Danny Salas

Archive for August 27th, 2009

Chico, CA Interest Rates Market Report – Economic Influences – August 27, 2009

What Goes Up, Most Come Down! Mortgage Bonds...Makes Me Go Round!

“Which way do he go?  Which way did he go?

To Quote The Abominable Snowman from Looney Tunes, I’m talking about the market, this morning.  So far, at 6:00 a.m. PST, Mortgage-Backed Securities were down 31 Basis Points, at 7:00 a.m., they were only down 6, at 8:00 down 3, and at 9:00 a.m., as I write today’s article, we are down 12 basis points. 

How Interest Rates Are Priced

So, some banks in the Western Region of the United States came out with pricing at around 7:00 a.m.  Most, will release their pricing at around 8:30 a.m. PST.  So, banks on the East Coast may have priced their rates higher than when banks came out with pricing on the West Coast.  Maybe about a .25% Point in Cost higher.  Remember; when Mortgage Backed Security Bond Values are down, their yields, (and therefore, Interest Rates, are up).  So, at 8:30  were down 3 basis points, as opposed to down 31 at 6:00.  That’s 28 basis points.  25 Basis Points translates into approximately .25% points on the cost of a loan.  

Market Jitters

Right now, Mortgage-Backed Securities are bouncing up and down, nervously.  The market, again, is concerned with the 7-Year Treasury Note Auction scheduled for release at 10:00 a.m. PST.  We have a very tough barrier to break through with the 100-Day and 200-Day Moving Averages.  Rates are currently bouncing back and forth with a tough layer of support with the 25-Day and 50-Day Moving Averages and this tough layer of resistance at the above mentioned 100-Day and 200 Day Moving Averages.  With so much nervousness in the market today…the direction of these bonds (MBS) could go in either direction, however, downward seems to be the weaker trend lines, at this point.  I hope I’m wrong.

Intial Jobless Claims

Unfortunately for the economy, Initial Jobless Claims were reported higher than expected.  570,000 Claims.  While that’s good for interest rates, it’s a factor that must be taken into consideration, regarding how the economy is doing.  The Labor Market helps us gauge where the economy’s going, and high jobless rates and claims just isn’t a healthy sign.

An “Itchy Finger”

My crew has their fingers on the “lock” button!  But, we’re floating, for now, to see how the $28 Billion Treasury Auction pans out today.  As I finish this article, bonds (MBS) are down 3 basis points.  Enjoy the Roller Coaster Ride!  Will touch base tomorrow…Danny