Danny Salas

Archive for August 25th, 2009

Chico, CA Interest Rates Market Report – Economic Influences – August 25, 2009

Yesterday Was a Gift! How Will The Treasury Auction Influence Rates?

What A Difference A Day Makes…

First, yesterday was a GREAT day!  Second, Housing Numbers are still movin’ on up. Third, Obama goes against others in his party and makes a key decision on Bernanke.  Fourth, The Market gets nervous before the 2-Year Note Auction, And, Last, Consumer Confidence seems to be ignoring Labor Statistics.

Yesterday’s Surprise

Yesterday ended up being a wonderful day for Mortgage-Backed Securities.  The end of the day say MBS up 47 basis points. That’s at least a .375% Points DECREASE in the cost of an interest rate compared to the morning’s initial release.  What caused this?  Basic market jitters regarding what will happen in the market today.  The uncertainty led to a stock sell-off.  There was uncertainty about who President Obama would appoint to take over as Federal Reserve Chairman.  The last time a Federal Reserve Chairman was “changed” in the middle of a new party was when Alan Greenspan took over and stocks suffered, as the market became nervous.   Adding to the uncertainty was the question as to today’s Treasury Auction.

Great News on Housing

Eighteen of twenty cities, used in a recent housing statistic, increased 1.4%.  Most of this, it is speculated, is due to the fact that a lot of first time home buyers are “getting off of the fence” and purchasing while rates are low, and values are low, and to take advantage of the $8,000 tax credit.  So, what does this mean to December of 2009, and beyond, once the tax credit incentive goes away?  That will be interesting to monitor.  Many experts expect that loan activity will decline by 50%.  Yes, from about $2.2 Trillion to $1.1 Trillion in 2010. 

“Good ‘Ole Ben Bernanke”

Yes, President Obama decides to go against some of his own party and keep existing Federal Reserve Chairman Ben Bernake to another four years.  While others were hoping that an existing member would be promoted, Barack Obama felt as though Good ‘Ole Ben had kept the markets sound during the world financial crisis, thought “out of the box” when it came to reviving the wealth-sticken economy of the United States, and if they had promoted or appointed Former Vice Chair Alan Blinder, “Good ‘Ole Alan Blinder” just doesn’t have a nice ring to it.

2-Year Treasury Note Auction

Today, starting about now, the Treasury will auction off $42 Billion in 2-Year Notes.  Cross your fingers, if the note don’t fair well, rates will suffer. 

Consumer Confidence…Up?

Yes, consumer confidence came in higher than expected.  But, what did we expect?  It’s interesting to see where the government sets its limits.  If numbers come in “better than expected” the stock market benefits.  But, it is what it is…and consumer confidence seems to be ignoring Labor Statistics and believing that the market is optomistic about the future.  I am too, but thing it may take a little while longer…sorry…

Locking?

It you’re looking for advice on locking…I’d float into today Treasury Auction News with an itchy finger on the lock button.  Why…take advantage of yesterdays “gift.”