TWO POSITIVES FOR FINANCIALS THIS MORNING: MORTGAGE APPS & INITIAL CLAIMS BOTH IMPROVE

Rates Fall and Purchase and Refi Applications Rise

MBA Purchase Applications rose 5.5% WoW in the first week of November. We think the public is finally responding to lower mortgage rates. Zillow reports that 30-Yr mortgage rates hit an all time low of 4.07% last week. We don't yet have Freddie Mac data yet for last week to confirm, however (that comes out tomorrow). Refinance Applications rose 6% to levels near the highs of the year.  For reference, November refinance application volumes are running at 92% of 2003 levels - the all-time high.

TWO POSITIVES FOR FINANCIALS THIS MORNING: MORTGAGE APPS & INITIAL CLAIMS BOTH IMPROVE - shark chart

TWO POSITIVES FOR FINANCIALS THIS MORNING: MORTGAGE APPS & INITIAL CLAIMS BOTH IMPROVE - shark chart long term

TWO POSITIVES FOR FINANCIALS THIS MORNING: MORTGAGE APPS & INITIAL CLAIMS BOTH IMPROVE - refi

TWO POSITIVES FOR FINANCIALS THIS MORNING: MORTGAGE APPS & INITIAL CLAIMS BOTH IMPROVE - refi long term

 

 

Initial Claims Fall Sharply - Starting to Get Interesting

The headline initial claims number fell 24k last week to 457k (22k net of the revision). Rolling claims came in at 446k, a decrease of 10k over the previous week. This significant improvement moved claims near the lows of the year on both the rolling and reported series. There have been five weeks in 2010 where rolling claims fell by 10,000 or more. Today’s report brings the series closer to the 375-400k range we are looking for before unemployment can begin to improve.

TWO POSITIVES FOR FINANCIALS THIS MORNING: MORTGAGE APPS & INITIAL CLAIMS BOTH IMPROVE - rolling

TWO POSITIVES FOR FINANCIALS THIS MORNING: MORTGAGE APPS & INITIAL CLAIMS BOTH IMPROVE - raw

 

Yield Curve Improves WoW - Quarter-to-Date Sequential Now Flat

The following chart shows 2-10 spread by quarter while the chart below that shows the sequential change. The 2-10 spread (a proxy for NIM) has fell dramatically in 2Q and 3Q, but has stabilized thus far in 4Q10. Yesterday’s closing value of 221 bps is up from 216 bps last week.

TWO POSITIVES FOR FINANCIALS THIS MORNING: MORTGAGE APPS & INITIAL CLAIMS BOTH IMPROVE - spreads

TWO POSITIVES FOR FINANCIALS THIS MORNING: MORTGAGE APPS & INITIAL CLAIMS BOTH IMPROVE - spreads QoQ

The table below shows the stock performance of each Financial subsector over four durations. 

TWO POSITIVES FOR FINANCIALS THIS MORNING: MORTGAGE APPS & INITIAL CLAIMS BOTH IMPROVE - subsector perf

Joshua Steiner, CFA

Allison Kaptur