Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – April 6, 2010

Great Day To Lock

Fed Minutes Released Today

Later today, the minutes from the last Federal Open Market Committee meeting will be released.  There are two areas of concern that will be listened to particularly. One, will be the reading, or interpretation, regarding the “extended period of time” language that the Fed has been using, to take advantage of the large spread between the Fed Funds Borrowing Rate, and the rate that investment coupons are carrying (like the 4.5% Coupon).  The other area of concern will be the timeline regarding when the Fed will start to consider unloading the $1.25 Trillion in Bonds that they have been buying up, to keep rates down, over the past year and a half.  So, if the Fed was buying, to keep rates low, once they start selling, what do you think will happen with rates?

141 Basis Points Lost

Since the Fed stopped buying Mortgage-Backed Securities, we’ve lost 141 Basis points.  This is a HUGE number!  There’s not much support, from where we are, currently, so expect rates to continue to move lower, however, in a more sporadic fashion.  This morning, for instance, rates “bounced” off of an extreme low.  Traders call this a “Dead Cat Bounce.”  It’s, basically, investors cashing in on their bets, on an extreme low, in the market.  Don’t expect it to last, however.

Treasury Auctions

Today, we have $40 Billion in 3-Year Notes being auctioned.  Remember, with the US Government, not on the sidelines, anymore, things could get interesting.  Tomorrow, $21 Billion in 10-Year Notes will be auctioned, and Thursday, $13 Billion in 30-Year Notes.  Remember that we must take longer term investments seriously, when considering inflation pressures over the course of that longer investment.

Fed Minutes Released Today

Locking Advice

Today is, particularly, a nice day to lock.  I’d take advantage of the “Dead Cat Bounce,” and lock in before the rest of the week’s Treasury Auctions.  Note to be aware of, though…Greece is already requesting that their promissory note (financial aid package) get reassessed, on concerns that interest rates will rise, faster than they though, about a month ago…go figure…

Related Must Reads

What “Extended Period” Means To Banks
Why Longer Term Investments Create Higher Interest Rates

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This entry was posted on Tuesday, April 6th, 2010 at 8:41 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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