Danny Salas

Archive for December 17th, 2009

Chico, CA Interest Rates Market Report – Economic Influences – December 17, 2009

Yesterday's Advice, "Float Into The Fed Comments, Today."

Initial Jobless Claims Disappoint

But, it’s good for interest rates!  480,000 new claims compared to the 465,000 that experts expected.  Also, of interest, was that continuing claims increased by 5,000 to 5.19 Million.  This information was a real blow to Stocks, as they expected the lower claims number trend to continue, and since they did not, Bonds, Mortgage-Backed Securities (MBS), and Interest Rates, are benefiting.

Citigroup Selloff

Interesting stuff here; the government indicated that it’s going to sell a significant portion of its ownership interest in Citigroup.  Citigroup recently lowered their stock value and is holding a discounted sale.  So, it’s causing another decline in overall Stocks and, again, interest rates are benefiting.  There is talk that Goldman Sachs and Morgan Stanley’s earnings will fall short, into 2011.  This is hurting Stocks, too.

Fed Says, “Extended Period”

Told you!  When Bernanke Speaks…Markets Listen.  ”Extended Period,” was the quote used by the Fed, when explaining that they were interested in keeping the overnight rate low.  This helped keep bonds under control, and it signaled a reversal in the current trend of higher rates.  Yesterday’s advice to, “carefully float into the Fed’s comments, today,” proved to be perfect advice!  Our Clients are happy…are yours?

Ben Bernanke For Four More Years

The Senate Banking Committee is voting, today, regarding another four year term for our current Federal Open Market Committee Chairman, Ben Bernanke.  I think he’ll be confirmed!  Also, mentioned in yesterday’s comments, The Fed reiterated that the MBS Government Purchase Program is going away on March 31, 2010.  At this point, they hinted that the program will not be extended beyond this end date.  So, beware, rates will increase if these facts hold true.

Locking Advice

Floating advice yesterday, proved positive.  We are now hitting resistance at the 40 and 50-Day Moving Averages.  It may be tough to break through these lines, so we will probably be locking today…unless we stay at these levels…If we stay at these levels, it could show that another trend has been set and we’ll continue to see lower rates.  However, keep in mind that if we break away, locking, immediately, would be prudent.

Related Must Reads

November 28, 2008 – When The Government Took A Piece of Citi
When Bernanke Speaks, June 2004
When Bernanke Speaks, July 2007
When Bernanke Speaks, September 2007
When Bernanke Speaks, September 18, 2007
When Bernanke Speaks, December, 2008
When Bernanke Speaks, September, 2009
When Bernanke Speaks, November, 2009
When Bernanke Speaks, December 8, 2009
When Bernanke Speaks, December 16, 2009
$1.25 Trillion Government MBS Purchase Program

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