Rate markets have enjoyed a couple of days of improved prices, this morning the bond and mortgage markets opened a little soft even with the stock indexes starting weaker again. No economic releases today, the bond market is focusing on next week’s supply ($118B). While demand for US debt has remained strong, every time Treasury steps up, which is every other week now, traders sweat whether foreign demand will continue or slacken. Starting next Tuesday with $44B of 2 yr notes auctions will carry the trade. At 9:30 the DJIA opened -50, the 10 yr note -8/32 at 3.62% +3 BP and mortgage prices at 9:30 -5/32 (.15 bp).
Pres Obama’s plans to rein in the big banks remains center stage this morning. Obviously the banks are reeling and sending out their troops to argue against any curtailment of their ability to act in the same manner that took the entire global economies into recession. While there will be handcuffs placed on large banks it is way too early to assess how and when the legislation will actually come down. One of the arguments being tossed out by the banks is that if US banks are restricted in their ability to trade and invest directly as they have been able to do,foreign competitors will have a major advantage over US banks. That argument is fluff at its finest; once US legislation is finalized (likely mid-year) foreign banks will also be restrained by their respective governments. The banking mess isn’t reserved just for US banks, all large banks are in the same basket. What constraints will actually make into law remains very nebulous; the House Financial Services Committee is set to begin protracted hearings on how banks will be regulated in the future; a developing story and one that will drag to the last chapter before the end is revealed.
Treasuries and mortgages have run into technical resistance this morning; 3.60% on the 10 yr rate and 101.00 on the Feb FNMA 4.5 coupon. Unless equity markets get hit hard again today the bond and mortgage markets will likely trade weaker. We floated overnight on the expectation equity markets would continue to decline today, so far at 10:00 the DJIA is weaker but treasuries and mortgages are being dragged down against next week’s auctions.
Market Minute information for January 22nd, 2010 provided by:
 Patsy Bailey Mortgage Banker |
 4801 Lang Ave NE Suite 100 Albuquerque, NM 87109 4001 Office Court Ste 603 Sante Fe, NM 87507 Cell: 505.715.3231 Office: 505.473.4045 ext.109 E-mail: patsybailey13@gmail.com |
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