note trading and if achieved, could boost mortgage pricing by another .125% to .25%. What I’m getting at here is that the market trades well but your risk reward is starting to dwindle.

Given the stiff resistance overhead, best to use the improved mortgage levels and take a little off the table. Too many cross currents leading to too much volatility doesn’t allow any of us to put our feet up on the desk. Take advantage.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Case-Shiller 20 city home price index was the first to hit the tape, down 3.1% year on year and off 2.5% Q4. The numbers were close to expectations with a few bright spots like Dallas, Washington DC, San Francisco, and San Diego showing year on year price appreciation. David Blitzer, Chairman of the index committee at Standard and Poor’s, said the housing market is in better shape than it was a year ago and showing signs of stability. Our next hurdle will be the removal of MBS purchases by the Fed and the elimination of the 8K tax credit. Time will tell. Consumer Confidence was up next, falling sharply by nearly 10 points to 46.0. The present situation hit 27 year lows while future expectations fell to levels not seen since July 2009. The weather could have been a factor but overall, the numbers are disappointing as consumers do not see their problems as temporary. What we need here is some supply side economics, ala Ronald Reagan. All of the above, combined with a drop in Germany’s consumer confidence has given our market a nice little pop. Stocks are on the slide, down 65 on the big board but the 10 year note is plus 17/32’s on the day. Mortgage backs are up 12/32’s on the 4.50% security. We priced up 11/32’s, giving you the benefit of the market right out of the shoot. The buying today has pushed the chart back through resistance but has not eliminated the bearish trend readings. We like the price action which has put the market in a neutral bias, stopping the bearish bias of the past few days. One thing to keep in mind is that auction supply started today and concludes on Thursday. Given the souring economic data, we’d expect willing buyers of all three issues. Good time to take advantage of better pricing, using the float down just in case things go from bad to ugly (economic data).

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

The first trading day of the week is off to a slow but positive start for us mortgage types. Although the 10 year note is down 2/32’s (yield 3.79%), mortgage backed security spreads have tighten, posting gains of 5/32’s on the day. Stocks have been of little help, waffling on either side of unchanged all day. No news this morning but the calendar will heat up as we move towards the end of the week (see attached). Of particular importance will be the Housing data on Wednesday and Thursday, followed by 4th Qt. preliminary GDP on Friday. The treasury auction calendar is in full swing with 126 billion up for grabs, starting tomorrow with 44 billion of 2 year notes. The good news here is that all the paper is shorter in duration (2 year through 7 year) which should have better appeal to the investor community then the debacle 2 weeks ago. Another key to market direction this week will be Sir Ben’s testimony before the Humphrey-Hawkins group on Wednesday and Thursday. We expect him to manage his speech and question/answer period back to “core” Fed values, emphasizing low rates for and extended period and no assets sales until some sort of economic recovery is well underway. The technical view of all this mumbo jumbo is to stay defensive, selling rallies into auction supply and Sir Ben. Intraday charts have improved but the lack of strong gains and bearish readings on daily charts suggest that the market is corrective in nature. If our work (and that of others) is correct, we would expect a larger bearish move (more selling/worsening mortgage pricing) in the days ahead. To avoid another leg down, we need to close below 3.74% on the 10 year note (end of day close). Best to keep both hands on the wheel.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

New day, same story. Mortgage backed securities are getting a dose of the “new normal”. The point here is that the Fed has been buying MBS for the past 14 months, starting at an average of 100 billion a month and then tapering off to 50 billion a month. Within this process, they (Fed) has bought the majority of the new issue MBS (loans we have been producing) and now owns 20% of outstanding MBS paper. That part of this Quantitative Easing process will end soon (end of March). That said, the street is being overwhelmed with mortgage paper by originators, servicers, and portfolio types that make this their business. The spike in mortgage rates and worsening prices will be worked into the system until we find a new buyer/buyers to replace Uncle Sam. The other part of this market “two step” happened yesterday after the stock market closed. That’s when the Fed raised the Discount Rate. For the record, the Discount Rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from the Federal Reserve Bank lending facility, the discount window. Usually, these loans are extended to commercial banks, etc. for a short period of time. The move was technical in nature but does start the ground work for monetary policy changes to remove Quantitative Easing measures put in place over a year ago. Earlier today, CPI, inflation at the consumer level, hit the tape plus .2% with the core index (ex-food and energy) down .1%. The print was better than expected and points to inflation well under control. Market action was positive for the 10 year note and MBS post CPI with mortgage backs unchanged to up a tick or two. That mini rally quickly faded as mortgage players entered the market, selling on the reality of my opening few lines. Currently, the 10 year note is off 1/32nd to yield 3.81%, mortgage backs are off 7/32’s, and stocks are plus 36 points on the big board. The next 30 days are going to be tricky as volatility and the changing dynamics will be difficult to handicap. Given what we know, you should error on the conservative side, locking loans as they come across your desk. Once this period of adjustment is priced in the system, we expect mortgage pricing to rebound (get better) as MBS product will look attractive on a yield basis and the overall economic picture will still be a concern. We’ll try wrap this up as happy hour approaches.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611

Adding insult to injury, the Fed just raised the Discount Rate from 50 bps to 75 bps. The FOMC minutes eluded to the possibility (yesterday) but the market did not expect it would happen this soon. They (Fed) are saying that no change in policy has been signaled. Market reaction has been negative as sellers once again are pounding the street with paper. MBS now off 19/32’s. Lucky for us the devil will close in 5 minutes. We’re looking for a little stability and maybe a small rally to relieve oversold conditions in the morning. That happening “if” CPI comes in as expected or better. Careful out there.

With Permission & Courtesy of Scott S. Eggen
Senior Vice President – Capital Markets

For other rate lock advisory commentary please visit:
http://www.mrloanbiz.com/DailyRateAdvisory

Sam Cowen, NMLS ID#: 176693
Branch Manager, Lending in 47 States
PrimeLending | a PlainsCapital Company
2007 N Collins Blvd Ste 403 Richardson, TX 75080
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888) 675-6262 Toll Free Fax: 866-908-2611