Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – April 28, 2010

Greece Being Rescued From IMF

Bargain Hunters Abound

After yesterday’s sharp declines, the Stock Market is looking to win back a few investors, coupled with the fact that the International Monetary Fund (IMF) has decided to aid Greece, and Mortgage-Backed Securities (MBS) are taking the blow.  Yesterday’s 50 Basis Point Gain, has lost all but 19 Basis Points.  At one point, we gained 66 Basis Points…And Started Locking, saving our clients ten’s of thousands of dollars!

The ‘Ole Swith-A-Roo

Standard & Poor’s Credit Rating Agency downgraded Greece and Portugal’s debt status to “junk.”  This caused investors to flee to the United States to invest in our Treasuries.  Here’s the “Catch-22″ in all of this.  Greece had to offer higher yields, to attract investors.  So, their 2-Year Treasury Note is offering 18% compared the United States’ 1.0%.  With a “junk” status, it was too risky for investors to throw their pools into Greece’s pot…however, with the IMF offering some stability, it might be worth more risk, so money is now pouring out of the United States’ Treasury Auctions and offerings.  I told you to expect volatility!

Bernanke Speaks

The Federal Open Market Committee (FOMC) will wrap up their two-day meeting today, and announce their decision on Monetary Policy at 11:15 a.m. PST.  Don’t expect any surprise moves, by the Fed.  Also, it will be interesting to see if the “extended period” language will be twisted a bit, or remain in their statement.  Yesterday’s Consumer Confidence levels might put pressure on other Committee members to sway toward Kansas City Fed President Thomas Hoenig’s stance on removing the language to circumvent inflation from rearing its ugly head.

Other FOMC Interests

The Fed has another meeting in June.  With the tax credits ending, more opportunity to take a look at the Labor Market, and see if Consumer Confidence can remain high, I think the Fed will keep their “extended period” language in place, at least for now.  But if I’m wrong…if you didn’t lock yesterday, you’d better talk to your borrowers and let them know it might be prudent.

CAREFUL Floating

Locking Advice

If your clients didn’t lock yesterday, have your lender register them, and lock them, if the Fed’s Statements support doing so.  The 5-Year Treasury Note Auction is today.  That might not fare too well, with Greece being rescued…AGAIN!

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This entry was posted on Wednesday, April 28th, 2010 at 8:12 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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