Loan Biz Blog

You will want to stay tuned for this one!

Just a quick note as we are way behind the curve this morning. For the most part, the jobs report was bond bullish, improving or holding steady mortgage pricing as Nonfarm Payrolls fell 20K. Since the print, both stocks and mortgage backs held close to unchanged. Within the last 10 minutes, stocks have slipped, now down 88 points on the big board. This has helped to goose MBS higher and allow us to improve pricing by .125% (out shortly). With S & P futures (stocks) right on good support, we would expect a bounce in stocks early next week (at least a short term trade). So with the price improvement, it’s not a bad time to take a little off the table, expecting stocks to recover and our mortgage pricing to get pinched (consolidate) as the week begins. It fits with the technical picture as well since we are now becoming over bought in the near term. Overall, both global and stateside concerns will keep the market on edge and support lower mortgage rates. Interesting stuff from Gail this morning, especially the first piece on extending MBS purchases. Pray that the Apple Dumpling Gang gets it right. Wonderful to see all you PrimeMericans the past few days. Safe travels.

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 ongoing wave of debt concerns in the Euro Zone. Lithuania joined the debt woes of Spain, Greece, and Portugal, forcing the ECB to have Plan B ready. That being a stimulus package if all of the above cannot raise capital and pay their bills. The concerns hit equity markets across the pond like a brick, spilling over to stateside trading right from our opening bell. Currently, stocks are off 200 on the big board as the macro concerns keep on comin’. Bond and mortgage back traders have a tactical bias to sell strength into tomorrow’s payroll numbers but seem to be caught between a rock and a hard place as the above mentioned has caused a flight to quality in U.S. fixed income products. Currently, the 10 year note is up 18/32’s (yield 3.63%) with mortgage backs up a smooth 8/32’s. With mortgage pricing better by .25% and the always volatile Employment Report for January out tomorrow at 7:30 am cst, squaring up your pipelines is always a good bet. More on our “employment guess” this afternoon. Earlier today, Weekly Jobless claims rose 8K, much more than the expected drop of 10K. With seasonal factors in the rear view mirror, the numbers seem to be leveling off at the high end of the range. Disappointing indeed. Preliminary Q4 Productivity jumped 6.2%, in line with most economist expectations. The number is all about growth in output versus hours worked. Good for corporate profitability, bad for jobs. We’ll complete the economic hat trick with Factory Orders crossing the tape plus 1%. Most of the gain can be attributed to inventory rebuilding yet a positive sign came by way of Durable Goods, up for the first time in three months. Technically, yesterday’s selling in 10 year notes took the contract to support but held within the current range. That weakness did not accelerate any sell signals but does tell us that sellers are gaining the advantage. As I mentioned above, they are frustrated with macro events just the same. Looking a little deeper, we see slow stochastics bullish but stalling and Elliot Wave counts pointing to a top and correction since printing a yield of 3.59%. From a pure chart play, we would advise locking in your loans. Trouble with that is stocks and all the global heartburn can put the chart on its head. Tough one to handicap. Given the high profile jobs number tomorrow, it’s best to be a live dog than a dead lion when it comes to pipeline management.

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

Pending Home Sales hit the tape up 1.0% to 96.6, stabilizing after last month’s record 16% decline. Contract signings rose in every region of the country except for the West which declined 3.8%. The Midwest did the best, up 5.2% after getting punished last month for a loss of 25.7%. The leveling off in this index points to the continuation of the 8K tax credit for first time buyers as move up buyers are still on the sidelines. The Street also took note of the rise in the U.S Home Vacancy rate which rose 2.7%. While we see the data as “less worse”, the pressure continue on our housing market. For the most part, most market are relatively calm. Stocks are up 60 something on the Dow, 10 year notes are up 2/32’s (yield 3.65%), and mortgage backs are plus 2/32’s as well. Overall, both stocks and bonds seem to be worried about Regulatory Policies and the removal of stimulus as we move into the new year. The political rush for bank and financial reform is at best in chaos, being thrown from one side of Capitol Hill to the other, right along with the Federal Reserve Chairman. As we mentioned earlier, the removal of stimulus is the political hot potato. Without it, we need more Americans employed to keep the housing industry moving. Without the consumer back in the game, a double dip recession, led by housing is a real possibility. Politicians and the populous movement are angry about continuing anything associated with growing the government and adding to the deficit. We believe in a phase out, not going cold turkey with respect to the 8K credit. In the short run, it’s tough to find a political or regulatory rabbit to pull out of the hat. As Mortgage Bankers, we has been through tough times in the past and always come out on top. This period of craziness will be no different. Cream always rises to the top! Going into Friday’s Employment data, our bias is for a neutral/defensive fixed income trade. Most time frames on the chart has gone neutral with little sponsorship from either bulls or bears. We do like the fact that some oscillators suggest that further upside (rally) is plausible but needs a catalyst. That probably comes Friday morning. Trouble is, what will the data be? Until that cat is out of the bag, locking in your pipeline is the best sleeping pill we can prescribe.

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 lack of month end buying and rebounding stocks has pinched treasury and mortgage pricing this morning. 10 year notes are off 12/32’s (yield 3.65%), mortgage backs off 6/32’s, and stocks are up 85 on the big board. The week ahead will be loaded with first tier data including everything from Construction Spending, Housing numbers, and the Employment Report for January. Earlier today, Personal Income/Spending hit the tape plus .4% and plus .2%, slightly better than economists has predicted yet not anything to write home about. Construction Spending was another story, falling 1.2% versus the minus .5% many were looking for. Cold weather and competition from a heavy inventory of distressed/foreclosure sales has done the trick once again. The ISM Index (Manufacturing) surprised to the upside, putting it its best number since August 2004 (plus 3.5 points to 58.4). Digging deeper into the numbers, most of the gains came from new orders as inventories need to be rebuilt. The question now becomes, will buyers step up to take the newly produced goods off the shelf? Time will tell. President Obama’s projected budget sets a new record deficit (1.516 trillion in 2010) as the new budget looks to be 3.8 trillion. Bailout costs for FNMA and FHLMC alone will be 153 billion. Wow. Technically, note, bond, and MBS structure are in neutral as follow through to the upside (rally) is not in the cards. Bulls need the 8 day moving average (currently we’re sitting on it) at 3.65% to hold. We expect that area to hang in there into tomorrow. Traders will then make a move, one way or the other, on Wednesday and Thursday to hedge positions up for Friday’s Employment Report. Tough one to handicap as predictions on Nonfarm Payrolls and the Unemployment Rate are all over the map. Cautiously optimistic is the best we can come up with.

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

Although the early morning economic data was much better than expected, especially GDP plus 5.7%, stocks are just above unchanged and bonds, notes, and mortgage backs are grinding higher (rally). Most of the improvement in treasury and mortgage pricing can be attributed to month end hedge fund extensions. Barclays index, which most money funds must follow, call for a .06 duration extension in fixed income funds. This is healthy and has forced firms that must comply to the index to step up and buy all the instruments we just talked about. Concerns over stock price valuations continues to support our market as well. China slowing its economy, Greece going broke, and political policy uneasiness in Washington DC are all giving the stock market a continuing headache. With the price change for the better that Big Joe just threw your way, it’s a good time to lock in a few at the best levels of the week. Monday will be a new month and the hedge fund buying will be history so take advantage if the need is there. More this afternoon as we wrap it up for the week.

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

I’m sorry about playing “crack the whip” with your pricing today. It’s been a volatile session. With 15 minutes to go in cash Treasury/MBS trading, the market is going out on the lows (highest yields/worst mortgage pricing) of the day. Fed Governor Hoenig’s dissent looks to us like an interest rate protest or maybe it’s the first vote/trial balloon. Traders were expecting the same old, same old and got sideswiped by the hawkish detail I just mentioned. This one is a tough call, trying to figure out if it’s the beginning of a tightening cycle or the Fed’s way of testing the market towards removal of accommodation (stopping the Treasury/MBS purchase program, etc.) With so many cross currents it’s tough to remember who’s on first. I can tell you from a technical stand point that the market put in an outside day down, including a test of the best levels we’ve seen since November and then failing. The rejection from the top and outside day down are strong indicators of a market top in the making. This does not mean that the consolidation we expect will be huge, just that it has a very high probability. Given the fact that the 8 day moving average held, sellers will need to trade the market above 3.65% for a sustained period of time to do any real damage. For now, the brackets to watch are 3.65% to 3.57% (we are set to close right at 3.65%). Anything outside these parameters to the high side is bearish for interest rates and below 3.57% is bullish. Given the uncertainties on so many fronts, you should expect the unexpected right along with volatile trading and mortgage pricing. Hopefully, the State of the Union Speech will give us a little help. Hang in there and 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

Just a heads up as the market is drifting lower (MBS now down 5/32’s) as Fed Governor Hoenig, who believes that economic and financial conditions have changed sufficiently and that expectations of low interest rates for an extended period of time are no longer warranted. Comments were made about Treasury/MBS purchase program that are set to expire March 31st or June 30th are still in vogue. Markets are slipping as we speak, warranting a worsening re-price for .25. 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

Treasury Secretary Geithner is medium rare as the House Oversight Committee is grilling him on AIG. Undisclosed documents, backroom deals, maybe a cover up coordinated with Sir Bernanke, and the counter parties all paid off at par (by the taxpayers) are the hot topics. As we speak, their search for a smoking gun continues. The FOMC is finishing up their two day meeting with any change in short term rates and policy statement due out at 1:15 pm cst. The consensus thinking is that they will continue their low interest rate policy for an “extended period of time”. We also expect the FOMC to note that the economy still has “challenges” with some improvement seen within the economy. Given today’s power packed agenda, the FOMC should not move the market. Earlier this morning, New Home Sales dipped by 7.6% to 342K units. Sales gains in the Northwest and West were over shadowed by losses in the Midwest and South. Housing, along with employment, needs to be top priority for our country. Let’s see what the CEO of the U.S. has to say tonight. We also have 42 billion of 5 year notes on the auction block. Results are due at high noon cst. Given the anxiety in stocks and overseas markets, we expect the issue to go well. Trouble with this call is that it is happening on a FOMC day and historically, only one out of the last five have come in on the screws. The others had been sloppy. Technically, the market is making higher highs and higher lows, holding the bullish regression line. Once again we challenged the 3.56% yield level and have backed away. Given all of the cross currents, we advise a defense pipeline strategy until the dust settles. Currently, the 10 year note is up 6/32’s (yield 3.61%), mortgage backs up 3/32’s, and stocks off 30 something on the big board. Buckle up!

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

Results of the first leg of this week’s auctions (2 year note) just hit the tape. Yield came in at .88%, Indirect Bidders took only 11%, and the bid to cover was 3.13 to 1. The issue also had a 1 bps tail. This was not an aggressive auction so we’ll give it a C. Post results, the market pulled back and briefly when negative on mortgage backed securities. Currently, the 10 year note is up 2/32’s (yield 3.62%), mortgage backs up 1/32nd, and stocks plus 73 on the big board. Trading is a little spooky right now as Wall Street dealers fear there might not be the sponsorship for Wednesday and Thursday’s longer duration auction paper ( 5’s and 7 year notes). We also have the FOMC statement tomorrow and the State of the Union speech so buckle up, this thing could get slippery. Earlier today, Consumer Confidence was out with a print of 55.9 (improvement) and the Case Shiller Home Price Index was down 5.3% (as expected). Earlier than that, the wheels were churning across the pond as Italy, Greece, Spain, Portugal, and now Japan are struggling with their sovereign debt. S&P just put Japan on the negative credit watch. With China putting the brakes on bank lending, the mood outside the U.S. is tentative at best. On the bright side, Barclay’s has issued their indices for month end extensions, a measure that fixed income funds must conform to per their filings. The extensions are larger than expected so in English, this will be supportive of mortgage pricing until at least Thursday afternoon. Technically, the high today approached the 62% retracement level of the November/December selloff (188 11 in futures/ 3.56% yield on the 10 year note). We failed to take that level out and have now backed away. Not to rain on your parade but this failure could be the start of a new corrective phase. Your key will be if yields on the 10 year note print 3.65% or higher. On the bright side, daily oscillators are still posting positive readings and holding above midrange levels. All good things for those that want lower mortgages/better pricing. Just want you to know that this baby is like herding cats so keep both hands on the leash! P.S. we’re rich to the market (investor pricing) so a price change for the worse (.125) should come as no surprise.

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

Bond prices rose yesterday as stocks suffered another beating. The Dow and bond yields both closed at their lowest levels in a month. Stocks were reacting, in part, to President Obama's renewed focus on reigning in big banks. The administration is seeking to curb proprietary trading and reign in too-big-to-fail institutions. Despite widespread support on Capitol Hill for constraining the large banks, it is unclear how soon and in what form the President's proposals will materialize. The moves would require Congressional approval and House Financial Services Chairman Barney Frank indicated that the changes would not be in effect for a number of years. Meanwhile, the confirmation of Sir Bernanke, which was thought to begin as soon as today, does not appear to be making any progress. Senate Majority Leader Reid, who must schedule the vote and does not appear to have sufficient Senate support to do so, seems to be waffling based on a quote where he said "As the Senate prepares to take up Chairman Bernanke's nomination, I look forward to hearing more from him about how he intends to address these issues." This morning, bond prices are slightly lower and stocks have once again opened lower. Corporate earnings and, in some cases, even revenues are coming in better-than-expected but investors seem focused more on concern for the future than joy over the fourth quarter. The economic calendar is dormant today. The economic data releases on tap next week are not terribly significant but it will be a momentous and potentially volatile week with the State of the Union address, the FOMC meeting, and the last week of Bernanke's current term as Chairman. Currently we are trading off a tick or two in mtg backs with the 10yr unchanged at a 3.61yld. Buying yesterday forced prices to close above the 50% retracement of the Nov/Dec sell-off at 117-28. The market is trading that level as we speak. The next target would be the 62% retracement of that previous sell-off at 118-11. We would expect to see a push to that level with some light consolidation on the way up. Have a great weekend!

With Permission & Courtesy of Joe Webb
Senior Trader

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

Sam Cowen
Your Mortgage Professional
PrimeLending | a PlainsCapital Company
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888)675-6262 Toll Free Fax: (866)908-2611

Weekly Unemployment Claims jumped unexpectedly by 36K to 482K. Continuing Claims came in at 4.599 million, nearly unchanged over the past two weeks. Dow Jones reported that the spike in Weekly Claims was due in part to a backlog of Christmas and New Year’s filings. They are calling it an “administrative thing, not an economic thing”. I’m not so sure about that when you look at Emergency Claims jumping 652K. They continue to soar due to recent extension changes (new claimants) while those already on emergency benefits are not coming off the roles. Leading Economic Indicators were also released, up 1.1% versus the expected plus .9%. 8 of the 10 components indicated growth via month on month comparisons. The trouble with this data is that it is rear view mirror stuff, information that we already know and is priced into the market. When its release, the market blinks and moves on. What is catching trader’s eyes this morning is China and their latest release of GDP. The plus 10.7% has the Dragon breathing fire and Wall Street worried about overheating. Given the data, China will need to curb growth sooner than later which will certainly have an effect on our economy. Stocks are taking a beating, down over 200 points. Metals, oil, commodities, and financials are all to the downside. Financials are really spooked as the Prez just held a news conference about limited bank risk taking. The good news is that for every stock market whipping, money always runs for cover in the bond market. Even though the 10 year note looks a little tired, given the rally over the past few days and upcoming auction supply next week, the 10 year has powered through resistance and now trades a 3.61% yield. Mortgage backs have had a good day as well, up 5/32’s on the current coupon. Bullish signals are still active on daily charts but open interest has been falling. This means that as we advance (rally), volume is declining, usually a sign that a top or at least a stall is near. Makes sense into next week’s auction supply. The other component that has kept mortgage pricing from any radical improvement is that spreads between our paper and the 10 year note are widening. Underlying reason here is the backlog of foreclosed homes that is overshadowing a recovery in housing. Servicers are holding inventory or renting it, reluctant to push it on the market for fear of further depressing values. We’re going to deal with this throughout 2010. For now, get a few locked at some of the best levels we’ve seen in some time.

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, markets are quiet, trading just above unchanged. Oil and gold up, the dollar down, and stocks up a baker’s dozen on the big board. Bonds, notes, and MBS are a mixed bag with the 10 year note off 3/32’s (yield 3.82%) and MBS current coupon up 1/32nd. The week ahead will feature little news until Thursday’s dose of Retail Sales, Weekly Unemployment Claims, Import Prices, and Business Inventories. Friday’s finale will feature a heavy slate as well. CPI, inflation at the consumer level, will be the highlight (complete week attached). Tuesday, Wednesday, and Thursday’s trade will have to content with 84 billion in auction paper. 3’s, 10’s, and 30’s will all cross the auction block. Given the paper, a defensive strategy should be taken as we look for a 3.78% to 3.88% range on the 10 year note. The curve is at record steep levels but should unwind a touch (flatten) as we get through the bond auction on Thursday. Interesting article in the Hartford Courant on Saturday which featured Fed Governor Rosengren talking about the direction of mortgage rates “if” the Fed ends its MBS purchase program. “If” the program ends, he is looking for a bump in mortgage rates of .75% from today’s levels. He also went on to say that the Fed could extend the program if the economy deteriorated dramatically. In our opinion, this program and the 8K stimulus MUST be extended until the housing industry gets back on solid footing. Let’s hope they get it right. Technically, the market has not been able to form a strong bias over the past few sessions despite very oversold conditions. From our work, the chart is trapped right in the middle of good support (3.88%) and good resistance (3.76%). Given that the spread between 2’s/10’s and 2’s/30’s are at historic wides, odds favor a little improvement in pricing once the auctions are out of the way. Until we see who shows up to buy all this paper, keep your defense on the field, selling strength if the opportunity presents itself. One more thing; Congrat’s to all you Cardinal, Raven, and NY Jet fans. And oh ya, how bout’ them Cowboys!

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, today has been all about squaring positions before tomorrow’s all important Employment Report. The tight range, back and forth price action, has been with us all day. Mortgage backs started in the hole, down 3/32’s early this morning but now are down 8/32’s. Wishy washy trade with a bearish bias. A worsening price change for .125% is a layup. Most of the bearish bias has come from “whisper numbers” on tomorrow’s data printing on the positive side. My number happens to follow suit, looking for a plus 20k jobs growth. Stocks have traded much in the same fashion, printing on both sides of unchanged as we enter the last hour of trading. Tomorrow’s jobs report is big from at least two perspectives. One is that it is the first high profile piece of data in the new year. Two, it is given an overweight as to the direction of the economy. No jobs, no growth while the flip side projects just the opposite. No matter what your bias, getting your pipelines squared up is high priority as this number creates high anxiety and volatility. For the record, here’s what the market is expecting for tomorrow;

1) Nonfarm payroll – Minus 8K jobs

2) Unemployment Rate - 10.1%

3) Hourly Earning – Plus .2% month on month change

4) Average Work Week – 33.2 hours

While the ADP report (yesterday) predicted job losses of 84K, most traders are looking for a number on either side of unchanged. Our bias is based upon the weekly unemployment reports that are used in the reporting cycle (for the monthly number). Average drop has been 20%. The next factor has been a steady improvement in private sector service jobs. Last month’s gain in this sector was 51K, the first improvement since November 2007. We believe it will surprise on the upside again. Manufacturing and Construction will continue to be the dogs, shedding another 80K jobs combined. We expect the Government to add about 10K and see the 2% gain in temporary workers shifting into full time, permanent employment. Add it all up and our call is plus 20K. We agree that the unemployment rate bumps up just a bit to 10.1%. What others are saying;

1) UBS – Minus 35K at 10.2%

2) Credit Suisse – Plus 10K at 10.2%

3) RBS – Plus 25K at 10.1%

4) JP Morgan – Plus 40K at 10.0%

What will the effect on mortgage rates be? Given that the market has build in a positive jobs bias, anything that is 0 to 50K in jobs growth will not create a strong selloff. The bias will be for worsening pricing but not substantially so. This is because the market has already sold off in anticipation. The surprise trade would be for a number closer to ADP’s, say minus 50K or higher. This would give us a nice little snap back rally, probably good for ½ point in mortgage pricing. Given that we are near good support technically (3.88% versus 3.83% current) and the set up (risk reward) favors MBS being down slightly worst case, savvy borrowers may want to not lock going into this number. On the other hand, this one is tough to handicap and by using the float down, everyone wins. 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

Wanted to get you out a quick heads up as fast market conditions as pressing the market (selling). Currently, the 10 year note is off 14/32’s to yield 3.81% while current coupon MBS are off 8/32’s. Since we priced near unchanged, chances of a worsening price are not if but when. Despite a firm close above the 8 day moving average, selling is threatening revive the bear trend. Very tricky market so stay defensive.

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 my tardiness today but wanted to confirm that this was the light at the end of the tunnel instead of another train about to run us over (2:00 pm CST 10 year note futures close). Two fundamental factors, Pending Home Sales falling 16% and the Fed being open to extending the MBS purchase program to help underpin the housing industry gave us the boost (see details below). The chart work I was waiting to see was if we could close above the 8 day moving average, something we haven’t done for over 2 weeks. Given that fact that we closed above the 8 day, many bearish signals (ADX, Trend Intensity, etc.) have been neutralized, crippling the bears and reducing the probability of continued bearish trending. In other words, the light we were seeing “is” the end of the tunnel which should produce better mortgage pricing into Friday’s Employment release (7:30 am cst). Given the severity of the selling over the past 3 weeks, we could easily see another 1 point gain in the 10 year and another ½ point improvement in MBS. This will need to occur within a short time frame (2 days) as all bets are off come Friday. Use the improvement to square up your pipelines before Friday’s Employment 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

Hello 2010! The first trading day of the New Year has been all about stocks and commodities, with both sectors flying off the page. Stocks have gotten their legs from a continuation of last year’s Santa Clause rally and Chinese manufacturing expanding. Most European exchanges were higher by ½% to 1.0%. Commodities have been the beneficiary of not only the recovery theme but once again a falling dollar. Gold up over $20.00 and oil up nearly $2.00 have been just a couple of today’s power plays. The economic calendar kicked off the New Year with ISM’s Purchasing Manager’s report and Construction Spending. ISM printed its highest level since November 2006 while Construction Spending fell to its lowest level since July 2003. The entire calendar for the week is attached. Notice that Friday’s Employment data for December will be released Friday at 7:30 am CST, setting the tone for the month ahead. Given the divergence in data, the days ahead will be a challenge predicting mortgage interest rates. The GDP growth and recovery theme seems to be more about replacing inventory taken off the shelves than any real growth. What needs to happen to solidify a recovery is an expansion or long term investment, consumer spending, and lowering the unemployment rate. If not, we could see another economic dip. If the Fed steps in too quickly to raise rates, given my last statement, we could see a repeat of what happened in 1937 when the Roosevelt administration prematurely bumps rates. Housing will also be a big factor. While existing home sales have some wheels due to depressed values and the 8K stimulus. New construction has and will continue to suffer as the builders must compete with existing home sales. Tough to make any money when you sell for below your cost to construct. As you have all noticed, mortgage rates have been on the move. Their level will be critical as we judge demand. Technically, we’re near good support at 3.88% to 3.91% (currently 3.84%). Trouble is, we see very little demand from buyers showing up why the likes of Pimco’s Bill Gross are opening talking about reducing their exposure to Treasuries and UK Sovereigns. We’ll need to stay quick on our feet until the sky clears. Currently, let’s enjoy a little green on the screen as the 10 year note is unchanged, mortgage backs are plus 6/32’s, and stocks up a buck sixty

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 first time in nearly two weeks, bond prices rose across the curve on Tuesday and climbed slightly higher this morning. The economic data came in very close to estimates yesterday and the five-year note auction fared a touch better-than-expected. The S&P / Case Shiller home price index fell in October after five straight monthly increases. While the decline was barely measurable, it serves as a reminder that the bounce back in real estate prices is not likely to occur as quickly as the three-year decline. The consensus among analysts seems to be for another 10% decline in home prices in 2010, making a new bottom. The Conference Board's consumer confidence measure rose a touch to 52.9 and has been confined to a narrow range since April. Confidence remains well above its lows but is still below previous recession's lows and well below the "normal" levels. The five-year note auction was solid, finding better-than-expected demand, especially following the soft two-year note sale the previous day. Today, the Treasury will auction $32 billion seven-year notes at high noon. I have forwarded more news below including this morning’s release of Chicago PMI which came in at its highest level since Jan 06’. The last bit of news for the week will be released tomorrow with weekly claims. Trend signals in the last couple of weeks of the year can have trouble maintaining their direction in January. Current bearish readings on Trend Intensity remain valid, but are getting tested by a very minimal corrective action. Trend signals need prices to continue to hold below the 8-day moving average that currently sits at 116-045…..that measure is often critical resistance during a bearish trend. However, a close above that level would neutralize any bearish readings. The 10yr is currently sitting at 115-22 on futures, a yld of 3.807. We priced mtg backs up this morning about 7-8 ticks and we are now only up a couple. I don’t want to scare anyone, but price changes for the worse would be in play if we hold these current levels. Please note that tomorrow is an early market close and the lock desk will shut down promptly at 11:00am CST. Please get all locks in before this cutoff. The lock desk will re-open on Monday, January 4th at normal hours.

With Permission & Courtesy of Joe Webb
Senior Trader

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

Sam Cowen
Your Mortgage Professional
PrimeLending | a PlainsCapital Company
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888)675-6262 Toll Free Fax: (866)908-2611

Not even Tiny Tim can catch a break today. Our mini rally from this morning has started to fade as current MBS are now down 3/32’s. With pricing struck plus 2/32’s early today, chances of a worsening price change are close to 100%. Blame it on the light volume as the bias is bearish and most traders have one foot out the door.

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

Oversold 10 year note conditions and a sour New Home Sales number may have nailed down a bottom in the market (for today). New Home Sales, expected to up 10K units, fell like a rock to 355K units annualized. The 11.3% drop caught the market by surprise, illustrating the impact that 8 G’s has the consumer. Remember, the program was going away until it was extended the first week of November. It also points out how fragile the economy and more specifically, housing really is. Continued foreclosures will compete with builders into the New Year, creating this teeter totter effect on our housing market. For the record, New Home Sales fell in every region of the country except the Midwest. That region jumped 21.4% while the other end of the spectrum pointed to sales in the South falling 21.1%. University of Michigan Sentiment survey, final revision for December hit the tape at 72.5. The index fell .9 from the last revision and 1.0 below economist’s expectations. Overall, it appears as if consumer sentiment is not deteriorating further but is not gaining much traction either. Personal Income/Spending were also in the docket, up .4% and .5% respectfully. Stronger stocks and perhaps a stabilizing employment picture has put a little bounce in the consumers step. It should put them in a better mood for Christmas spending. All of the above has helped to put a little green on the screen. Currently, the 10 year note is up 8/32’s (yield 3.71%), mortgage backs are plus 3/32’s, and stocks are off a dozen on the big board. Not much of a rally considering the “stinky” housing numbers but a net positive for us mortgage types. What you’re seeing in the big picture is a steepening of the yield curve, anchored on one end by “extended period of time” cheap Fed money and the other end, controlled by market forces, “front running” an economy that is growing (2.2% GDP) along with a hint of inflation. With so many cross currents to deal with, from the economy to the Fed, the road ahead will see choppy interest rates with sharp moves either way possible. Given the supply hitting the market next week (2’s, 5’s, and 7 year treasuries), best to stay defensive and use any price improvement to your 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

GDP 3rd Quarter (final revision) slipped to 2.2%, revised lower from the previous posting of 2.8%. Downward revisions to nonresidential fixed investment, private inventory investment, and personal spending did the trick. Economists were looking for a print of plus 2.8%. Although the number was a disappointment, it is certainly better than the negative GDP growth we were seeing earlier in the year. The unemployment picture however, will not heal with growth below 3.0%. Existing Home Sales were also on tap, up 7.4% to 6.54 million units annualized. 33% of the sales were distressed units and 51% of the borrowers were first time home buyers. Just think where we’d be without the 8K program. Stocks are riding a Santa Claus rally, up another 50 something on the Dow and setting new 2009 highs on the Naz. Bonds, notes, and mortgage backs have continued down their bearish path, starting in Australia and continuing through Asia and Europe. State side traders picked up the ball and battered the market, driving mortgage backs down 20/32’s at the time we priced. We have begun to stabilize but are just off the lows (yield 3.74%) as we speak. Low volume trade or not, the chart shows a stunning break since last Thursday with no signs of letting up. 3.75% on the 10 year note is minor support and psychologically important but nothing to hang your hat on. Bigger picture charts (weekly/monthly) warn of the next level of real support not coming in until we see 3.88% to 3.90%. Market profile and trend intensity also tell us that the bears are in control. Markets like this are dangerous, taking your 1 point gain and turning into zero right before your eyes. Use the float down and get out of the way. Hoof prints on your back can be painful.

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

Figures – just after I send out my update about a “quiet trading day”, the market slips. Although a pricing change is not imminent at this point, you may want to cover any locks you are sitting on. MBSs off 5/32s and 10 Yr Treasury is off 13/32s.

Yesterday was a great day for rates even with the mixed news. Jobless Claims were up but Leading Economic Indicators rose .9, more than expected, and the Phily Fed survey rose to its highest levels since 2005. This morning the market opened fairly flat, with MBS pricing unchanged and the 10 Year down 4/32s. As we approach Noon, the market has softened slightly with MBS pricing now off slightly (2/32s) and the 10 Yr stands at 3.52 yield. With this being the Friday before Christmas, quiet trading should be expected throughout the remainder of the day. No Economic news today or Monday, but keep an eye on those frisky Iranians as any clashes with Iraq over disputed oil fields could push crude prices way up.

For those who have not attended a New Pricing Policy Training, you still have a chance at 2pm CST today and at 10am CST Monday or Tuesday. (To sign up, see links below)

We are a little thin in Secondary this afternoon, as proud Father Eggen is off to see his son’s college graduation, Joe Webb is out, and Melanie Simmer is rocking New Orleans like a hurricane.

With Permission & Courtesy of Chris Cordry
VP Secondary Marketing

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

Sam Cowen
Your Mortgage Professional
PrimeLending | a PlainsCapital Company
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888)675-6262 Toll Free Fax: (866)908-2611

Economic news is coming from every angle. Kinda like Custer and his last stand. Developments started across the pond as S & P downgraded Greek debt, sending fixed income markets on a buying spree via flight to safety. That in turn sparked the dollar which rallied to 3 month highs, kicking the Euro’s tail and sending stocks on a tail spin. We see the dollar trade as a “short squeeze” as the world really hasn’t changed that much. When traders lean on a market as they have with the dollar, you get everyone on one side (short, betting the dollar will fall). Inevitably, the trade gets long in the tooth and something happens to reverse the trend (Greece). Short sellers must cover or get run over, causing what we call a “short squeeze”. Believe me, the unwinding of those trades are painful. Next thing that happened on the way to the forum was Weekly Unemployment Claims jumping to 480K. Continuing Claims rose as well, up slightly to 5.19 million. Leading Economic Indicators were also on tap, up .9% versus market consensus of plus .7%. The good news in the report emphasizes an improving labor market and housing, with particular attention seen in builder attitudes. Bad news is this report is old news, rear view mirror type stuff which traders barely blink at. The Philly Fed rose 3.7 points this morning, better than the expected unchanged reading we were looking for. Gentle Ben was also in the news, passing a Senate Banking Committee vote by 16-7. We have had a nice day, holding gains that started overseas and then made their way stateside. Oversold conditions helps boost treasuries and MBS along with fear in the Euro zone. We talked about this before but let’s cover it again. Sharp moves in either direction can occur at any time in low volume markets. That’s why it’s best to lock loans in if all parties are satisfied and move on to the next one. Expect this kind of behavior to last until the new year.

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

Fast market conditions are ruling the day post FOMC, with light selling hitting both treasuries and mortgage backs. Big picture sees the Fed on hold for “an extended period of time”. Bright spots point to the employment picture improving and hints of economic growth. This is basically the same as last month (see attached) but some are trying to read the tea leaves for any sign of a change. Post release, the 10 year is nearly unchanged, losing all of this morning’s gain. MBS have cut their gains in half. Nothing huge, just movement that is not in our favor. Buckle the chin strap.

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

CPI, inflation at the consumer level, rose a meager .4% headline while the core index (ex-food and energy) remained unchanged. Higher energy prices bumped the headline number, just like they did with yesterday’s PPI. Food prices, especially dairy products and nonalcoholic beverages, took a dip, helping the core index to hold steady. The results were in line to a touch better than expected, taking the sting out of yesterday’s jump in PPI. Overall, renewed demand for energy products and the falling dollar will continue to nudge headline inflation numbers higher but will have little effect on Fed policy. November Housing Starts were also on the calendar, rising 8.9% to 574K units. Although the print was up from last month, it came in below economist’s estimates of 580K units. Supply of existing homes fell to 7 months, a nice improvement from the peak of 11.3 months in 2008. Overall, we feel that the housing market is stabilizing but will need to content with another wave of foreclosures as homeowners remain underwater and the loan modification programs to date have been a bust. All eyes have now turned to the FOMC and any change in interest rates/policy statement. The news will hit the tape in a little over an hour. Given Global uncertainty (think Dubai, Spain, Greece, etc.) and year end constraints, we see today’s FOMC as a carbon copy of last month’s release. Technically, the combination of oversold conditions and good support at the 3.60% yield level has given life to our bond market. Currently, the 10 year note is up 13/32’s (yield 3.55%), mortgage backs up 6/32’s, and stocks up 25 points on the big board. Technically, the market is trading in a counter trend move (rally) within the larger bearish trend. Good resistance remains overhead at the 40 day moving average (3.49% yield). The limited range is forming a neutral, inside day with the bears still in control. As much as we want to like this market, it is nothing more than putting “lipstick on a pig”. Use the bounce to lock some loans and keep your defense on the field.

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

PPI, inflation at the wholesale level, grew legs this morning and jumped 1.8%. The ex-food and energy “core” index was no slouch either, rising .5% after last month’s .6% drop. The market was looking for a strong number but nothing like this. As we dig into the details, it seems if most of the increase can be explained away. Nearly 3/4th of the jump was due to higher energy prices. Gasoline prices alone rose 14.2%. Food prices were up .5%, boosted by a 8.7% increase in vegetable costs. We see this as a one hit wonder, adjusting itself to a more make sense level next month. The New York State Manufacturing Index was also released, falling 21 points to 2.55. Sharp declines in new orders and shipments forced the index to its worst level since July. Gentle Ben and his band of merry men kicked off the FOMC meeting this morning with any change in rates/policy due out tomorrow at 1:15 pm cst (Yesterday, I reported this incorrectly as a one day meeting). All of the above, combined with a bearish technical picture, has put pressure on the 10 year note and mortgage backed securities. Currently, the 10 year is off 18/32’s, trading at a yield of 3.62%. MBS has taken one on the chin as well, down 14/32’s. Since we priced down 10/32’s, a worsening price change is not far off. Technically, the bearish momentum has continued to push priced to new lows, holding below the 40 day moving average. We have taken the 62% retracement level out (Fibonacci study) and now appear to be headed for the 76% level (yield equivalent of 3.68%). “If” we get below that level, this baby will head for a full retracement, pushing yields on the 10 year note to 3.78%. Sell signals and trend intensity top the list of bearish conditions and given the low volume, it will not take much to push this market around. One factor in our favor is that the chart is very oversold which will allow for a bounce. Trouble is, I’m not sure from what level. Best to stay very defensive with your pipeline until we find a bottom.

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 the bell strikes 4:00 cst, let’s add up the score. 10 year notes had a rough day as Wall Street distributes all that paper, finishing the day just above our comfort zone at 3.55%. The 30 year bond however, came back nicely to close down only 3/32’s at 4.50%. This is what we call curve flattening as traders sell the belly of the curve (10 year note) to buy the wings (2 year notes and 30 year bonds). It functions as profit taking and convexity hedging, a move that is meant to reduce their positions and exposure to the market while hitting the cash register all at the same time. Winding down trading positions as we approach year end is what this is all about. I mentioned the 3.55% yield mark on today’s close. This makes us a little queasy from a technical perspective, tilting the odds towards a move to 3.58%/3.60%. Trouble with the chart work is that low volume tends to exaggerate directional moves that can snap back from either direction in a New York minute. Case in point is what Joe Webb did to you today; post pricing, re-price for the worse, re-price for the better. Trust me, it can move like a cat. Going into next week, we could certainly see a little more selling in treasuries and MBS but feel that it will be temporary in nature with the market finding its footing and then moving back to lower yields/better mortgage pricing as we head for the 2009 finish line. Hopefully we’ll get this thing back on track with a little rally come Monday morning. As for me, it’s time to “pull a cork”!

Have a great weekend.

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

Distribution trades can be painful. Following a poor 10 year note and 30 year bond auction, the market now moves into the second phase of distributing the paper to end uses. Since the initial reception was weak, getting rid of the new issue treasuries requires a higher yield evidenced today with the 10 year note off 20/32’s (yield 3.56%) and the bond off 17/32’s (yield 4.53%). Mortgage backs have jumped on the bus, off 12/32’s on the 4.50% coupon. Stronger than expected Retails Sales and University of Michigan Sentiment Survey numbers did nothing but add salt to the wound (see Gail’s stuff below). Although the 40 day moving average is trying to hold (3.54%), the end of day close with be critical to next week’s direction. In a nut shell, a close on the 10 year above 3.54% with produce a new target of 3.60%. Flip side is a close at or below 3.53%, projecting a move back into the middle of the range at 3.42%. At this time of the year, markets can be very tricky. The lack of liquidity can exaggerate moves in either direction as most traders would prefer to not get involved. The positive here is that the economy, coupled with geo-political concerns are still laden with land mines, helping to support our market as safe haven buying is still the preferred trade. Stay defensive with your pipeline until we see what color ( red or green) bow we can put on this 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

Good start to the new week as both stocks and bonds have gone “green”. Last week we suffered through Dubai’s woes, the Bank of Japan’s strong Yen/worsening domestic deflation issues, and a mind boggling Employment Report. The week ahead (see attached) is light on the data front but heavy on treasury auction supply. The key will be how well the market takes down 74 billion in 3 year, 10 year, and 30 year paper. We will deal with the auctions starting tomorrow. Today’s trade has seen better buying in the 10 year note as the 3.50% yield level has held (good support). Currently, the note is up 12/32’s, trading at 3.44%. Mortgage backs have followed suit, up 7 to 9/32’s, depending on the coupon. Stocks, in spite of a steady to stronger dollar, are plus 40 points on the big board. Gold has taken a breather, off $80.00 in the last two trading days. Technically, the buying has been backed by bullish readings on daily oscillators that bottomed out with the big drop on Friday. The signals show promise for today and tomorrow but go against the grain of longer time frame measures. Given the auction supply coming Tuesday, Wednesday, and Thursday, we view this as an opportunity to lock in those that missed the boat last week. Sir Bernanke is on the tube, speaking to the Economic Club in Washington. Labor market weak and inflation staying low have been the highlights so far. With different chart time frames and trend signals in conflict, we see the market as not being in harmony. This can create volatile swings so take advantage and play it close to the vest.

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
Your Mortgage Professional
PrimeLending | a PlainsCapital Company
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888)675-6262 Toll Free Fax: (866)908-2611

The Fed's Beige Book was released yesterday afternoon and found economic conditions to have “improved modestly” with consumer spending, manufacturing, non-financial services, and residential real estate all strengthening. Labor markets remained weak but “there were signs of stabilization and scattered signs of improvement.” The most negative comments were regarding commercial real estate which was “depicted as very weak and, in many cases, deteriorating.” Financial institutions saw “steady to weaker loan demand, continued tight credit standards, and steady or deteriorating loan quality.” Overall, the report points to a continuation of the accommodative policy for some time. On a side note, after the close yesterday, B of A announced plans (including governmental approval) to repay TARP via a combination of asset sales and raising capital. Gold is currently still trading over $1200 while the dollar is weak and volatile. Jobless claims were released this morning. Better than expected, initial claims dropped to a print of 457k for the Nov 28th week from a downward revised 462k the week before. This was the fifth consecutive weekly decline. Continuing claims rose slightly to 5.47mln in the week ending Nov 21st, breaking the 10 week streak of consecutive declines. ISM non-manufacturing index just hit the tape posting a print of 48.7 for Nov vs. 50.6 in Oct. The number came in below expectations of a 51+ print. Selling late afternoon and overnight has now taken the market below the 8-day moving average, 119-055, for the first time since late October. The market dipped below that average a couple of times last month, but each instance was quickly rejected. Bears show more poise this time because of strong new sell signals on daily oscillators…..same signals that occurred at very overbought readings yesterday. Mortgage pricing is trying to work its way back from the lows of the early morning trade. We are not out of the woods yet, although I wouldn’t expect this trade session today to be very volatile facing tomorrow morning’s Employment report. From what we are seeing, the estimates are anywhere’s from 100k to 130k job losses vs the 190k number from the previous report. I am leaning more towards the -110k mark at this point. Expectations are for the unemployment rate to stay at the 10.2% previous month number, as well as average hourly earnings and average work week numbers to stay the same as well. Squaring up pipelines into tomorrow’s numbers is always suggested, especially with the float down attached.

With Permission & Courtesy of Joe Webb
Senior Trader

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

Sam Cowen
Your Mortgage Professional
PrimeLending | a PlainsCapital Company
Email: 888@MrLoanBiz.Com Web: www.MrLoanBiz.Com
Toll Free: (888)MR-LOAN-BIZ (888)675-6262 Toll Free Fax: (866)908-2611