Danny Salas

Archive for the 'Weekly Market Report' Category

Chico, CA Interest Rates Market Report – Economic Influences – May 13, 2010

Political Chess Game Could Damn Financially Troubled Europe

Will ECB Package Rescue?

Is the $1 Trillion European Central Bank (ECB) Rescue Package too little, too late?  The world is trying to figure that out.  It’s election time in Europe, and many feel as though the funds were held up, until after the election in Germany.  So, this political strategy may have damned Greece, and other European Countries, by the stalling too long.  Investors are trying to figure out the consequences of the delay, and how, or even if, the financial band-aid will fix the problem.  As investors ponder, money flows in and out of world economies widely effecting Stocks and Bonds.

$16 Billion 30-Year Note Auction

The uncertainty in Europe may benefit today’s Note Auction.  We’ll have to wait and see.  If the feeling is that the rescue package is too little, too late, than interest rates, in America, will benefit.  So much uncertainty!

Initial Jobless Claims

The number of Americans filing for unemployment benefits moved to 444,000.  Just slightly higher than the 440,000 expected, bringing the total unemployment recipients to 4.63 Million, not taking into consideration the 5.13 Million people receiving Emergency Unemployment Compensation.  I’m sorry folks, but until these numbers start looking better, expect housing to grow at a more modest pace.  Low rates are great, however, jobs will benefit real estate, more than lower rates.

Initial Jobless Claims Higher Than Expected

Locking Advice

We’re back in CAREFUL float mode!  It, again, doesn’t get much better than this, however, we’ll have to watch the Auction Results, closely, and carefully!

Related Must Reads

European Fix
Why Be Leery Of Yesterday’s Auction Success: A Look Into Why 30-Year Notes Are Harder To Auction
Interesting Side Note On Unemployment: How The Numbers Are Squewed

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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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Chico, CA Interest Rates Market Report – Economic Influences – April 23, 2010

Greece Is Being Rescued...AGAIN

Greece IX

Things are looking better for Greece, and therefore the safe-haven for US Treasuries and Mortgage-Backed Securities has been abandoned, causing rates to increase.  Here is where we must be patient.  Most of our pipeline is locked, however, with some of the new applications taken, we’re risking not locking in order to see if Stocks have, indeed, moved to an level below their April 16th low of 10,973.  If they ignore this level, and are able to remain above the high’s of 11,154, than I will have been wrong, and interest rates will struggle with moving below their current levels.

Greece IX 1/2

Greek Prime Minister George Papandreou has asked the European Union (EU) and International Monetary Fund (IMF) for their $45 Billion Bailout funds.  Yesterday, I reported on Greece’s financial status, according to Eurostat.  This $45 Billion is a bandaid for their incredible deficit and watch this closely, as Greece will have to plan and cut to get out of their financial struggles.  Sound familiar?

First Time Tax Credit Boosts Home Sales

Home Sales were up 27% from the last month’s record lows.  The First Time Home Buyer’s Tax Credit had a lot to do with it, however, good weather played into the numbers, as well.  Remember, that if you’ve owned a home, five of the last eight years, you would also qualify for $6,250 for just buying a new primary residence.  So, this benefit, also helped increase sales.  411,000 new homes sold, compared to last months 324,000.  The rate in which homes sell, also accelerated to a 6.7 month holding period, as opposed to the 9.2 month reading that we saw in February.  It will be interesting to see how these numbers fare when the stimulus packages expire.

Durable Goods Orders

Durable Good Orders fell by 1.3%, however, when stripping out volatile transportation statistics, it actually gained a promising 2.8%, dominating the expected 0.7% increase, set by the market.

With Lock Barrel's Cocked...We're Still Floating

Locking Advice

At this point, I think we better continue to float, and watch what the Stock Market will do.  We lost some value, and Greece has been rescued, just in time to possibly have a negative effect on the Treasury Auctions this coming week, however, the Stock Market will play a larger roll, in where rates go.  Our loans are registered for locking…with an itchy finger on the lock button, and I warned of this volatility…expect more.

Related Must Reads

Greece’s Problems: What Eurostat Reported
Tax Credit Extension: Do YOU Qualify?

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Chico, CA Interest Rates Market Report – Economic Influences – April 22, 2010

Lock, NO FLOAT, No LOCK, NO...float

Happy Earth Day!

Treasury Auction Announcement

The United States Treasury will sell $11 Billion in 5-yr TIPS on Monday.  Also, $44 Billion in 2-Year Notes on Tuesday, $42 Billion in 5-Year Notes on Wednesday, and $32 Billion in 7-Year Notes on Thursday.  This Auction could be a nice place for international investors to place their money since Moody’s downgraded Greece’s Credit Status.

Greece VIII

There is even worse news coming out of Greece, today.  Eurostat, a European Statistic Agency, is reporting that Greece’s 2009 Books were worse than previously reported.  Not only that, but that there could be further revisions to their numbers…and I don’t think it will be positive revisions.

Obama Discusses Reform

President Barack Obama will be speaking to Wall Street, in New York City, today, in regards to financial reform.  It will be interesting to see how his speech, might effect the trading day.

Economic Info

Finally, some economic reports to share with you, this week.  Initial Jobless Claims were lower than last week, however, still higher than expectations at 456,000 new claims.  On a sadder note, 5.34 Million people are claiming Emergency Unemployment Compensation (EUC).  That’s 500,000 fewer claims than previously reported, however, don’t forget the Congressman from Kansas that held up Congress for days objecting to any further unemployment claims to be paid to anyone…so now that that’s rectified, we’ll see more Emergency Unemployment Compensation Claims again.

Hot PPI – But Cool Market Reaction

The Producer Price Index roared in at a 0.7% gain for March.  The expected reading was 0.5%, however, this left the year-over-year PPI at 6.0%.  This is a gauge on inflation, at the wholesale level.  Remember, the Fed wants to see inflation levels between 1.0 & 2.0%, so 6.0% is ridiculous.  Let’s break this down, however; wholesale food prices spike to a twenty-six (yes, 26) year high of 2.5%, and the Core PPI, which removes volatile food and energy costs, remained at a cool 0.1% and the Core year-over-year PPI was 0.9%.  So even though the information seemed hot, it was actually, cool.

Existing Home Sales

5.35 Million homes sold, in March, and the inventory of unsold homes lowered to 8 months, as opposed to the 8.6 months, just one month before.  The Tax Credit, has certainly a lot to do with this, however, it will be interesting to watch the housing numbers, once the tax credit expires, in just eight days.

It's Risky But I'd Float

Locking Advice

It’s a bumpy ride out there.  However, if you can stomach the roller coaster, I still think that Greece’s troubles, coupled with a down-trend that the Stock Market is poised for, will result in lower rates, starting next week.  Keep your fingers crossed!

Related Must Reads

The Beginning of Greece’s Troubles
The REAL Jobs Numbers
Senate Approves Tax Credit Extension

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