Phil Grossfield's Blog


Monthly Archives: February 2014


Translation. This was my gift the other day from my boy who is turning 6 years old tomorrow:

“I love you daddy you will open this and you will see what’s inside here”


My Market Watch: Bonds Up +13bps From Yesterday’s Close.  The Fannie Mae 30-Year Bond is up +13bps from yesterday’s close.  When traders buy bonds a lender’s rates/pricing improve…it’s as simple as that.  The trend in bond trading is looking good and I’m hoping for a nice rally.  Of course, Janet Yellen speaks today and depending on what she says we could see a move one way or the other. But my gut tells me that today will be innocuous.

Vacation Giveaway – Last Day to Enter!

Vacation Giveaway – Last Day to Enter! The Travel Mama strikes again! My wife is the Travel Mama in case you didn’t know…she is a travel writer and has a giveaway contest you can enter. TODAY IS THE LAST DAY TO ENTER! YOU COULD WIN!!!! You have to follow the instructions to get entered…you have nothing to lose so sign up and win!


My Market Watch: Bonds Flat – Pricing Same. The Fannie Mae 30-Year Bond is basically flat this morning +0bps from yesterday’s close…par. When traders buy bonds our rates/pricing improve and when they sell off bonds our rates/pricing get worse…the bond tells it like it is…it is a direct indicator…it’s as simple as that. Today it is flat, like a pancake…like a tortilla…like an Iowa countryside.

There are some conflicting reports in housing data and quite frankly it confuses me. For example, purchase applications are down 15% in 2014 but new home sales came in very high…tell me that doesn’t sound confusing. Maybe that’s why the bond is flat today.

glass elevatorIn analyzing the 30-year Fannie Mae bond it’s interesting to point out that it was selling off early and dropped down to the 25-day moving average. A moving average is a trend in the buying and selling of the bond. Traders use moving averages to make guesses on when the price of the bonds (and stocks) will reach highs and lows. As you know, traders want to buy low and sell high…if they see the price of the bond approaching a moving average floor, they usually conclude the price has reached it’s low and figure it’s a good time to start buying, unless of course there is some compelling report or news to suggest otherwise.

c48Early this morning the bond dropped down to the 25-day moving average…then it stopped and headed back up. I created the glass elevator analogy to explain this. Imagine the glass elevator is heading downward towards the Lobby. As the elevator nears the Lobby it slows down and eventually stops…will it go down to the garage or reverse and go up to higher floors in the building? If there are no economic reports or news to suggest the elevator should continue heading downward towards the garage, then traders will push the “up” button (buy bonds) and the elevator will reverse and go up to higher floors…this is what traders count on…this is why they start buying bonds at the lobby. The lobby today is the 25-day moving average.

As of now the bond is trading well above the Lobby…this is a very good thing. As long as the bond doesn’t fall below the Lobby, then rates/pricing will hold. Let me know if you have questions or comments…

Iron Man Sings

ironmanIron Man Sings.  I love music…you know this to be true. But did you know I’m a science fiction geek?  You probably knew that as well, eh?  I wonder how much your other AEs reveal about their personal lives. No matter. Yes, it’s true, I’m a science fiction geek who loves music. That’s why I found this particularly interesting…Robert Downey Jr., otherwise known as Iron Man, sings Driven to Tears with Sting.

As long as Iron Man is now on all of our minds, I’ll go on record to say that my favorite of the trilogy was Iron Man 3, then Iron Man 1, and last Iron Man 2 which I thought was just okay. As far as his singing ability goes…not too shabby!


My Market Watch:  Bonds Up – Pricing Improved.  The Fannie Mae 30-Year Bond is up this morning +30bps from yesterday’s close.  When traders buy bonds our rates/pricing improve…it’s as simple as that.

Since the bond opened much higher this morning from yesterday’s close, Capital Markets has already priced these gains into this morning’s rate sheet. Therefore, logic dictates that it would be unlikely we’d see a mid-day reprice improvement.  However, I have seen a pattern with Interbank where they will come out with conservative pricing after a big jump from the previous day’s close. Then, after waiting a few hours to see how the market reacts they will issue a reprice improvement. I’m hoping this trend comes true again today.

housingdataPositive housing data takes credit for trader’s motivation to buy bonds.  For example, it was reported the price of homes increased for December. This is good news because some of the guesstimates I was reading inferred the housing data might be weaker than anticipated. One reason analysts may have thought this is because of bad weather. But some of the housing data is being reported before the real nasty weather kicked in, i.e., December. Regardless, the good economic reports in housing data are resulting in traders investing in bonds, and when they do that our pricing improves.

The 30-year Fannie bond is trading in a comfortable space, away from any impending ceilings of resistance or floors of support. That is, there is no technical reason for traders to feel the bond will sell off. Assuming the bond levels out this afternoon, we could have a nice week in rates/pricing. The only barrier to this is if traders feel compelled to take gains realized and sell off bonds, but I think this is unlikely based on how things look presently. Let me know if you have any comments or questions….

Case Of The Mondays? Instill Trust – Build A Strong Relationship

mondaysCase Of The Mondays?  “People who are not happy on Mondays give up 14.3% of the available happiness in their life,” wrote one of my long-time clients and neighbors. Although David is also a math teacher here in San Diego, you don’t need to be one to figure out this calculation.  He went on to say, “so if you ask me, be happy and try not to worry a lot.”  If you ask me these are words to type in bold font, print on an 8×11 piece of paper, frame, and hang on the wall, next to the picture of me you no doubt already have hanging.

These comments came in response to my post I’ve Gone Viral! which was a play on my post My Verse.  And the lesson continued, “My verse will include getting people to say not only Happy Birthday or Merry Christmas, etc., but Happy Monday, Happy Tuesday, and Happy Every-Day-of-the-Week.  Since I have started saying my Happy Day to everyone I see at school, many of my colleagues are picking it up and I even hear it in the morning announcements every day.

The Moral of the Story:  Positivity is contagious…so influence others around you in a positive way, and for the sake of not wasting 14.3% of your life, don’t have a case of the Mondays, or Tuesdays, or Wednesdays, or…

I believe you get your ass kicked saying something like that man.


My Market Watch:  Bonds Down Slightly – Pricing Improved. Instill Trust – Build A Strong Relationship.  The Fannie Mae 30-Year Bond was trading flat but just started to decline and is now negative from Friday’s close by -11bps.  When traders sell off bonds our rates/pricing worsen…it’s as simple as that. But it’s too early to be worried…the bond would have to drop another 8-10bps or so in order to trigger a mid-day rate change by Capital Markets.

trustAccording to MBS Highway this could be a volatile week in mortgage rates because of all the housing data being released.  If you’re talking to clients and they are concerned about whether to lock or float, you might want to mention this to them.

Obviously it’s a delicate discussion because on the one hand you want to protect your client from a decline in pricing and on the other hand you don’t want to lock them in to early and then worry they’ll bail on you if the market improves. It’s got to be one of the toughest things about being an LO. I guess it comes down to how well you communicate and advise them on what’s going on. I suppose the best way to ensure they won’t seek a lower rate after you’ve already locked them in is to do your best to instill trust.

Building the relationship as strong as possible can be challenging since many times you have a very short period of time to interact with them.  But from my experience, the LOs who have mastered this skill are the most successful. Additionally, the most successful LOs seem to find a way to discuss what’s going on in the market and ultimately have the client decide what to do, that is, the decision on whether to float or lock is a resulting directive from the client.  If you need help with this aspect of your business, I suggest you seek out an LO you admire and ask them for advice…find out what they do and then incorporate the skill into your bag.  I’d love to hear some feedback….

Ask And Ye Shall Receive

dosequismanAsk And Ye Shall Receive. Have you seen this? A music student who was attending a Q&A with Billy Joel at Vanderbilt University raised his hand and asked if he could play with him. If he hadn’t asked, he never would have realized this incredible opportunity.

billyjoelThis is a good lesson for those of us in sales. We have to ask for it…it’s basic stuff…sales 101. The most successful sales people have mastered the art of knowing when and how to ask for what they want, which should be what the customer needs, can you feel me? But make no mistake about it…to be successful in sales you have to go after it…and once you’ve gone after it you have to close the deal…and in order to close the deal you have to ask for the sale. That’s pretty basic stuff, am I right? Ask, and ye shall receive!

My Market Watch: Bonds Up – Pricing Improved. The Fannie Mae 30-Year Bond is trading positive…up +11bps since yesterday’s close and up +17bps since our rates were published this morning. When traders purchase bonds our rates/pricing improve…it’s as simple as that.

Interbank’s pricing this morning is very aggressive. According to a LoanSifter report we’re leading the charge. If pricing holds all day, I advise you hold off locking and wait for Sunday to pick up 2 additional days on your lock term. Yes, you can lock online over the weekend…our rates/pricing at the end of the day today will still be available on Sunday. Of course, if the bond market shifts south today then you’d want to lock in before a reprice worsening. But at this point that doesn’t seem likely. So, if bonds hold, wait until Sunday. Let me know if you have questions.


Lookback.  Have you seen your Facebook Lookback Video?  I love these little 1-minute videos. So, I’m sharing mine with you.  Click below to see my lookback video.


My Schedule: Available all day….

My Market Watch:  Bonds Up But Down From Earlier – Pricing Improved So Far – Fed Minutes Released.  The Fannie Mae 30-Year Bond is a direct indicator of rates/pricing…if bonds are being bought then rates improve and if sold off rates worsen.  fedreserveAlthough the bond was up +20bps from yesterday’s close, the bond has been selling off and is only up +3bps right now. Because the bond has been selling Capital Markets might decide to issue a reprice worsening. If not, they are certainly watching closely. This might be a good time to lock in.

At 11:00a the Fed will release their minutes from the last Fed meeting. I’m expecting bonds to sell off after this meeting, but not too much. Why?  Because the topic of Quantitative Easing will be in there, and recent discussions about QE have been in favor of it.  Usually this results in traders putting money into stocks rather than bonds. Hey, I could be wrong…do your own research and please share it with me, okay?

Stress Is Not The Problem

stressStress Is Not The Problem. Does stress make you sick?  You’ve heard this before, right?  That stress can affect you not just emotionally, but physically too. And, I believe it. But it turns out that stress is actually not bad for you. However, stressing out about stress being stressful is! Huh?  Yep, normal anxiety about life is, well, normal, and actually beneficial. But if you stress out about being stressed…that my friends is the real culprit.  Read more about it here:  A Whole New Way To Think About Stress.

cornbreadCornbread Update: On Friday I have to feed cornbread to 30 people at my BFF’s BBQ Cook-Off. So far I’ve made one cornbread recipe I found on the Internet and it was great. It’s made in an iron skillet and then baked…very good with Honey-Butter. Now I’m gonna try a jalapeno recipe.

My Market Watch:  Bonds Up – Pricing Same So Far…. The Fannie Mae 30-Year Bond is a direct indicator of rates/pricing…if bonds are being bought then rates improve and if sold off rates worsen. Although the bond is up +19bps from Friday’s close, rates/pricing are the same. That’s why I think we’ll issue a mid-day price improvement, unless something drastically reverses the current movement.

Interestingly, NAMB reported the housing index, which measures Builder sentiment, dropped more this month than in its 8-year history. According to MBS Highway, builders blamed nasty weather and a shortage of lots and labor. I thought this report might negatively influence traders when looking at bonds, but bonds are still being bought this morning so no sweat, eh?


A Plea For Cornbread – Early Valentines Day

cornbreadA Plea For Cornbread.  I need a recipe, stat!  My brother-from-another-mother has assigned me to cornbread for his big BBQ competition next week. Yes, 2 of our friends got hot and heavy over who could make better BBQ and, well, one thing led to another AND VOILA, BBQ Cook-Off!

But what of cornbread?  My BFAM has given me this daunting and challenging task no doubt because he trusts only me to produce a buttery and crispy delight.  smileythumb2Nobody else could possibly be worthy of such a momentous challenge.  Anyone got a good cornbread recipe I can pass off as my own?

valentines2Early Valentines Day.  We had a great time…we took just one night but two days away…kid-and-animal-free.  We got to our hotel in L.A. around 4p on Monday…there was iced Champagne with chocolate strawberries waiting for us in the room.  Then we had drinks and dinner at the roof-top bar and restaurant that circles the small hotel pool.  Late the next morning we had a ridiculously good breakfast at a local joint and then went to the Getty Museum which is someplace we’ve always wanted to visit. We checked out our favorites – impressionism, sculptures and the gardens before heading home. It was a great early Valentines 2014. 

job_jobless_claimsMy Market Watch:  Bonds Up – Pricing Improved.  The Fannie Mae 30-Year Bond is a direct indicator of rates/pricing. If bonds are being bought then rates improve and if sold off rates worsen.  This morning the bond is up +36bps from yesterday’s close and as a result pricing is improved.  Today there was a report on initial jobless claims and there is a 30-year bond note auction.  Other than that it’s relatively quiet.  Today was a nice recovery from earlier in the week.  Let’s hope the bond continues to be attractive to traders….

Like A Dog Eats A Steak; Jobs Report Weak

valentinesLike A Dog Eats A Steak. My family goes through paper towels like a dog eats a steak. I don’t know why it bothers me so much but it just drives me nuts for some reason, particularly when they dry their hands using a paper towel…use a hand towel for the love of all things holy!  And when we’re in a public bathroom my son is like a pit bull…he will grab 20 towels until I tell him to stop. I literally have to train my family how to use paper towels…and then I saw this:  How to Use a Paper Towel. Have a nice weekend!  Oh, and don’t forget Valentine’s Day is a week away so get your flowers and a card…this is your time to show it…

My Schedule:  I have meetings all morning and may be difficult to reach before 11a….otherwise available all day…

My Market Watch:  Bonds Up – New Jobs Reported Much Lower Than Expected – Pricing Improved.  The 30-year Fannie Mae bond is up this morning +30bps after the Jobs Report came in significantly less than expected, a big surprise. As a result, pricing is up 0.250 or so. The Jobs Report tells us how many new jobs were created in January which came in at 113,000 when we were expecting 181,000. For a trader a report like this indicates the economy is weaker than previously thought:


The unemployment rate dropped from 6.7% to 6.6%…not a huge drop but it counters the weak jobs report slightly. Traders are buying bonds, but not as intensely as you might think after such a weak report…interesting….

I Just Can’t Help It; Jobs Report Tomorrow

majesty_rose_yorkI Just Can’t Help It.  My apologies, but I’m going to be writing about American Idol occasionally over the next several weeks.  I just can’t help it.  Although I usually don’t apologize for what I write, I know there are those of you that aren’t huge fans of American Idol…like my wife. But, like my wife, I can get you to admit that one or two artists are pretty good and worth a short listen. So, think of it like this…I will weed out the crap and only report on the non-crap…the good…the talented.  I won’t waste your time.

It’s well documented I love the dream, love the music, and love watching the progression of each.  This year there is less antagonism and no cruel or spiteful exchanges among judges.  Yes, the contestants do sabotage themselves, but at least this year the judges are mindful to inspire.  And, this year there are more extremely talented people. I like this girl:  Majesty Rose York.

My Schedule:  I have a meeting in Irvine at 1:30p today and will be driving north after noon. Then headed back down to San Diego late in the day.

My Market Watch:  Bonds Par with Yesterday’s Close.  Prices Worse.  Jobs Reports Tomorrow.  The 30-year Fannie Mae bond is down this morning but only -2bps from yesterday’s close.  The story this morning is tomorrow’s Jobs Report and Unemployment Rate.

jobs2The Jobs Report tells us how many new jobs were created in January and the unemployment rate tells what percentage is out of work.  If the Jobs Report shows more new jobs than expected, then traders will interpret this as a sign the economy is doing well. A lower unemployment rate would have a similar effect. That makes sense, right?  Jobs_Report_AnalysisTraders invest their money into the stock market when they’re bully on the economy, and they’ll pull money out of bonds to do so…this results in worse rates/pricing for us. On the other hand, if the Jobs Report comes in less than expected, and/or if there is a higher unemployment rate reported, then traders will interpret the economy is a bad bet.  They would rather sell off their stocks and put that money into bonds…its a safer bet.  When they buy bonds our rates/pricing improve. It’s as simple as that.

The Jobs Report is a market mover…traders pay close attention…they try to predict what will happen and react sharply when the report is released. Obviously, the real swings occur when the report comes in significantly less or more than what was expected. It is expected that 181,000 new jobs will be reported.  From what I’m reading, this might be aiming low and more jobs than expected might be reported. If so, rates would get worse. But you need to do your own research and rely on the same before you decide to lock or float your loans. Feel free to call me to discuss….

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