Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – March 15, 2010

Were Currently Sitting On Some Support

FOMC Meets Tomorrow

At 11:15 a.m., tomorrow morning, we’ll hear from Good ‘Ole Ben Bernanake and his other Federal Open Market Committee members.  Will the “extended period,” comment continue to be mentioned?  There has been some concern, as of late, and some dissenting members of FOMC, regarding inflation concerns, and when to start increasing the overnight rate to curb inflation.  Most feel as though the “extended period” portion of the Fed’s statement will remain.

Economic Interests

The Empire State Manufacturing Report came in near expectations, at 22.86.  Industrial Production was 0.1% and Capacity Utilization was 72.7.  This is a low reading, and low readings of Capacity Utilization usually keeps inflationary concerns astray.  However, what’s frightening about lower levels of CU is that it could lead to the closing of factories, if they’re not being “utilized.”  We’re starting to see this in Europe.

Speaking of Europe

Greece is back at the top of concerns, as their Prime Minister, George Papandreou, stated at the Brookings Institution in Washington, this weekend, “If the European crisis metastasizes, it could create a new global financial crisis with implications as grave as the U.S.-originated crisis two years ago.”

The Domino Effect

So, Greece is in financial turmoil.  The European Union (EU) needs to rescue Greece, or experience worse financial disaster.  The EU consists of Big Wigs, like Germany, France, and the United Kingdom.  So, here’s the rough part…Moody’s, one of the world’s largest credit rating firms, is considering lowering the current AAA Rating for all of these countries, AND the United States’, too.  This would really hurt these nations, as a lower credit rating would increase risk, and therefore interest rates on debt.  Everyone’s having enough trouble, these days, let alone higher debt payments.  And, if foreign markets need to you more of their funds to pay their higher debt payments, than they won’t have funds to buy US Treasuries and Mortgage-Backed Securities…thereby, increasing interest rates.  Whoa!  We’d better figure out a “Grecian Formula,” for success, hey!?

Locking Advice

We’re sitting right above the 50-Day Moving Average.  Actually, we’ve bounced right off it if, the last three trading days.  However, the 25-Day and 40-Day Moving Averages have been a layer of resistance, as we bounce back and forth between these lines.  It’s really up to you…we could lock, and protect what’s there, or we could use the support we have, at the 50-Day, and see what economic turmoil in Europe and Moody’s can bring to Stocks and Bonds.  Support shows us to float, but you’d better do so cautiously!

Related Must Reads

Mutiny On The Policy: A Look Into How The “Extended Period” Effects The Carry-Trade
The Carry Trade Phenom
Greece’s Financial Woes
Greece Two
Greece III
Greece IV
Eenie-Meanie-Miney-Moe – Catch a Country’s Financial Woes

YOU DON’T WANT TO MISS THIS EVENT!!!

Scott St. John will be speaking at The Big Room At Sierra Nevada, Friday, March 26, 2010.  Scott is a 3rd-Term Governing Board Member of Freddie Mac.  You’ll have an opportunity to inquire into expected economic future of the United States, Real Estate and its REO future, and what’s happening behind the scenes that is making closing loans to more timely and difficult, these days.   REGISTER AT THE CHICO OR PARADISE BOARD OFFICES.  $10 includes appetizers.  $15.00 AT THE DOOR!

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This entry was posted on Monday, March 15th, 2010 at 8:26 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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