Danny Salas

Archive for March 31st, 2010

Chico, CA Interest Rates Market Report – Economic Influences – March 31, 2010

The Market Is One Nervous Nelly!

This Is The End

My Only Friend…The End, of purchasing Mortgage-Backed Securities (MBS) by the Federal Reserve.  The Doors have been closed, on the $1.25 Trillion that the government set aside to buy these securities.  It was “my only friend”, due to keeping mortgage interest rates low for an unprecedented amount of time.  Now, the Fed is going to have to start selling those MBS to the private sector.  They’re not quite ready to do that, however, doing so, they will have to increase the yields, of these Bonds, to be profitable for those investors.  Therefore, higher yields equates to higher interest rates.

A.D.P Is O.F.F.?

American Data Processing (ADP) is the nations largest payroll company.  The have a tendency to report inaccurate figures, and today, the market interpreted what ADP said as bad news for the job market.  Twenty-three thousand jobs were lost, in March, in the private arena.  The government expects 40,000 private sector jobs created in March.  So, the discrepancy is wide.  Also, the ADP numbers do NOT take into consideration government jobs and the temporary census jobs created.  So, total numbers are expected to be an additional 190,000 jobs reported tomorrow.  So, when ADP reports a loss, Stocks suffer on the news, and Bonds and interest rates benefit.  However, once the market absorbed the fact that ADP is often incorrect, coupled with the fact that the ADP numbers do not account for government jobs or census jobs, interest rates suffered.

Take Advantage And Lock While Ya Can!

Locking Advice

Mortgage-Backed Securities have managed to wriggle their way down below all trend line levels of support.  The only support, they current have, is a trading level that the market hasn’t been at for quite some time.  So, we’ve been squeezed into a very small area of trading back and forth, between support and resistance.  With tomorrow’s jobs numbers, truly not expecting to be a huge surprise, I would take advantage of the opportunity to lock.

Related Must Reads

The First Extension of The $1.25 Trillion MBS Government Purchase Program
2007 Example of A.D.P being O.F.F.
Trend Lines: How They Support or Resist Interest Rates

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