Mortgage Headlines
Mortgage Rates Up Then Down
U.S. Treasury securities regained their footing on Friday after Thursday's massive sell-off that sent prices plunging and yields, which move in the opposite direction of prices, soaring. The sell-off resulted from China's decision to let its currency -- the yuan -- 'float' against a 'basket of currencies' rather than tying it to the dollar. Bond traders feared the move would decrease China's appetite for U.S. Treasury securities, and rampant selling followed. This morning, however, the near panic of Thursday subsided and a flight to quality, due to renewed violence in London and the shooting of a bombing suspect, restored equilibrium in the bond pits.
Prices of Treasuries edged back up and their yields moved down, although nowhere near the low levels of Wednesday. The sharp increases and decreases in yields, which lenders use as guides to set mortgage rates, were reflected in mortgage rate volatility. Rates moved up yesterday and spiked overnight and into the morning, but during the day they edged down, but they are now near levels of earlier in the week.
Equity Markets Pull Out Gains in Choppy Session
Wall Street was bombarded with news on Friday - some good, some bad. Investors had one eye on London and another on rising interest rates. They also had to factor in rising oil prices brought about by another tropical storm brewing in the Gulf of Mexico, and a slew of earnings reports that ranged from stellar to disappointing. Both the Dow Jones Industrials and the Nasdaq composite opened and closed in positive territory but spent the better part of the session south of breakeven. The S&P 500, however, traded positive all day and was the leading gainer of the three major indices.
Twenty (two-thirds) of the Dow components closed in positive territory, led by Exxon with a 2.78-percent gain, and Disney and Altria added more than 1 percent. Other gains were modest. Microsoft weighed on the tech sector. The software giant posted strong profits but missed on sales estimates and disappointed on guidance, as did Google. This resulted in a tough day for tech stocks. Microsoft was the Dow's biggest loser, shedding 2.87 percent. United Technologies was off 1.3 percent and Intel fell just a hair over 1 percent. Other losses were moderate to small.
The Nasdaq composite crept into positive territory not long before closing after weathering a choppy session. In spite Prudential increasing Google's price target to $400, the company suffered a 3.7 percent loss that kept tech buyers at bay. But there were some upbeat earnings, including those from chipmaker Broadcom, which was up 11 percent. SanDisk, a maker of 'flash' memory cards, added 12 percent, but losses among the tech bellwethers werre prevalent. In addition to declines by Microsoft and Intel, Cisco Systems was down 1.23 percent and Ericsson posted a loss. In fact, Yahoo! was the only one with a significant gain, rising 1.8 percent.
At closing:
The Dow 30 Industrial Index rose 23.41 points or 0.22 percent to10,651.18; the Nasdaq Composite index was up 1.14 points or 0.05 percent at 2,179.74, and the benchmark Standard & Poor's 500 Index gained 6.64 points or 0.54 percent to close at 1,233.68.
The 30-year Treasury bond was up 1-0/32 in price with the yield falling to 4.44 percent versus 4.50 percent at Thursday's close.
The 10-year Treasury note was up 14/32 in price with the yield falling to 4.22 percent versus 4.27 percent at Thursday's close.
The 5-year Treasury note was up 7/32 in price with the yield falling to 3.91 percent versus 3.99 percent at Thursday's close.
AVERAGE mortgage rates (zero discount points) based on rates collected nationwide were:
The 30-year Conventional Fixed-Rate Mortgage was at 5.561 percent from 5.529 percent at Thursday's close.
The 15-year Conventional Fixed-Rate Mortgage was at 5.142 percent from 5.124 percent at Thursday's close.
Coming Up
July goes out with a bang, as it features 10 economic reports that could be market movers. During the week we get the first look at second-quarter Gross Domestic Product, news on housing sales for June, and two reports on consumer confidence. Also slated are data on durable goods, manufacturing and employment. Monday, however, begins with only one report - Existing Home Sales for June. This is the most influential of the housing reports, as existing homes account for roughly 85 percent of all homes sales. Analysts are expecting sales to come in at an annual rate of 7.14 million units, which is just shy of the 7.15 million reported in May. A major gain or a big miss could impact the markets. Over the weekend and into Monday mortgage rates should stabilize near present levels.
Carolyn Siegel
carolyn@interest.com
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