Intraday News Roundup: Data, Mortgages, and Coordinated Action

by CC September 15, 2011 11:06 am • Commentary


Major central banks around the world will cooperate to offer three-month U.S. dollar loans to commercial banks in order to prevent money markets from freezing up because of Europe’s sovereign debt crisis.

The European Central Bank said on Thursday it would hold three fixed-rate operations between October and December to offer banks as many dollars as they needed, in order to ease any funding crunch in the year-end period.

The announcement sharply boosted European bank shares and the euro. Shares in French bank BNP Paribas jumped as much as 13 percent before coming off their highs.


Netflix Inc cut its third-quarter forecast by 1 million U.S. subscribers, sending its shares down nearly 15 percent, after a price increase earlier this month caused customers to shy away from its DVD-only service.

In what Wall Street has called a “rare, large and surprising misstep” by Netflix Chief Executive Officer Reed Hastings and his team, the company said it would have 24 million subscribers at the end of the third quarter, down from a prior forecast of about 25 million.


Fixed mortgage rates fell to the lowest level in six decades for the second straight week. But few Americans can take advantage of the historically low rates.

Freddie Mac says the average rate on the 30-year fixed mortgage fell to 4.09 percent this week. That’s the lowest rate seen since 1951.


Helping Responsible Homeowners Act

A bill to provide for the affordable refinancing of mortgages held by Fannie Mae and Freddie Mac.

Introduced: Jan. 25, 2011

Related Bills: HR 363

Sponsor: Sen. Barbara Boxer (D-CA)

Co-Sponsor: Sen. Johnny Isakson (R-GA)

More details on the Senate bill

-CQ Roll Call

Millions of American homeowners don’t qualify for those low rates. If they did, they’d be saving hundreds of dollars a month on their home loans, which might give them more money to spend elsewhere and help boost the economy.

“I know you guys must be for this because that’s a step that can put more than $2,000 a year in a family’s pocket and give a lift to an economy still burdened by the drop in housing prices,” Obama said.

At a Senate hearing Wednesday, lawmakers from both parties spoke out in favor of the idea.

Democrat Barbara Boxer has introduced legislation with the same aim: allowing millions more Americans to refinance. Homeowners would be able to refinance even if they owe more than their homes are worth. They could also do so regardless of their credit scores.

Boxer said people with high interest rates who never missed a mortgage payment as the value of their homes went “down and down and down” should have a chance to refinance at current levels.

Proponents say there’s a way to do that without more government spending.

The crux of idea is this: Millions of people are stuck at 6, 7 or 8 percent interest rates, and their loans are already guaranteed by mortgage giants Fannie Mae and Freddie Mac.

It would actually be in Fannie and Freddie’s best interest to let those people refinance into lower interest rate loans, since that would make the loans more affordable for people and make defaults and foreclosures less likely. That would save Fannie and Freddie money since they need to pay investors to cover losses on loans that they guarantee.

So, if Fannie and Freddie simply extended their existing guarantees for these people, to cover new refinanced loans at the current low interest rates, the private sector would make those loans. And proponents say that shouldn’t cost taxpayers anything.


Applications for unemployment benefits continued to rise in the past week, while inflation pushed higher and a key manufacturing index weakened.

The weekly jobless claims number, which is closely watched as an indicator for employment trends, unexpectedly rose 11,000 to 428,000, well ahead of estimates of 411,000.

The consumer price index, meanwhile, gained 0.4 percent when including volatile food and energy prices, after an increase of 0.5 percent in July. The so-called core CPI, though, gained 0.2 percent, which was in line with expectations.


U.S. industrial production rose 0.2 percent in August, slightly better than forecast, as a solid gain in manufacturing offset a drop in utility output, a Federal Reserve report showed Thursday.

August’s industrial output gain followed an unrevised 0.9 percent jump in July. Economists polled by Reuters had expected a 0.1 percent gain in August output.

Utility output fell 3.0 percent in August after rising 2.8 percent amid a July heat wave.

But manufacturing production rose 0.5 percent, with consumer durables rising a healthy 1.3 percent as automotive production rose. This followed an unrevised 0.6 percent rise in July factory output. Mining output rose 1.2 percent after a 1.1 percent rise in July.

Capacity utilization, which gauges firms’ performance relative to their full potential, edged up to 77.4 percent in August, from a downwardly revised July reading of 77.3 percent.


A gauge of factory activity in the U.S. Mid-Atlantic region contracted for a second month in a row in September, but the rate of decline moderated from a steep drop the month before, a survey showed on Thursday.

The Philadelphia Federal Reserve Bank said its business activity index improved to minus 17.5 from minus 30.7 in August.

That still missed economists’ expectations for minus 15.0, according to a Reuters poll.