Tuesday, May 17, 2011

Rates look to Improve

Good morning and Happy May 17th Insighters!!!
Today was not much of a shocker on the news front. Builders released the housing data and the only real disturbing piece is the fact its even less than the appallingly low estimates!
Here is the data results driving the markets in our favor…
Housing Starts: Actual 523K, prior 549K (-40k from consensus)
Building Permits: Actual 551K, prior 594K (+39k from consensus, this is the only bright star)
Industrial Production: Actual 0.0%, prior 0.8% (-.5 from consensus)
Capacity Utilization: Actual 76.9%, prior 77.4% (-.8 from consensus)
So the hope is that builders are starting to see some light at the end of this very long tunnel, as the permits pulled did go up from expected levels, however when you look at the actual starts (which puts people back to work) those are lagging behind almost the same number the permits are up.
The 10y responded very well and seeing what ”should” bring us to the 3.00 levels as we finally broke through a critical mark at 3.14 and are sitting at 3.11.
Yesterday had the FNMA 4.0 close at the top of the range and today opened with a nice gap up +12bps open.
Greece and Spain now appear to have their debts extended to avoid a default.
Is the US next in line? We might laugh at the thought today but reality is we have a serious deficit that is not going away anytime soon and per the congressional budget office we will have reached our max borrowing limit in August of this year!
Hold on its going to get interesting but for now all of us in the real estate world should benefit nicely from these extremely favorable rates!!
Trading range today I expect us to break through the FNMA 4.0 level of 100.5 and close in the 100.5-100.65 area.
Lock Advice
If closing in 7-10 days – LOCK, take your gains and move on
if closing in 14+ – Float, rates will get slightly better (at least that is what current technicals point to)
Make it a great day

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