Financial markets re-opened Wednesday after Hurricane Sandy forced an early closing Monday and a complete shutdown Tuesday. Upon the re-open, investors sought a safe haven in bonds, which moved mortgage-backed security prices higher and mortgage rates down.
The Fannie Mae 30-year 3.0 coupon gained + 5/32 to price at 104.28. The Ginnie Mae 30-year 3.0 coupon gained +4/32 priced at 106.10.
Mortgage rates of all types improved. Conforming, FHA and VA mortgage rates fell throughout Milladore Berbice. USDA and jumbo mortgage rates eased, too.
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Mortgage Rates : Down On Hurricane Sandy, Chicago PMI
Mortgage-backed bonds improved from the outset Wednesday. With damage from Hurricane Sandy estimated near $60 billion, the storm will take a toll on the recovering U.S. economy and, as a consequence, it should boost prices in “safe” bond classes, a group which include mortgage bonds.
This is similar to what happened after Hurricane Katrina and Hurricane Irene. In the absence of economic certainty, mortgage rates tends to drop.
Rates were also felled by a weaker-than-expected Chicago Purchasing Managers Index.
The Chicago PMI measures positive and negative factors associated with manufacturers’ supplier deliveries, with production, with inventories and with employment. Chicago PMI ratings below 50 suggest a contracting manufacturing sector, while ratings above 50 suggest an expanding one.
October’s reading of 49.9 was a small improvement over September when Chicago PMI read 49.7.
No additional U.S. economic news was released Wednesday, but the European Central Bank (ECB) did announce that its covered bonds program expired on schedule. The program allowed struggling Eurozone countries to sell bonds “covered” by additional assets, or by the country’s ability to cover losses incurred on such bonds.
Also, Spain continues to refuse ECB aid with “strings attached”. Concerns for the nation’s economy and the its spillover effect on the Eurozone region also drove safe haven buying Wednesday.
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Thursday : Jobless Claims, Consumer Confidence
Mortgage rates may continue to improve Thursday, notwithstanding a lengthy series of data points due for release.
At 8:30 AM ET, the ADP Challenger Report, the Q3 Productivity report, and the Initial Jobless Claims report will be released. Each can make an impact on markets, but it will be the ADP and Jobless Claims data for which rate shoppers should watch. Unexpected strength will raise expectations for Friday’s Non-Farm Payrolls report and that report is closely tied to how mortgage rates will move this week.
Then, at 10:00 AM ET, we’ll see Construction Spending, ISM Index, and Consumer Confidence data. These reports should make little impact on rates.
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