Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – February 24, 2010

Inflation Back In Check

Chicago was a blast!  But let’s get caught up on what you missed!  Last Post, I was discussing inflation, at the wholesale level.   The report for the consumer level was much tamer than anticipated.  The Consumer Price Index (CPI) came in at a comfortable 0.2%.  Lower than the 0.3% expected.  And the Core CPI came in at a cool 0.1%, when an actual increase of 0.1% was expected.  This helped cool the massive upward trend in rates that we observed on the 17th and 18th of February.

Discount Rate Increases

As anticipated in last weeks article, the Fed increased the discount rate from 0.5% to 0.75%. This should not hurt businesses and the consumer, but help financial institutions return to a somewhat state of normalcy, regarding the spread between the discount rate, and the Fed Funds Rate.

The National Association for Business Economics

The (NABE) reported that they anticipate approximately 103,000 new jobs created from April through the end of this year.  Now that’s just in line with The White Houses assessment of adding 95,000 per month.  However, keep in mind that with population growth and immigration, alone, we need to add more than this, to reach the 6.0% Unemployment Rate that The White House has predicted to reach in five years.  So, while the news is somewhat encouraging, particularly to the media, it’s not so encouraging to me.

Eenie-Meenie-Miney-Moe

Catch a Country’s Financial Woes…Okay, so let’s choose a country…any country…England!  No, how about Spain!  Okay, How about Greece…Japan or China?  Here’s my point.  Bank of England Governor Mervyn King indicated that England is ready to extend its asset purchase program, to enable banks to lend more money, to help their fragile economy.  Spain’s economy could potentially be worse.  There’s concern that their spending for their social programs is spiraling out of control.  If it doesn’t curb, substantially, than the effect on the entire Euro-community could be devastating.  De-valuing the Euro and creating an uncanny value of the Dollar.  Which could, actually, hurt the United States.  We’re not out of this mess, yet, my friends!

“Yellen” Up The Wrong Tree?

San Francisco Fed President Janet Yellen indicated that she’s not concerned with inflation and that the economy is moving too sluggishly for inflation to be a concern, at the moment.  Now, this is scary!  We’re walkin’ a fine line, here!  Inflation should always be a concern to a Fed President…but if we’re not adding jobs, what is one to do?  We’re not out of this mess, yet, my friends!

Consumer Confidence Bums

So the consumer, apparently, is not listening to the media.  All of the hype about jobs, and growth, and the economy on recovery did not have an effect on the consumer, as consumer confidence reported a weak showing at 46.0, when a 55.0 number was expected.

Good ‘Ole Ben Bernanke

He’s speaking before Congress’ House Financial Services Committee today.  Tomorrow he’ll talk before the US Senate’s Banking Committee!  He’s indicating that he feels as though inflation is in check!  And that it will continue to be so for quite some time.  He also reiterated that ‘ole “extended period” quote. Bringing some level of satisfaction to investors around the world.  Keep in mind, that he’s gotta sell some of our debt.  The best way to do that is to sell Bonds and Mortgage-Backed Securities, to the world.  Think he’s baitin’ the world?  It will be interesting to see.  His comments on inflation are quite interesting, however, keep in mind, if he indicated that inflation was a concern, investors would run!

Locking Advice

My guess is that late yesterday, and early this morning, will be the best times to lock. Although, hearing Bernanke’s testimony this morning may bring bidders to the auction table today.  That could change things, but not too drastically.  We locked in our clients this morning, on applications taken yesterday.

Related Must Reads

Greece Two
Japan’s FICO And China’s Tightening Credit
Hints Into Higher Rates
Why The Spread Was Lowered Initially, And Why It’s Okay To Go Back

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This entry was posted on Wednesday, February 24th, 2010 at 9:43 am and is filed under Chico Home Loans, Home Buying, Interest Rates. 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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