Danny Salas

Archive for December, 2009

Chico, CA Interest Rates Market Report – Economic Influences – December 7, 2009

After 6 Days Of Higher Rates...We're Finally Floating Again

Rates Getting Better

Finally, after six straight days of increased interest rates, mortgage-backed securities are finally making a move in the other direction, to the benefit of rates. 

Treasury Auction

With no real economic information to influence markets this week, interest rates will likely follow technical factors and results of the Treasury Department’s Auctions, throughout the week.  Tomorrow, $40 Billion in 3-Year Notes will be auctioned.  Wednesday will auction off $21 Billion in 10-Year Notes and Thursday will see $13 Billion in 30-Year Notes. 

Ben Bernanke

Ben Bernanke is speaking at the Economic Club of Washington today.  His statements may be alarming, following Friday’s Jobs and Unemployment Surprises.  There is talk that the Fed may increase the overnight rate sooner than most thought.  This is causing the Dollar to gain value at the cost of stocks, gold, and oil. 

Locking Advice

After the change in trading this morning, we should float into the day and see what happens with the first Treasury Auction tomorrow.

Related Must Reads

Why Be Leery…
December 4th’s Unemployment Surprise
Title of article

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

Unemployment Down To 10.0%

Fewer Lossed Jobs and Lower Unemployment Rate =

Fewer jobs were cut last month than expected.  11,000 jobs were cut and the market expected 125,000 to 130,000.  Now that’s an important number!  Also, a very important Unemployment Rate dropped to 10.0% from last month’s 10.2%.  These numbers, coupled with the fact that the last two months’ numbers were overstated by 159,000 jobs, led interest rates to spike up quite aggressively.  “Temp-Jobs” numbers spiked up 40,000 in number.  This is important because we’ve learned from prior recessions that we see an increase in temporary positions before we see an increase in permanent positions.  Makes sense! 

Higher Rates…Who Cares…More Jobs…More Buyers

Is the worst of the recession behind us?  These numbers appear to support that we may be in a modest recovery.  What’s interesting about this is that even if rates move up, it’s better that we have people returning to the work force, than keeping rates in the 4’s and not having the labor statistics emerge confidently.  People working means people buying homes! 

$1.25 Trillion Well Is Drying

In an effort to try to help keep interest rates low, the Federal Reserve purchased $16 Billion in Mortgage-Backed Securities this past week.  So far, $1.054 Trillion has been spent on the program.  With only $1.25 Trillion for the total program funds…you can see that the reservoir is drying up.  When it does dry up, the effort to keep mortgage interest rates low, will dissipate. 

Locking In…

If you didn’t follow the afternoon advice we gave to lock, you’ve lost a lot of money, or you’ll have a higher interest rate than November 30th’s warning.  However, we are sitting above the 50-Day Moving Average.  If we can stay above that strong layer of support…it may be beneficial to float your rate into next week.  If we do, however, break that barrier, than locking, immediately, would be prudent.  Have an excellent weekend! 

Related Must Reads

Higher Rates…Period!

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

We Twittered On November 30, to Lock

Employment Looking Better

Unemployment Claims came in at 457,000 as opposed to the 480,000 that was expected.  This is the lowest reading in 14 months!  We really need to see new claims below 400,000 before we get excited about the labor market even coming close to correcting itself.  Keep in mind, that with the Tax Credit Extension, unemployment benefits were extended, as well, for those who had previously lost their ability to continue their claims. So, expect this number to be difficult to reach the below 400,000 level for some time.

Ben Bernanke Up for Re-Election

President Obama recommended Ben Bernanke for another four year term, as our Fed President, back in August.  He’ll probably get voted back in, however, what will really be interesting is if the government wants to take over the Federal Reserve.

Obama’s Job Forum

The White house is hosting a job forum of CEO’s, economists, and other leaders to determine what can be done to help the job market.  And Speaking of Jobs, the White House Commented that they think that tomorrow’s Jobs Report and Unemployment Numbers will see a slight increase.  Economists are expected a loss of 125,000 jobs.  I think it might come in a little better than that, and as far as the unemployment rate goes…even if it’s worse, I don’t think we’ll see the interest rate lows that we’ve enjoyed this past month.  I think we take advantage of what’s available and lock in before tomorrow’s Jobs Numbers.

Related Must Reads

House Passes Tax Extension
Jobless Claims…Obama Signs Unemployment Benefits Extension
Dubai’s False Troubles Was Still A Signal To Lock

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

Dubai's Troubles Were Somewhat Misleading

Dubai Clarification

Interesting how the world reacts to the media.  To be clear, it was Dubai World, that was having trouble making payments and may to rearrange or re-structure their assets.  Dubai World is a private investment group, that never had the governments backing.  So, that information coupled with the fact that The United Arab Emirates were going to free up capital to assist the company, helped eased world concerns of another Lehman Brothers type catastrophe.  So, the dollar is weakening again, oil and gold are climbing higher, and things are back to where they were last week.

Down Under Raises Their Over

Overnight Rate, that is!  Australia raised their overnight cash rate by another .25% to 3.75%.  Citing an increasingly strong economic recovery and with consumer confidence booming, they felt the move was prudent.

Bank of Japan

The government, in Japan, is concerned with their commercial lending and banking industry.  They requested an emergency meeting of monetary policy makers to have their government start buying government Bonds.  The policy makers decided not to structure a government purchase program, however, did approve short-term loans to commercial lenders.  We’ll have to watch this closely, as well.

Stocks Doing Well

GE will be selling a 20% stake in NBC to Vivendi for $5.8 Billion.  This should pave the way for Comcast to purchase a controlling interest in NBC.  This will be interesting to watch, as we continue to transition into a cable controlled television viewing environment.

Locking

Again…whilst the gettin’s good my advice is to take advantage of the opportunity available.

Related Must Reads

After 158 Years…Lehman Brothers is…History
Put Another Quarter Percent On The Overnight Mate

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