Danny Salas

Archive for January 25th, 2010

Chico, CA Interest Rates Market Report – Economic Influences – January 25, 2010

Rates Are Barely On The Rise

Bernanke’s 2nd Term

It looks as though the Senate is prepared to vote Good ‘Ole Ben Bernanke in, for a second term, later this week.  Stocks are liking this news and are doing fairly well, after a 500 point decline last week.

Fed’s Meeting This Week

The Fed’s Rate Decision and Policy Statement will be delivered on Wednesday, after meeting this week to determine two very important factors.  One of these factors will be if the Fed will continue to offer a low Fed Funds Rate, “for an extended period of time.”  This allows people to buy bonds at low levels, with very little down, and finance the rest.  If the Fed doesn’t mention, “for an extended period of time,” than the writing’s on the wall, so to speak.  And, with that…these investment opportunities in bonds will diminish.  Causing rates to rise.

Will Government Sponsored Purchase Program Expire

The second factor is what to do with the Mortgage-Backed Security Purchase Program that the Fed will have contributed $1.25 Trillion to, by the end of March.  The Fed has continued to state that the program will expire, however, there are rumblings that they may contribute more than the $1.25 Trillion.  This will be closely watched, as well.

Locking Advice

We’re currently hovering above the 200-Day Moving Average, so I would carefully float all new applications.  We should manage to stay above this level of support.

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