Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – June 24th, 2008

Humbolt Fire

After missing last week due to the fires and getting caught up after being evacuated from my home for three days, I’d like to send out a heart felt notice to all of the victims of these fires.  My thoughts and prayers go out to all of the families that were either evacuated, lost their homes, or have loved ones fighting the flames.  I can honestly say that it was very comforting, for me, to just have my family together and out of harm’s way.

On to business!  The biggest news of the week will be the announcement of the Federal Open Market Committee’s meeting that occurred Tuesday, June 24, 2008 and Wednesday, June 25, 2008.  The speculation at the time of this article was that the Fed would leave the overnight rate untouched at 2.0%.  What’s on most people’s minds is the public statement that the Fed will announce after the meetings.  Again, inflation will be the buzz word of that policy statement.  Depending on how that statement is announced, will depend on where interest rates go.

PPI Up, But with Oil’s Influence?

The Producer Price Index rose 1.4%.  Core PPI increased 0.2%.  There are mixed feelings about these reports because Core PPI is within expectations, however, again, we must remain skeptical about the high energy and food costs that we keep seeing and how that will effect inflation.  The Commerce Department said that Housing Starts were at their lowest  levels since March of 1991.

Initial Jobless Claims fell again this week, however, we’re still not out of the woods, as we continue to see layoff’s like CitiGroup’s 6,000+ layoffs this last week.  Also, adding more inflationary fears was the Agriculture Department’s announcement that the price of cereals, baked goods, sweets, and poultry will continue to rise at uncomfortable levels due to the cost of grain and gas.

Quadruple Witching

This Friday we experienced what is known as “Quadruple Witching.”  Quadruple witching refers to when market index futures, market index options, stock options, and stock futures all expire on the same day.  Index futures and options share simultaneous expirations on the third Friday of every month, most of the time.  But quadruple witching days only occur on the third Friday of every March, June, September, and December. The last hour of these trading days, from 3:00 to 4:00 p.m. EST, is referred to as the quadruple witching hour.  This can translate into a very volatile trading day, as you can imagine.

Hey, at least oil prices are down.  For about fifteen minutes of one day last week…other than that they continue to climb.  To add to the problems was a Chevron plant in Nigeria had employees threatening a “strike” and Israel flew so far into Iran to show them their military power that they could “strike” if Iran threatens a nuclear attack, that it made stocks and bonds “strike” against the American People!

UPS Showing Recession Signs

UPS made an announcement that their profits will be down.  This is alarming because many businesses use shippers, if their profits are down, sales are down, and if sales are down, the economy slumps.  This is generally good for rates, but with oil prices taking away the glory…Even a very poor consumer confidence level might not help matters…Until next week…

This entry was posted on Tuesday, June 24th, 2008 at 7:01 pm and is filed under Home Buying, Interest Rates, Weekly Market Report. 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.

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