Danny Salas

Archive for September, 2009

Chico, CA Interest Rates Market Report – Economic Influences – September 4, 2009

Jobs Numbers Are In

Why’s everyone so dang excited?  216,000 lost jobs reported last month.  However, they expected 230,000 jobs lost.  This whole idea of what’s expected, compared to what’s actually reported kinda cracks me up.

Why I’m Crackin’ Up

So, over the course of this past year, the Labor Department continues to revise previous months’ data.  Particulary regarding Jobs Lost.  Each month has been revised by about 50,000 Jobs.  And it’s NOT in the positive direction.  So, if you add the 50,000 expected when we revise these numbers, next month, we would have lost 266,000.  More than the 230,000 expected.  But the markets will have already moved, positioned themselves, and people will have made and, or lost their money in their investments, etc.  So,  not very funny, but I’m still laughin’.  The markets are taking this as good news, when really, I don’t think it’s so good.  BUT, we’ll have to ride the wave.  Today, Stocks will probably fare relatively well, before the Labor Day Holiday. 

The Revisionist

That’s why I have called myself a “revisionist,” in previous articles.  With markets revising themselves every month, I thought it a catchy label.

Highest Unemployment in 26 Years!

Now, this is the information that should be moving rates lower.  The unemployment rate spiraled to 9.7%.  The highest Unemployment in 26 years!  Since our current recession started, in December of 2007, total jobs lost are greater than we’ve seen since just after World War II.  Scary. 

Short Escrow?…Lock

So, as we just sit on the 200-Day Moving Average, I think for short periods, it’s a good time to lock.  But, again, if you’re in a long escrow, I feel like we’re going to see lower rates into October.  Have a Great Labor Day Weekend.  We’ll see ya Tuesday!

Chico, CA Interest Rates Market Report – Economic Influences – September 3, 2009

I Told Ya So!

In yesterday’s article, I mentioned that it may have been a good time to lock, first thing this morning.  Keep in mind, that I write these article early.  We ended up locking in numerous loan rates, late yesterday.  Here’s why:

Bustin’ Through Trend Lines

We have broken through all of the lines of resistence regarding Trend Lines and where Mortgage-Backed Securities have been.  We, actually, approached the best level we have seen since March.  So, rates were in the 4’s for the afternoon.  When we approached these higher levels (meaning rates are down), we figured we see a sell off, and we did!  So, it was a great opportunity for a lot of buyers. 

What’s happening Now

My advice has been to float for some time now.  We have risen 281 Basis points since August 7, 2009.  That’s almost 3.0% Points, or $6,000 on a $200,000 loan.  Are you glad you listened?  If you haven’t Locked In, or if you’re in a 60 day escrow.  I THINK RATES ARE GOING TO GET EVEN BETTER!  On August 21, even in the face of rising rates, I still indicated that I though rates would be lowering.

Treasury Auctioning More Bonds

That’s right.  The Treasury Department will announce, today, 3, 10, & 30 Year Bond Auctions and how much they’re going to auction.  Keep in mind that the longer the term of the Bond, the more difficult to reap a profit.  If these Auctions don’t fare well, rates will suffer.  However, I think we’ll be fine when the 3rd Quarter Earning’s for Corporations start to come out…starting at the end of this month and going into October. 

Unemployment Figures

The number of Americans filing for unemployment compensation fell by 4,000, however, it’s still higher than expectations, at 570,000.  The other bummer is the four-week average of claims rose to 571,250.  That’s an eight week high.  So, bad for labor, but good for rates.  A nice catch 22. 

Will The Fed Stop Buying MBS?

There is toying with the idea of extending the Mortgage Backed Security Purchase Program AFTER December.  The idea is that the housing industry is too fragile to mess with, right now.  Some Fed members disagree with this idea.  If it’s extended, it should help to keep rates lower, however if they decide not to extend, after October, expect rates to steadily increase to the 6% range by January. 

Locking in?

Ahead of all of the Treasury Auction information and jobs numbers; if you’re in a short escrow…I’d consider locking in.  If you’re beyond 30 to 45 days, I’d wait for a while to lock.  Unemployment will be interesting to see tomorrow morning.  I’ll have an explanation as to the numbers for you…tomorrow.

Chico, CA Interest Rates Market Report – Economic Influences – September 2, 2009

Rates in the Mid-4's???

Rates Keep Sliding

ADP is a payroll company that monitors employment statistics, because they’re such a huge corporation.  They estimated that jobs numbers would be worse than expectations, when they come out on Friday.  Now, ADP has been wrong on numerous occasions, however, they still have an influence on the market. 

MCGE

No, this is not a new electric lightbulb from General Electric, it’s an introduction by The Mortgage Bankers Association called Mortgage Credit Guarantor Entities.  Essentially, these would be smaller corporations that would take over management of the GSE’s (Fannie Mae & Freddie Mac), trade Mortgage-Backed Securities, but with a government guarantee, of course.  Don’t know if this will go very far, but it’s an interesting proposal.

Oil Prices Dipping

Yes, the gooey stuff is down to $68 per barrel on fears that the world economic crisis is not as close to being finished, as some thought. 

To Lock Or Not To Lock

Tomorrow morning might be a good time to lock, on a short escrow.  Otherwise, if you have about three weeks or more, I’d float into the month.  September Stock Values generally plunge, putting more money into Mortgage Backed Securities (Bonds), and therefore lower interest rates.

Chico, CA Interest Rates Market Report – Economic Influences – September 1, 2009

September Stock Blues

Calm Before The Storm

Mortgage-Backed Securities are bouncing back and forth, between the 100-Day and 200-Day Moving Averages.  I think they’re poised move in a higher direction, making rates lower for September and October.  Here’s why!

Stock Market

To put it simply, Stocks are overbought, we’re heading for September, AND we’re getting ready to receive the 3rd Quarter Earnings Reports from U.S. Corporations.  As I have been saying to a lot of my clients and agents, I think it’s going to be ugly.  The good news…interest rates will benefit. September stock months have, traditionally, been bad since 1959.  So, if tradition has anything to do with anything…

July Pending Sales

Pending Homes Sales for July increased by 3.2%.  They only expected a 1.5% increase, not to mention that we’ve experienced six months of increases.  Don’t get too overly excited.  Remember, many first time home buyers are moving their purchases up to take advantage of the tax benefits this year.

Read Between the Lines

The Institute for Supply Management Index (ISM) came in at a very strong 52.9%.  Generally, a reading over 50% indicates strong economic growth, because it measures manufacturing output.  But reading between the lines, you’ll take notice that Manufacturing has been slow.  Since 2007, corporations have depleted their supply of goods, as opposed to the cost manufacturing new ones.  So, since the supply has depleted, manufacturing has to go up.  So, watch this carefully.  It could be misleading!

Continue to Float

So, I would continue to float, very cautiously, into the third quarter.  It’s benefited numerous of my clients this past few weeks.