Mortech Blog


Mike Sanley

Recent Posts

On Investors: Good News and Met Expectations

Posted by Mike Sanley on May 2, 2016 9:30:15 AM

Not so great news from the Fed translates into not so bad news for mortgage rates.


The recent Fed meeting resulted in worry over the overall health of the economy both at home and abroad. Most of the data has matched expectations which the bar was set fairly low on, so not a lot of movement came from the financial data released. As expected, the Fed did not make any changes to the federal funds rate. With the Fed acknowledging that housing and labor markets showed a little improvement, the overall economic activity “appears to have slowed”. This was a big factor that kept, and pushed, mortgage rates lower once again. Inflation indicators showed a slowing and small pull back of inflation which was just 1.6% higher than a year ago, an encouraging sign that the fed will keep the loose monetary policy in place longer.


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On Investors: Fed Changes Direction and Speed

Posted by Mike Sanley on Mar 21, 2016 9:15:41 AM

Wednesday's meeting turned into good news for mortgage rates. Mixed economic reports over the past week ultimately ended up neutral. Mortgage rates ended the week a little lower, which was helped by the Fed’s non action on interest rates and new guidance for future increases. The Fed is now targeting two rate increases instead of four as it previously indicated. Slowing US growth as well as pressure from abroad have put pressure on the Fed to not pull back or tighten its monetary policy.

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On Investors: Inflation Pressure Continues to Rise

Posted by Mike Sanley on Feb 22, 2016 9:30:00 AM

Volatility in the market has continued to shift money away from stocks to safer assets such as bonds and then reverse the trend taking money out of safer assets and buying stocks. We have seen some upward pressure from inflation as the Consumer Price Index (CPI) came in 1.4% higher than a year ago and was the highest since October 2014. As inflation pressure continues to inch slowly higher it influences mortgage rates to follow suit. While a stronger dollar and extremely low oil prices have countered some of the inflation, the upward surprise was not great news for those seeking to keep interest rates lower. The key indicator going forward may end up being the CPI as that will require the Fed to take a long look at the indication of possibly slowing down future rate increases even if the world economy struggles to right the ship.

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On Investors: The Market Relaxes

Posted by Mike Sanley on Jan 25, 2016 9:38:57 AM

The market turmoil takes a slight break.


For the first time in 2016 the Dow ended the week on the positive side. Oil and stocks have been pretty much in lock step with each other. As oil dips the Dow plunges, and as oil climbs the market rebounds. We are starting to see how big of a driving force that the oil industry is in the basic economic fabric.


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On Investors: Positive Reports, Negative Responses

Posted by Mike Sanley on Jan 11, 2016 9:01:10 AM

The New Year has not been happy for stocks as they close the week with the worst start in history, but that leads to better MBS pricing! Stocks tumbled after the start of the year to pull back about 6% over the 5 day period. While this happened, MBS pricing benefited by a hefty 23/32 increase. While the vast majority watched with concern as world markets tumbled on the backs of China’s building recession and tensions over North Korea announcing that it had successfully tested a hydrogen bomb, mortgage rates quietly edged their way lower for the week, all while the U.S. economy posted decent reports throughout. This was especially true on the job front, as 292K jobs were added for the month of December.

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On Investors: The Fed is On the Rise

Posted by Mike Sanley on Dec 21, 2015 9:24:53 AM

The Fed is on the rise. Or at least, for the first time in seven years the federal funds rate has been increased.


Last Wednesday, as expected, the Fed voted to increase rates by 25 basis points. Initially the announcement that had been seen as almost certain had little impact on both the stock market and MBS prices, but volatility took hold later in the week. However, the net changes by end of week were marginal. Mortgage rates were up .05 while the DOW ended an up and down week up 50 points. Investors were more concerned with the tone of the Fed’s dialog about future increases and how fast they look to continue tightening their monetary policy.


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On Investors: Rate Hike A Near Certainty

Posted by Mike Sanley on Dec 7, 2015 10:32:44 AM

Investors are nearly certain of a rate hike before years end with another strong labor market report. Upward revisions even added another 35k to prior months. Wage growth showed another decent gain that was 2.3% higher than a year ago. All while the European Central Bank announced additional stimulus but fell far short of expectations of the amount of stimulus that would be implemented. The European Central Bank will extend its bond buying program for another 6 months but the quantity will remain at $60 billion euros. Investors were hoping, and expecting to see a large increase in the amount going towards bond purchases and caused a pretty good pull back on MBS prices for the day.

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On Investors: The Game Continues

Posted by Mike Sanley on Nov 16, 2015 9:30:34 AM

The yes, no, maybe so game continues. Fed chair Yellen seems to have learned her lesson on tipping the Fed’s hand to the direction they are leaning for hiking rates. After stating the economy was not in the position to warrant a rate increase after the last vote, causing a tail spin in the markets based on her comments. Yellen has now offered direction, but basically that it could be in any direction. Starting last week by stating that the markets indicated a strong possibility for the first rate hike in years to take place in December, to opening up all possibilities including the option of more QE (Quantitative Easing) or even negative interest rates are possible if conditions dictate. With over $12 trillion of QE being pushed into global markets since 2008 most government bonds are trading at less than 1% with over $6 trillion currently yielding less than 0%. Again with the low rate environment the markets have no idea how to react.

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On Investors: Some Slight Decline

Posted by Mike Sanley on Oct 16, 2015 3:39:11 PM

Heading into a slight headwind with the economic reports over the last few weeks, mortgage rates fell slightly again this week. Weaker than expected data along with another downward revision for August retail sales is starting to point toward slower growth. Retail sales account for roughly 70% of our overall economic activity.

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On Investors: Weird Becoming Normal

Posted by Mike Sanley on Oct 9, 2015 2:16:00 PM

The unusual is starting to become the norm recently.


With a little more consistency, the Dow has gained about 600 points over the past week while mortgage rates ticked up slightly. We are starting to see reactions to economic news have odd or opposite reactions. Have you felt yourself hoping some of the economic reports come back bad? And for what reason? Because the market has started reacting positively to negative news, which in many ways means we have broken the very system meant to stabilize the economy. Obviously this has a lot or everything to do with (QE) Quantitative Easing and the Fed’s policy of record low interest rates and bond buying. We are now expecting that the bad news about the economy will continue to pressure the Fed into not raising rates while good news may push up any decision on raising the prime rate. A fairly short term mentality that is not health on its own. Eventually one would suggest that the bad news will eventually have to be corrected for and especially if inflation starts to move north forcing the Fed to raise rates at an un-opportune time. Let’s start hoping the positive news starts to get more traction than the negative.


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