Danny Salas

Archive for the 'Weekly Market Report' Category

Chico, CA Interest Rates Market Report – Economic Influences – March 4, 2010

We've Already Been Down This Morning...

Jobless Claims

The numbers rolled in at 469,000 new claims.  Wow!  But, that’s what the market was prepared for, go figure!  Continuing Claims were 146,000 lower than last month, but 5.7 Million people are claiming Emergency Unemployment Compensation, so, their numbers aren’t even calculated into the “government numbers,” being reported to monitor how the economy is truly doing…so, it sort of fakes out the market and media, into a false sense of security.  Maybe faking out Senator Bunning, too!

< 60 Days To Get Into Contract

Pending Home Sales were reported at a -7.6% reading for January.  That’s a little disapp0inting, considering we were expecting a 1.0% increase.  The National Association of Realtors contributed this loss to the horribly bad weather. Remember that 49 of the 50 States had snow one day, in January.  You’d think more buyers would be jumping off the fence, to receive the tax credit for home purchasing.  Remember, there’s more than one opportunity!  Think of it…you have less than 60 days to be get qualified for a loan, find an agent you’re comfortable with, look for houses, if you find the one you love…what if it’s a short sale, or a bank owned property that could take more than four weeks to get an answer from, go through the loan process and close by June 30, 2010, in order to receive your tax credit!  Fence sitters…get off your fence!

Good News on Job Front

Well, sort of good news.  Productivity rose by 6.9%, the fourth quarter of 2009.  This, compared to 6.2% the previous quarter.  For the  2009 year, Productivity rose by 3.8%.  Unit Labor Costs were slashed by 5.9%, the fourth quarter and 1.7% for the 2009 year.  So, with productiviy increasing, and labor costs decreasing, it’s generally a sign that businesses will start hiring.  However, be patient, as we’ve written before, businesses are getting a lot more out of the employee than they used to.  So, they’ll squeeze what they can, out of the employee, before adding on more costs and hiring.

Take Advantage Of Where We Are...Today

Locking Advice

So, Unemployment Numbers will be released tomorrow.  It should be depressing!  However, as I have been stating, there’s not much further bond values can rise (and therefore, lower interest rates).  We have the temporary hiring of the census bureau, we already have a market that expects an ugly number, so anything better than expectations can have a temporary effect on rates.  I think that the risks are too great, to not take advantage of today’s rates.  I’d wait for today’s best pricing, then I’d lock!

Related Must Reads

The Real Jobs Numbers
Senate Approved Tax Credit Extension

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Chico, CA Interest Rates Market Report – Economic Influences – March 2, 2010

Greece's Assurance Of A Resolution Stopped The "Flight To Quality"

Greece’s Resolution

There’s no real economic data scheduled to appear, this morning.  So, the market is moving, primarily from news that their is a financial resolution to Greece’s problems. Basically, they are having to increase taxes, cut government workers’ wages, and other ideas, to help lower their huge deficit.  One suggestion, taken seriously, is requiring taxi drivers to issue receipts, so that they pay their fair share of taxes.  This has caused a nationwide strike and put a huge damper on tourism.  So, you can see how everyone understands that there are sacrifices that need to be taken to rescue and failing economy, it’s just that nobody wants to pay for them.

Locking Advice

Just as anticipated, yesterday, we hit a level that we just couldn’t do much with.  We’d reached the pinnacle of where we could go, without some sort of news that could catapult rates where we haven’t seen in quite some time.  And, actually, we got the news, from Greece, which helped take the “flight to quality” from US Treasuries, back into Stocks, causing rates to increase, slightly.

Related Must Reads

Greece’s Financial Problems

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Chico, CA Interest Rates Market Report – Economic Influences – February 26, 2010

4th Quarter GDP Excites

Dissecting The GDP

A ton of economic information to report on, this morning.  First of all, the 4th Quarter Gross Domestic Product grew at a whopping 5.9%. The Best GDP reading in over six years!  You’d think that Stocks would surge and interest rates would move up on the great economic news. However, let’s dissect this figure.  The gains are primarily due to businesses re-stocking their shelves, after the government “Cash for Clunkers” Program and NOT buying during the late 2008 and 2009 seasons, due to the recession.  Also, when you measure consumer spending (the most important component of GDP), we had a measly 1.7% growth.  Not so whopping!

Existing Home Sales

January’s Existing Home Sales were expected to be at 5.5 Million Units.  Unfortunately, the number attained was 5.05 Million.  Inventory of unsold homes moved to 7.8 months.  Weather, back east, probably had a lot to due with this number.  These numbers are not as promising as we’d hoped, and shows that we’re still trying to maneuver out of this slump.

The Chicago Purchasing Managers Index (PMI) and Consumer Sentiment, both came in at expectations.

Where’d All The $ Go?

This last week, the government purchased purchased $11 Billion in Mortgage-Backed Securities.  So, there’s only $44 Billion left, in the Government’s $1.25 Trillion Mortgage-Backed Security Purchase Program.  Wow!  That’s alarming!

Locking Advice

We're Still Floatin'

Poor economic activity reduces demand for capital causing Stocks to lower, which causes Bonds to rise, which, in turn, causes a reduction in interest rates.  If this structure continues, the goods news is that mortgage interest rates would probably move lower.  Unfortunately, the bad news is that this could have a very negative effect on the job market.  Which in turn has a negative effect on the housing market.

Related Must Reads

Advanced GDP Hot! An October Take On GDP
More Jobs – Better Housing
The Effect of $1.25 Trillion…Gone

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Chico, CA Interest Rates Market Report – Economic Influences – February 18, 2010

Fiscal Policy Is On An Unsustainable Course

Inflation, Inflation, Inflation

Uh-Oh…Yesterday afternoon, we switched to a lock mode, after advising people to carefully float into the morning.  And lock, we did!  It’s a good thing, too, because the negative movement, for interest rates, continues to be alarming with reads on inflation poking its ugly head out and stirring the markets.  Remember, inflation is the nemesis of interest rates.

Read This Carefully

Yesterday, Kansas City Fed President Thomas Hoenig had some very interesting comments that the United States, quite frankly, better pay close attention to.  He said, “Fiscal policy is on an unsustainable course.  The US Government must make adjustments in its spending and tax programs.  It is that simple.  If pre-emptive corrective action is not taken, regarding the fiscal outlook, then the United States risks precipitating its own next crisis.”  He’s warning about hyperinflation.  That occurs when rates have to increase so quickly, as to stave off inflation, that currency become valueless.  Remember Post World War I Germany?  Well, I don’t.  But I’ve read about it!  So, when Hoenig became President of the Kansas City Fed, in 1991, he mentioned that his 85 year old neighbor gave him a 500,000 German mark note.  He told Tom that that note would have purchased a home, in 1921.  In 1923, that same note wouldn’t even buy a loaf of bread.  Mr. Hoenig took that to heart, and that’s one of the reasons he’s been so outspoken regarding these turbulent times.  He has that mark note framed in his office, as a cold reminder to himself, of what his responsibilities are, to the American People!

Housing Starts Up

591,000 starts compared to the 580,000 expected.  Great news for the housing market, however, bad news for rates.  Kind-of-a “Catch-22,” no?  This is primarily due to the Tax Credit.

Jobless Claims

Jobless Claims, for the week, were up to 473,000, compared to the 438,000 expected.  Here’s a scary figure:  An additional 5.8 million people are filing for Emergency Unemployment Compensation (EUC).  That’s up an astonishing 304,708 people, just from the prior week. Keep in mind that these figures are not included in the general unemployment data.  So, if we’re waiting for the jobs numbers to look better, we might be waiting a long time!

Producer Price Index

The PPI came in 1.4% hotter, in January, than in December.  This is a measurement of inflation at the wholesale level.  It’s hot, however, this is not always passed to the consumer, at the consumer level.  These readings will be reported tomorrow, with the Consumer Price Index (CPI).

As I Write:  Locking Advice

As soon as we touched beneath the 200-Day, things took off and plummeted down about 50 basis points.  That’s about 1/2 Point cost on a loan.  Now that we’ve broken beneath all levels of support, it would be prudent to lock.

Related Must Reads

An Interesting Contradiction: Jobs Growth?

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