Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – February 11, 2010

Treasury Auction And MBS Purchase Program Increasing Rates

Greece’s Financial Woes

So, Greece is afraid that they won’t be able to make their financial obligations, this month.  The European Community has indicated that they may extend a loan, to Greece, to keep them from financial ruin.  Initially, this helped interest rates, in the United States, because the $25 Billion Auction of 10-Year Treasuries, went relatively well, for such a long term (10 years), until the European Countries united to help keep Greece from financial disaster.   Investors, therefore, started moving away from Treasuries.  So, we ended the day in negative territory, and below ALL levels of support, but it could have been much worse.

An Interesting Contradiction

So, I heard on Mark and Brian, this morning, that the White House Predicts 95,000 jobs through 2011.  This may sound like great news, and don’t get me wrong, it’s better than we’ve seen, however, check out these statistics.  The Federal Budget estimates unemployment to move to under 6.0% by the year 2015.  So, first of all, in order to keep employment steady, due to population growth and people working longer into their lives, we need to add 125,000 jobs a month.  Also, in order to move unemployment to under 6.0%, by 2015, with these growth calculations, we need to add 225,000 jobs per month.  Hello!

$16 Billion in 30-Year Treasury Notes

Auctioned today!  As mentioned earlier, the 10-Year Auction showed promise, but in order to help Greece out, Europe stepped in and money poured out of U.S. Treasuries…those dang Europeans…(sarcasm).  If these 30-Year auction bodes poorly, due to the enormous debt obligations the U.S. is currently printing, then yields (and therefore interest rates) will have to increase to entice investors to tie their money up for such a long period of time.

Locking Advice

It may be wise to lock, before the 10:00 a.m. announcement of the Treasury Auction.

Related Must Reads

Why Be Leery of Longer Term Auctions
How Breaking Below Levels of Support Can Effect Rates

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This entry was posted on Thursday, February 11th, 2010 at 9:44 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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