(a rare positive “alert”):
Fannie 3.0s are now up 7 ticks on the day to 102-17 after hanging on to the bounce that was potentially developing during the last update at 10:15am. After the Fed’s daily Treasury buying operation (aka: POMO for “permanent open market operation), yields only rose a bit more as remaining inventory was sold. Volume went dead after that and big buying came in at 11:24am in Treasuries.

That’s been good for just over a bp of improvement in 10′s and MBS have followed it up with several ticks more. Keep in mind that, as 10′s approach 2%, Fannie 3.0s have a tendency to get especially queasy. When 10′s show resilience in moving lower in this high 1.9′s territory, MBS perk up noticeably. We’re seeing that now, and may see reprices from some ‘early crowd” lenders.

Treasuries DID, however, pause to digest Bullard’s comments at 11:30, which were surprisingly dovish. Bullard said that QE is the best way to way to go when a central bank has ‘near zero’ rates, but this was more advice for Europe than it was a statement about current policy. It’s almost as if markets were double checking to make sure there wasn’t any hidden, bearish clue in Bullard’s speech. 10′s held at 1.96, and not even 1 minute ago, broke lower. Things are looking up for MBS for now. 1.96 is now a pivot point that we’ll hope proves supportive if yields head higher.

Article source: http://www.mortgagenewsdaily.com/mortgage_rates/blog/309613.aspx

Time to move in? Shares of companies with ties to the housing market are surging.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

If the housing market is really on the mend, that is undeniably a good sign for the broader economy and the stock market.

Guess what? It’s increasingly looking like the housing rebound is, to pull a famous Seinfeld phrase, real and spectacular.

Home Depot (HD) reported profits Tuesday morning that were much better than forecasts. It also raised guidance.

In its earnings release, CEO Frank Blake said the company is continuing to “benefit from a recovering housing market” despite the fact that there was “less favorable weather” during the quarter.

Some retailers have blamed the snowy and cold winter for soft first-quarter results and a slowdown in consumer spending. So it’s really encouraging to see that Home Depot bucked that trend, thanks to the comeback in housing.

Related: Home appraisals no longer derailing sales

Shares of Home Depot were up nearly 2% Tuesday, making them the top performer in the Dow on an otherwise ho-hum day for the broader market. Home Depot rival Lowe’s (LOW), which reports its earnings Wednesday, rose slightly as well.

Both stocks have posted phenomenal returns so far this year. Other companies catering to the housing market, such as paint maker Sherwin-Williams (SHW), furnishings manufacturer Leggett Platt (LEG) and kitchen supplies retailers Williams-Sonoma (WSM) and Bed Bath Beyond (BBBY) have also been Wall Street studs this year.

All of these companies are part of the somewhat erroneously named SPDR SP Homebuilders (XHB) exchange traded fund, which also owns shares of actual builders. The ETF is up almost 20% so far this year, following a nearly 60% pop in 2012.

It makes sense that housing related stocks are trouncing the market.

The Federal Reserve has kept interest rates at historically low levels for a long time. Add in the numerous rounds of bond and mortgage-backed security purchases and you understand why mortgage rates have remained unusually low for a lot longer than they probably should be at this stage of the economic recovery. That’s boosted demand for housing. We’re seeing it in increased home prices, higher sales and a pick-up in building activity.

Of course, investors now have to worry if there is a new bubble inflating in the housing market. In fact, homebuilder stocks have been falling for the past few days.

PulteHome (PHM), Lennar (LEN) and D.R. Horton (DHI) were all among the worst stocks in the SP 500 Tuesday.

Related: Apartment construction slows but single-family home activity remains strong

But these stocks are all simply pulling back from 52-week highs. It’s natural for investors to take some money off the table. And it’s premature to suggest that the housing market is already approaching a top again.

The mistake that some are making about the housing recovery is to assume that it can’t last for a long time. But given how far the residential real estate market fell in such a short period of time during the Great Recession, it’s not a stretch to think that a recovery will unfold gradually over a period of years.

If you look back at the first-quarter results of just about any company with tangential ties to housing, the comments from executives are bullish.

Paint maker Valspar (VAL) noted that housing is in recovery mode several times during its conference call earlier this month.

Online real estate listing firm Move (MOVE) said “that it’s increasingly clear that a national housing recovery is underway.”

Executives at both Citigroup (C) and fiber glass maker Owens-Corning (OC) … start humming the Pink Panther theme … noted that they think the recovery in housing is “sustainable.”

And in perhaps the strongest endorsement of the housing market, real estate developer Brookfield Residential Property (BRP) went as far as to say that “in the U.S., the housing recovery appears to be in full swing.”

Related: Home price rise continues to pick up speed

It’s understandable that many are still skeptical. But the sheer volume of comments about how the housing market has finally turned the corner can’t be dismissed.

Now we just have to hope that the housing rebound leads to even more job growth. If that happens, the entire economic recovery, and by extension the stock market rally, could last a while longer.

By the way, which one’s Pink? A quick shout-out to a reader who answered one of my silly Name That Tune Twitter challenges. With Yahoo (YHOO) making news for its acquisition of Tumblr and revamp of photo sharing site Flickr, I decided to ask followers if they could identify this song lyric.

Blinding signs flap. Flicker flicker flicker, blam. Pow. Pow. Name tune for shout-out in Buzz. $YHOO up 1% pre-market after Flickr overhaul.—
Paul R. La Monica (@LaMonicaBuzz) May 21, 2013

Congrats to the winner!

@LaMonicaBuzz
Astronomy Domine – Floyd.—
James Lewis (@JamesLUFCLewis) May 21, 2013

Great song from the debut album. (Poor Syd Barrett). I am a sucker for Pink Floyd. So much so that I had to tweet the following after my colleague Maureen Farrell reported that JPMorgan Chase (JPM) shareholders voted to allow Jamie Dimon to keep both the chairman and CEO titles.

@maureenmfarrell I said I would tweet this if he won. And I’m a man of my word. Shine on you crazy Dimon! $JPM #rememberwhenyouwereyoung?—
Paul R. La Monica (@LaMonicaBuzz) May 21, 2013

I guess some could accuse me of frittering and wasting the hours in an off-hand way on Twitter.

Article source: http://rss.cnn.com/~r/rss/money_topstories/~3/uAHaJCP48f4/

Federal Reserve officials seem to be having a running internal debate about the efficacy and future of quantitative easing. Meanwhile, the markets seem to be reacting to that debate, and not so subtly. The Dow Jones Industrial Average ran up 52 points, or 0.3%, to end at 15,387 following comments from the St. Louis Fed president praising the central bank’s efforts. The bounce back from yesterday’s losses was reflected by today’s top Dow stock, which was Monday’s worst performer.

Merck , which slumped 1.7% yesterday, surged 4.7% Tuesday on trading nearly three times its average daily volume. While big catalysts like whether the FDA will approve Merck’s new insomnia drug loom in the near future, today’s sudden rise was peculiar for its lack of definitive cause. Sometimes Wall Street doesn’t reveal its logic — and sometimes there’s none to be had — but what is certain is the popularity of health-care stocks Tuesday, as it was the top-performing sector.

Home Depot ended as the second-best Dow stock, rallying 2.5% on strong first-quarter earnings and pleasantly surprising 2013 projections. The home-improvement supplier’s success helps to underline a resurgence in housing across the country. CEO Frank Blake even noted stabilizing sales in states like Florida and Nevada as they recover.

Property insurance company Travelers sank 2.2%, the most in the Dow, on the heels of a tragic tornado that ravaged parts of Oklahoma yesterday. The deadly storm, which was as large as two miles wide, tore through a suburb of Oklahoma City, leaving untold damage. Property insurers will face a surge in claims as the community rebuilds and recovers.

Lastly, Microsoft shares slipped 0.7% today, even after unveiling its newest gaming console, the Xbox One. Integrating voice-control, motion sensors, and video chatting ability, the device seeks to redefine entertainment in the living room. That’s all well and good, but investors were clearly a bit peeved at the presentation’s omission of one crucial feature: its price.

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Article source: http://www.dailyfinance.com/2013/05/21/todays-best-dow-stock-merck-goes-from-laggard-to-l/