Mortgage Pros, Inc.

No Economic Indicators Scheduled for release today other than Consumer Credit at 3PM.

Treasury 10-Year Yields Rise From One-Week Low Before Government Auctions Treasury 10-year note yields rose from their lowest levels in more than a week as the U.S. government prepared to sell $70 billion in notes and bonds over the next three days.

Hoarding Treasuries Helps Bond Dealers Sleep as Europe Debt Woes Increase Wall Street’s biggest bond firms are buying the most Treasuries in two years, driving the biggest rally in government bonds since 1995, as Europe’s sovereign-debt crisis worsens.
Easy Money to Stick Around a While. The next test of the Fed’s intentions will come at its meeting June 22-23. Euro-zone debt turmoil, meager job growth and low inflation make it unlikely the Fed will soon reverse the easy-money policies that have greased the wheels of the financial system since the financial crisis began. Futures markets see less than a 50-50 chance that the Fed will push the federal funds rate up to 0.5% by December from its current level just below 0.25%, a major shift since the beginning of May, when an increase was viewed as almost a sure thing. Futures-market prices suggest that investors expect the fed funds rate to hit 0.75% by July 2011. In early April, the market put the rate at more than 1.25%.
Mortgage Delinquencies at FHA Show Slowdown, with nearly 8.5% of loans 90 days or more past due, the third consecutive month of decline after peaking at 9.4% in January.
Economic Rebound in U.S. Seen Slowing Most Since 2002 on Europe Debt Woes The U.S. economy may be headed for a slowdown reminiscent of the one it suffered in 2002 as the sovereign-debt crisis in Europe, fading government support and persistently high joblessness weigh on expansion in the second half of the year.

Hungary Rejects Greek Comparison in Reversal After Financial Markets Scare Hungary’s government reversed course over the weekend, saying there was no danger of default after it spent two days telling the world the nation was at risk of a Greece-like crisis.

Economic Indicator News Release Calendar for the weeks ahead
Monday, June 7
United States
Date Value Consensus Forecast Previous
3:00 PM Consumer Credit (G19) April n/a n/a $2.0 bil

Tuesday, June 8
United States
Date Value Consensus Forecast Previous
7:45 AM Chain Store Sales Snapshot 6/5/2010 n/a n/a -0.8%
5:00 PM ABC News/Washington Post Consumer Comfort Index 6/6/2010 n/a n/a -45

Wednesday, June 9
United States
Date Value Consensus Forecast Previous
10:00 AM Wholesale Trade (MWTR) April n/a n/a 0.4%
10:30 AM Oil and Gas Inventories 6/4/2010 n/a n/a 365.1 mil barrels
2:00 PM Beige Book May

Thursday, June 10
United States
Date Value Consensus Forecast Previous
8:30 AM Jobless Claims 6/5/2010 n/a n/a 460,000
8:30 AM International Trade (FT900) April n/a n/a -$40.4 bil
2:00 PM Treasury Budget* May n/a n/a -$82.7 bil

Friday, June 11
United States
Date Value Consensus Forecast Previous
8:30 AM Retail Sales May n/a n/a 0.4%
10:00 AM University of Michigan Consumer Sentiment Survey
June n/a n/a 73.6
10:00 AM Business Inventories (MTIS) April n/a n/a 0.4%
10:30 AM ECRI Weekly Leading Index 6/4/2010 n/a n/a 127.3

Tuesday, June 15
United States
Date Value Consensus Forecast Previous
7:45 AM Chain Store Sales Snapshot 6/12/2010 n/a n/a -0.8%
8:30 AM Import and Export Prices May n/a n/a 0.9%
8:30 AM NY Empire State Manufacturing Survey June n/a n/a 19.1
9:00 AM Treasury International Capital Flows April n/a n/a $140.5 bil
1:00 PM NAHB Housing Market Index June n/a n/a 22
5:00 PM ABC News/Washington Post Consumer Comfort Index 6/13/2010 n/a n/a -45

Wednesday, June 16
United States
Date Value Consensus Forecast Previous
8:30 AM Producer Price Index May n/a n/a -0.1%
8:30 AM New Residential Construction (C20) May n/a n/a 0.672 mil
9:15 AM Industrial Production May n/a n/a 0.8%

Thursday, June 17
United States
Date Value Consensus Forecast Previous
8:30 AM Current Account 2010Q1 n/a n/a -$115.6 bil
8:30 AM Jobless Claims 6/12/2010 n/a n/a 460,000
8:30 AM Consumer Price Index May n/a n/a -0.1%
10:00 AM The Conference Board Leading Indicators May n/a n/a -0.1%
10:00 AM Philadelphia Fed Survey June n/a n/a 21.4

Friday, June 18
United States
Date Value Consensus Forecast Previous
10:00 AM Risk of Recession May n/a n/a 23%
10:30 AM ECRI Weekly Leading Index 6/11/2010 n/a n/a 127.3

Tuesday, June 22
United States
Date Value Consensus Forecast Previous
7:45 AM Chain Store Sales Snapshot 6/19/2010 n/a n/a -0.8%
10:00 AM Existing-Home Sales May n/a n/a 5.77 mil
10:00 AM FHFA Purchase-Only House Price Index April n/a -2.4% -2.2%
10:00 AM Richmond Fed Manufacturing Survey June n/a n/a 26
5:00 PM ABC News/Washington Post Consumer Comfort Index 6/20/2010 n/a n/a -45

Wednesday, June 23
United States
Date Value Consensus Forecast Previous
10:00 AM New-Home Sales (C25) May n/a n/a 504,000
10:30 AM Oil and Gas Inventories 6/18/2010 n/a n/a 365.1 mil barrels
2:15 PM FOMC Monetary Policy June n/a n/a 0.0-0.25%

Thursday, June 24
United States
Date Value Consensus Forecast Previous
8:30 AM Jobless Claims 6/19/2010 n/a n/a 460,000
8:30 AM Durable Goods (Advance) May n/a n/a 2.9%
11:00 AM Kansas City Fed Manufacturing Survey June n/a n/a 5

Friday, June 25
United States
Date Value Consensus Forecast Previous
8:30 AM GDP 2010Q1 3.4% 3.4% 3.0%
10:00 AM University of Michigan Consumer Sentiment Survey June n/a n/a 73.6
10:30 AM ECRI Weekly Leading Index 6/18/2010 n/a n/a 127.3

Monday, June 28
United States
Date Value Consensus Forecast Previous
8:30 AM Chicago Fed National Activity Index May n/a n/a 0.29
8:30 AM Personal Income May n/a n/a 0.4%

Tuesday, June 29
United States
Date Value Consensus Forecast Previous
7:45 AM Chain Store Sales Snapshot 6/26/2010 n/a n/a -0.8%
9:00 AM S&P/Case-Shiller® Home Price Indexes April n/a n/a 2.3
10:00 AM The Conference Board Consumer Confidence June n/a n/a 63.3
5:00 PM ABC News/Washington Post Consumer Comfort Index 6/27/2010 n/a n/a -45

Wednesday, June 30
United States
Date Value Consensus Forecast Previous
8:30 AM ISM – NY Report June n/a n/a 449.3 index
9:45 AM ISM-Chicago June n/a n/a 59.7
10:30 AM Oil and Gas Inventories 6/25/2010 n/a n/a 365.1 mil barrels

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Gross Domestic Product rose at a 5.6% 4Q09 Final, revised from 5.9%.  Corporate profits climbed 8.2% in the fourth quarter, lower than the 13.8% surge in the third quarter. Year-over-year, earnings were up 51.8%. Gauges measuring inflation remained subdued but were revised slightly higher. The government’s price index for personal consumption increased 2.5% October through December, compared to the previously estimated 2.3% climb, reflecting upward revisions to the price of financial services, insurance and health care. The core PCE gauge, which excludes volatile food and energy prices, rose 1.8%, compared to the previously estimated 1.6% increase. Efforts to stabilize inventories provided the biggest boost to growth last quarter, contributing 3.8 percentage points to GDP.   Business investment in new equipment advanced at a 19 percent pace last quarter, the biggest gain since 1998.

Michigan Consumer Sentiment Index Unchanged at 73.6 in March. Compared to February, a small increase in assessments of current conditions was offset by a small decline in expectations. Both components were revised up from the preliminary report. Inflation expectations were also unchanged from February.

Treasury 10-Year Yield at Almost 9-Month High on Signs of U.S. Recovery and Debt Fears. Unease at Deficit Hurts Demand for Treasurys; Mortgage Costs on the Rise.   A sudden drop-off in investor demand for U.S. Treasury notes is raising questions about whether interest rates will finally begin a march higher—a climb that would jack up the government’s borrowing costs and spell trouble for the fragile housing market.  The move up in its yield coincides with the impending end of the Federal Reserve’s program to support the mortgage market. A drop in the 10-year note this week has driven the yield up 19 basis points, the biggest increase since the week ended Dec. 25, as record-tying $118 billion note auctions drew lower- than-average demand.  U.S. interest-rate swap spreads plunged this week to the lowest levels in more than two decades after Fitch Ratings’ downgrade of Portugal sparked concern that European nations will struggle to contain deficits.  The gap between the rate to exchange floating- for fixed- interest payments and comparable-maturity Treasury yields for 10 years was negative for a fourth day after reaching negative 10.19 basis points yesterday, the lowest level since at least 1988.

Economy Still Needs Near-Zero Rates, Bernanke Says. “The economy continues to require the support of accommodative monetary policies,” Mr. Bernanke said, according to a prepared text of his testimony. “However, we have been working to ensure that we have the tools to reverse, at the appropriate time, the currently very high degree of monetary stimulus.”

New York Fed purchases $8 billion net ($8.3 billion gross) in agency mortgage-backed securities

U.S. Plans Big Expansion in Effort to Aid Homeowners.  Many of these loans have been bundled together and sold to investors. Under the new program, the investors would have to swallow losses, but would probably be assured of getting more in the long run than if the borrowers went into foreclosure. The F.H.A. would insure the new loans against the risk of default. The borrower would once again have a reason to make payments instead of walking away from a property.   Many details of the administration’s plan remained unclear Thursday night, including the precise scope of the new program and the number of homeowners who might be likely to qualify.   One administration official cautioned that the investors might not be willing to volunteer any loans from borrowers that seemed solvent. That could set up a battle between borrowers and investors.

Economic Indicator News Release Calendar for the week ahead

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Feb. 19 (Bloomberg) — The cost of living in the U.S. rose in January less than anticipated and a measure of prices excluding food and fuel fell for the first time since 1982, indicating the recovery is showing few signs of inflation.
The consumer-price index increased 0.2 percent for a fifth straight month, led by higher fuel costs, Labor Department figures showed today in Washington. Excluding energy and food, the so-called core index unexpectedly fell 0.1 percent, reflecting a drop in new-car prices, clothing and shelter.
Companies may have little success raising prices with unemployment projected to end the year at 9.5 percent. Subdued inflation will allow Federal Reserve policy makers to keep interest rates close to zero to help support the recovery.
“Even though the economy appears to be entering a sustained recovery, it will take several quarters for inflation to accelerate in response,” Joseph LaVorgna, chief U.S.
economist at Deutsche Bank Securities Inc. in New York, said before the report. “We expect core inflation to begin to firm in 2011.”
Economists forecast the consumer-price index would rise 0.3 percent in January from a month earlier, according to the median of 78 projections in a Bloomberg News survey. Estimates ranged from no change to a gain of 0.6 percent.
The core index was forecast to rise 0.1 percent, according to the Bloomberg survey. The decline in the core was the first since December 1982.
Energy costs jumped 2.8 percent in January, led by higher prices for fuel oil and gasoline. The cost of crude oil on the New York Mercantile Exchange averaged $78.40 last month, up from $74.60 in December.

Gasoline Prices

Gasoline prices increased 4.4 percent, the most since August. The cost at the pump rose 10 cents to $2.71 a gallon on average in January, from $2.61 the previous month, according to AAA. The price has since retreated.
Compared with January 2009, the CPI rose 2.6 percent after climbing 2.7 percent the previous month. The year-over-year gains in the consumer price index have been getting bigger as crude oil prices increase from an almost five-year low in December 2008.
Food costs, which account for about 15 percent of the CPI, increased 0.2 percent in January, reflecting higher prices for dairy products, meat and fruits and vegetables.
Rents of primary residences was unchanged. Owners- equivalent rent, one of the categories used to track rental prices, fell 0.1 percent last month after no change.

Cars and Clothes

New-car prices fell 0.5 percent in January, the most since August, and apparel costs dropped 0.1 percent. Medical-care costs rose 0.5 percent in January, the most in two years.
The Fed’s long-term forecast for its preferred measure of inflation, the Commerce Department’s index tied to consumer spending and excluding food and fuel, calls for gains in a range of 1.5 percent to 2 percent. That gauge, which is typically lower than the CPI, was up 1.5 percent in the 12 months ended in December.
Fed Chairman Ben S. Bernanke said last week that the central bank expects economic conditions, including “subdued inflation trends,” that may warrant an “exceptionally low”
benchmark interest rate “for an extended period.”
Central bank policy makers last month “agreed that underlying inflation currently was subdued and was likely to remain so for some time,” according to minutes of the Jan. 26-
27 meeting released this week.
Consumers in the Reuters/University of Michigan preliminary survey, released Feb. 12, said they expect an inflation rate of
2.8 percent over the next five years. Those figures are tracked by Fed policy makers.

Broadest Measure

The CPI is the broadest of the three monthly price gauges from the Labor Department because it includes goods and services. Reports this week showed 1.4 percent gains in both the cost of imported goods and wholesale prices in January. Both increases were more than anticipated.
Almost 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets. Airline fares fell 2.5 percent in January, the most since February 2009.
Even with higher production and material costs, U.S.
companies are reluctant to pass on the expenses to consumers.
Wal-Mart, the world’s largest retailer, reported fourth-quarter sales yesterday that trailed its projection after cutting grocery and electronic prices.
The Bentonville, Arkansas-based company reduced the cost of laptop computers, along with turkeys and cranberry sauce for holiday meals, to attract shoppers living paycheck to paycheck.
“We see the influence of the paycheck cycle as pronounced now as it’s been in the past,” Chief Financial Officer Tom Schoewe said on a call with reporters.

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