Mortgage Headlines
Rates on Hold
Another downgrade of Hurricane Rita - this time to a Category 3 - and concern that China will curb its buying of U.S Treasury securities wreaked havoc on the bond markets Friday, sending prices tumbling and yields, which move in the opposite direction of prices, soaring. In spite of the rise in yields, mortgage rates held close to yesterday's levels.
China rattled the Treasury markets as it took another step toward currency flexibility (China freed the yuan from the dollar earlier this year), raising fear that it would decrease the need to purchase Treasuries. Since China is second only to Japan in foreign Treasury holdings any move in that direction would deal a blow to the debt market.
Traders were also torn over the downgrade of Rita. It is now looking like the hurricane will hit landfall east of Houston near the Texas-Louisiana border, which would spare a number of refineries that were once thought to be in jeopardy. Many feel that higher energy prices and the economic slowdown that would result from the storm would be sufficient enough to slow Fed policy on rate hikes. But today's turn of events could put an end to this theory. What happens over the weekend along the Gulf Coast could significantly impact Treasuries when the markets reopen on Monday.
Stocks Volatile: Close Mixed After Thursday's strong rebound, key stock indexes ended mixed on Friday, buffeted by jitters about the additional impact Hurricane Rita might have on some corporate earnings and the steep pullback in crude oil and gasoline prices.
Among the most-active issues on the day was Alcoa Inc., which fell $1.48 to $24.42 on Friday after it said late Thursday that it would miss third-quarter forecasts because of rising energy costs, the impact of Hurricane Katrina and lower aluminum prices. Oracle Corp. shares lost $1.09 to $12.43 after giving disappointing second-quarter earnings guidance on Thursday. And Palm slid $6.31 to $28.66 after it warned it would miss second-quarter projections.
On the plus side, online auctioneer Ebay Inc. gained $1.15 to $38.87 after an investment bank reiterated its "buy" rating. Amazon.com and Google also headed higher as well.
Oil slid another $2.31 a barrel to close at $64.19, and prices of heating oil and natural gas also closed down on the day.
At closing:
The Dow 30 Industrial Index fell 2.46 points (-0.02 percent) to 10,419.59; the Nasdaq Composite index added 6.06 points (+0.29 percent) to 2,116.84; and the benchmark Standard & Poor's 500 Index inched up by 0.67 point (+0.06 percent) to 1,215.29.
The 30-year Treasury bond skidded 1-2/32 with the yield rising to 4.52 percent from 4.46 percent at Thursday's close.
The 10-year Treasury note fell 20/32 as the yield increased to 4.25 percent from 4.17 percent at Thursday's close.
The 5-year Treasury note fell 12/32 in price with the yield firming to 4.07 percent from 3.99 percent at Thursday's close.
At 4 p.m. EDT, AVERAGE mortgage rates (zero discount points) based on rates collected nationwide were:
The 30-year Conventional Fixed-Rate Mortgage was at 5.592 percent from 5.61 percent at Thursday's close.
The 15-year Conventional Fixed-Rate Mortgage was at 5.201 percent versus 5.191 percent at Thursday's close.
Coming Up:
The single economic report due on Monday is August U.S. existing home sales, which are expected to slip to a 7.11-million-unit annualized rate from July's original 7.16-million unit rate. Over the weekend, mortgage rates could hold firm as the market waits for more economic data.
Carolyn Siegel
carolyn@interest.com
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