Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – October 9, 2009

Mark This Date! Rates Were At Their Lowest

Turn Out The Lights

I think the party may be over.  We touched on bond value high’s again, which translates to interest rate lows.  But after the poor 30-Year Treasury Auction, yesterday, it will be hard for rates to get as low as they have been these past few weeks.  As a matter of fact, as I write this article, we’ve already lost 50 basis points.  With the 25-Day Moving Average just about 25 basis points lower, and the 200-Day Moving Average another 50 basis points below, there’s a lot of room for bonds to fall, and therefore, interest rates to climb, before the day is done.  The only thing that might keep rates in check, would be a poor Stock day. 

Good ‘Ole Ben Bernanke

To top things off, Ben Bernanke spoke on Capitol Hill, stating that as the economy recovers, the Fed will need to increase interest rates to stave off inflation.  Don’t be fooled, now is the best time to buy, and pass this on to your clients:  Interest Rates Are Going Up! 

$1.2 Trillion Purchase Program

The New York Federal Reserve Purchased $20 Billion of Mortgage Backed Securities, this week.  There is only $304 Billion Left.  So, if the Fed is running out of funds, and there’s only about 25 weeks left to purchase the securities, that means that $12 Billion may be purchased, on average, a week.  But remember, the Fed also announced that they’re going to start purchasing every other week.  It’s just another indication that rates are on the rise. 

Locking

Moving to a lock bias is strongly suggested here.

Columbus Day

The market will be closed on Monday, in observence of Columbus Day.  You will not receive an interest rate update, until Tuesday.  Have a great weekend!

Related Must Reads

Read How Mortgage-Backed Securities Effect Interest Rates
Read What Factors Will Contribute To Higher Rates

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