Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – October 13, 2009

Interest Rates Benefiting At The Expense Of Stocks

The Moment of Truth

Johnson & Johnson reported earnings, less than anticipated.  Stocks are reacting negatively towards this information, and it’s what I’ve been talking about for months.  Even though companies were reported better than expected earnings through the second quarter, they were cutting jobs, energy costs were lower, and closing down whole locations to simply stay alive.  Well, that’s not truly economic growth.  And I expected the third quarter earnings reports to show this.  It’s happening now.

Stocks Suffering…Rates Benefiting

Generally, when stocks suffer, Mortgage-Backed Securities benefit, as money pours out of stocks and into bonds.  So, their yields, and therefore interest rates, move down.  We’re still not at the lowest levels, that we may not ever see again, but we’re close.  So, again, educate yourself, and your clients, regarding locking in, when it’s time to buy (NOW), and who to work with on their loan (ME).

UK’s Central Bank Extending Their Purchase Program

That’s right!  The United Kingdom has a purchase program for assets to help stave off inflation (temporarily) and keep interest rates down, because they’re dealing with an economic nightmare, too.  $25 Billion Pounds has been approved.  Are things worse off overseas than we’re reading in the press?  Seems like England and the rest of the United Kingdom are experiencing similar the same situation as the United States.  Keeping the overnight rate low, Government Asset Purchase Program, and pushing the value of each countries currency low.

Locking Advice

Last Thursday and Friday were the days to lock.  If you’re starting a new escrow, I’d hold out and see how these 3rd Quarter Earnings Reports continue to pan out.  We have a little support above the 25-Day Moving Average, so we should sit back, relax, but keep that itchy trigger finger on the lock button.

Related Must Reads

Late August Info, “To Put It Simply, Stocks Are Overbought
2008 Article about World Wide Inflation
Hello, Is This Thing On?

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This entry was posted on Tuesday, October 13th, 2009 at 8:12 am and is filed under Chico Home Loans, 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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