Mortgage Headlines
Mortgage Rates Dip as Treasuries Jump
Treasury securities prices jumped on Wednesday, while mortgage rates dipped, as the market mulled the impact of more weather-induced hikes in energy prices and the kept Tuesday's Federal Reserve rate hike in its sights. Treasury yields, which move opposite of prices, pulled back.
News that Hurricane Rita now has strengthened into another potentially devastating Category 5 storm that could hit the Gulf Coast boosted crude oil prices sharply, with lead-month crude oil futures briefly topping $68 a barrel before shaving its gains.
Treasury prices have moved in tandem with crude oil prices of late on the reasoning that higher energy prices will help slow consumer spending and economic growth and keep the Fed from having to tightened credit more aggressively than it already has.
The market also continued to digest Tuesday's quarter-point hike in the Fed funds rate and the accompanying statement, which suggested to analysts that the Fed still sees room to raise rates in small increments to combat any signs of inflation.
Stocks Take a Dive
Key U.S. stock indexes slid sharply for a second consecutive day on Wednesday, battered largely because of the pressure companies foresee on earnings from the hurricanes' effects on profits, plus the hangover from Tuesday's rate hike.
A number of companies slid after lowering their earnings outlooks, including The New York Times (-$1.57 to $30.56), Avon Products (-$3.68 to $26.92), Jack In the Box (-$2.34 to $31.18), and Diebold (-$5.87 to $38.50). A few upside standouts, such as FedEx (+$6.15 to $83.15), were unable to rescue the indexes from negative territory.
At closing:
The Dow 30 Industrial Index fell 103.49 points (-0.99 percent) to 10,378.03; the Nasdaq Composite index lost 24.69 points (-1.16 percent) to 2,106.64, and the benchmark Standard & Poor's 500 Index slid 11.14 points (-0.91 percent) to 1,210.20.
The 30-year Treasury bond surged 1-1/32 with the yield dropping to 4.46 percent from 4.52 percent at Tuesday's close.
The 10-year Treasury note jumped 17/32 in price with the yield falling to 4.17 percent from 4.24 percent as Tuesday's close.
The 5-year Treasury note rose 8/32 in price with the yield declining to 3.99 percent from 4.05 percent at Tuesday's closing.
AVERAGE mortgage rates (zero discount points) based on rates collected nationwide were unavailable at Wednesday's close.
Rates were as follows at midday:
The 30-year Conventional Fixed-Rate Mortgage was at 5.597 percent intraday versus 5.621 percent at Tuesday's close.
The 15-year Conventional Fixed-Rate Mortgage was at 5.154 percent intraday from 5.198 percent at Tuesday's closing.
Coming Up:
On Thursday, the market will dissect the weekly jobless claims report, expected to show a hurricane-bloated jump in claims to 450,000 from 398,000 the previous week. Also, August U.S. leading economic indicators are forecast dipping 0.3 percent after July's 0.1-percent decline.
Given the slight decline in mortgage rates posted by intraday Wednesday, lenders might see little reason to adjust rates further on key products until Thursday's data is released.
Laura Jacobs
ljacobs@interest.com
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