Mortgage Pros, Inc.

MBA Weekly Mortgage Applications Survey: The Market Composite Index decreased 1.2%, Refinance Index increased 1.4%, and the Purchase Index decreased 7.0%. The refinance share of mortgage activity increased to 69.7% from 69.2% and the ARM share of activity remained unchanged at 4.5% of total applications. The average 30-year rate decreased to 4.94% from 5.01%, the average 15-year fixed-rate remained unchanged at 4.33%, and the average one-year ARM rate decreased to 6.68% from 6.70%.
Chairman Ben S. Bernanke prepared Text of on Federal Reserve’s exit strategy. The hearing was postponed due to inclement weather. According to the statement, the Fed currently anticipates concluding purchases of $1.25 trillion of agency MBS and about $175 billion of agency debt securities at the end of March. Bernanke said the interest rate paid to banks on excess reserves held at the Fed may for a time replace the Fed funds rate as the main operating target for policy. The Fed currently pays banks a 0.25% rate for the more than $1.1 trillion they hold at the central bank. Raising the rate would give banks an incentive to park more funds at the Fed instead of lending it out to companies or households. ” The Federal Reserve’s purchases have had the effect of leaving the banking system in a highly liquid condition, with U.S. banks now holding more than $1.1 trillion of reserves with Federal Reserve Banks. The Federal Reserve has also been developing a number of additional tools it will be able to use to reduce the large quantity of reserves held by the banking system. Reducing the quantity of reserves will lower the net supply of funds to the money markets, which will improve the Federal Reserve’s control of financial conditions by leading to a tighter relationship between the interest rate on reserves and other short-term interest rates. One such tool is reverse repurchase agreements (reverse repos), a method that the Federal Reserve has used historically as a means of absorbing reserves from the banking system. In a reverse repo, the Federal Reserve sells a security to a counterparty with an agreement to repurchase the security at some date in the future. The sequencing of steps and the combination of tools that the Federal Reserve uses as it exits from its currently very accommodative policy stance will depend on economic and financial developments. One possible sequence would involve the Federal Reserve continuing to test its tools for draining reserves on a limited basis, in order to further ensure preparedness and to give market participants a period of time to become familiar with their operation. As the time for the removal of policy accommodation draws near, those operations could be scaled up to drain more significant volumes of reserve balances to provide tighter control over short-term interest rates. The actual firming of policy would then be implemented through an increase in the interest rate paid on reserves. If economic and financial developments were to require a more rapid exit from the current highly accommodative policy, however, the Federal Reserve could increase the interest rate paid on reserves at about the same time it commences significant draining operations. I currently do not anticipate that the Federal Reserve will sell any of its security holdings in the near term, at least until after policy tightening has gotten under way and the economy is clearly in a sustainable recovery. However, to help reduce the size of our balance sheet and the quantity of reserves, we are allowing agency debt and MBS to run off as they mature or are prepaid. Although passively redeeming agency debt and MBS as they mature or are prepaid will move us in that direction, the Federal Reserve may also choose to sell securities in the future when the economic recovery is sufficiently advanced and the FOMC has determined that the associated financial tightening is warranted. Any such sales would be at a gradual pace, would be clearly communicated to market participants, and would entail appropriate consideration of economic conditions”.
Trade Deficit in U.S. Unexpectedly Widened to $40.2 billion from $36.4 billion in November, on Imports increase of 8.4% and exports climbed to the highest level since October 2008. Faster economic growth in emerging countries and a drop in the dollar’s value that is making American goods more competitive may propel gains in sales overseas that will spur further gains in U.S. manufacturing. Efforts to rebuild inventories will probably also draw in goods from abroad, giving global trade a lift.
Treasury 10-Year Notes Trade Near Middle of Range Amid Greece Speculation U.S. 10-year notes traded near the middle of a range they’ve been in for almost a month amid speculation Greece may not get aid and the U.S. prepared to sell a record-tying $25 billion in 10-year debt.
Soros `Confident’ Greece Will Do Whatever It Takes to Stay in Euro Region Billionaire investor George Soros, who made $1 billion in 1992 correctly betting against the British pound, said he expects Greece will be able to remain in the euro region.

Economic Indicator News Release Calendar
This Week’s Calendar
Date ET Release For Actual Consensus Prior Revised From
Feb 09 10:00 Wholesale Inventories Dec 0.5% 1.5%
Feb 10 08:30 Trade Balance Dec -$35.5B -$36.4B
Feb 10 10:30 Crude Inventories 2/5 NA 2.32M
Feb 10 14:00 Treasury Budget Jan -$50.0B -$91.9B
Feb 11 08:30 Initial Claims 02/06 465k 480k
Feb 11 08:30 Continuing Claims 1/30 4590k 4602k
Feb 11 08:30 Retail Sales Jan 0.5% -0.3%
Feb 11 08:30 Retail Sales ex-auto Jan 0.5% -0.2%
Feb 11 10:00 Business Inventories Dec 0.3% 0.4%
Feb 12 09:55 Mich Sentiment Feb 75.0 74.4

Week of February 15 – February 19
Date ET Release For Actual Consensus Prior Revised From
Feb 17 08:30 Building Permits Jan NA NA
Feb 17 08:30 Export Prices ex-ag. Jan NA NA
Feb 17 08:30 Housing Starts Jan NA NA
Feb 17 08:30 Import Prices ex-oil Jan NA NA
Feb 17 09:15 Capacity Utilization Jan NA NA
Feb 17 09:15 Industrial Production Jan NA NA
Feb 18 08:30 Continuing Claims 02/13 NA NA
Feb 18 08:30 Core PPI Jan NA NA
Feb 18 08:30 Initial Claims 02/13 NA NA
Feb 18 08:30 PPI Jan NA NA
Feb 18 10:00 Leading Indicators Jan NA NA
Feb 18 10:00 Philadelphia Fed Feb NA NA
Feb 19 08:30 Core CPI Jan NA NA
Feb 19 08:30 CPI Jan NA NA

Week of February 22 – February 26
Date ET Release For Actual Consensus Prior Revised From
Feb 23 09:00 Case-Shiller 20-city Index Dec NA NA
Feb 23 10:00 Consumer Confidence Feb NA NA
Feb 24 10:00 New Home Sales Jan NA NA
Feb 25 08:30 Continuing Claims 02/20 NA NA
Feb 25 08:30 Durable Orders Jan NA NA
Feb 25 08:30 Initial Claims 02/20 NA NA
Feb 26 09:45 Chicago PMI Feb NA NA
Feb 26 10:00 Existing Home Sales Jan NA NA

Week of March 01 – March 05
Date ET Release For Actual Consensus Prior Revised From
Mar 01 08:30 Personal Income Jan NA NA
Mar 01 08:30 Personal Spending Jan NA NA
Mar 01 10:00 Construction Spending Jan NA NA
Mar 01 10:00 ISM Index Feb NA NA
Mar 02 14:00 Auto Sales Feb NA NA
Mar 02 14:00 Truck Sales Feb NA NA
Mar 03 08:15 ADP Employment Change Feb NA NA
Mar 03 10:00 ISM Services Feb NA NA
Mar 04 08:30 Continuing Claims 02/27 NA NA
Mar 04 08:30 Initial Claims 02/27 NA NA
Mar 04 08:30 Productivity-Rev. Q4 NA NA
Mar 04 10:00 Factory Orders Jan NA NA
Mar 05 08:30 Average Workweek Feb NA NA
Mar 05 08:30 Hourly Earnings Feb NA NA
Mar 05 08:30 Nonfarm Payrolls Feb NA NA
Mar 05 08:30 Unemployment Rate Feb NA NA
Mar 05 15:00 Consumer Credit Jan NA NA

Week of March 08 – March 12
Date ET Release For Actual Consensus Prior Revised From
Mar 10 10:00 Wholesale Inventories Jan NA NA
Mar 10 14:00 Treasury Budget Feb NA NA
Mar 11 08:30 Continuing Claims 03/06 NA NA
Mar 11 08:30 Initial Claims 03/06 NA NA
Mar 11 08:30 Trade Balance Jan NA NA
Mar 12 08:30 Retail Sales Feb NA NA
Mar 12 08:30 Retail Sales ex-auto Feb NA NA
Mar 12 09:55 Mich Sentiment Mar NA NA
Mar 12 10:00 Business Inventories Jan NA NA

This entry was posted on Wednesday, February 10th, 2010 at 3:47 pm and is filed under HEADLINE NEWS, MORTGAGE NEWS, THE FED. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.