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

More Volatility Right Around The Corner

Greece VII

The European Union approved a thirty billion Euro ($40 Billion Dollar) bailout for financially stricken Greece, yesterday.  It’s the second such bailout in a couple of months.  Once Greece realized that the first bailout wasn’t going to be enough to really help them, they petitioned for a second bailout.  Where do I get in line for this type of assistance, huh?  Sign me up!

Corporate Earnings Week

The week starts off with Alcoa reporting lower than expected earnings.  This would generally hurt Stocks and boost Bonds, and did so, temporarily this morning.  However, expect extreme volatility since The Fed has exited the buying market.  First thing, this morning, we were up 31 Basis points, however, we just will have a lot of difficulty rising above numerous trend lines of resistance.  So, be prepared for a bumpy ride.

Businesses Pessimistic About Growth

The National Federation of Independent Businesses reported that businesses’ confidence level has dropped to an eight month low.  Seven of the reports ten components were in negative territory.  That’s not the best news for a struggling employment rate.

Numerous Lines Of Resistance Will Be Tough To Break Through

Locking Advice

Since this morning, we have lost 34 Basis Points.  Locking today, would probably, be prudent.

Related Must Reads

Greece’s Financial Woes
Greece’s First Bailout Plan: Trouble From The Beginning

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

Rates Have Increased 1/2%

Biggest Job Gains In Three Years!

162,000 new jobs were created, last month, and revisions to the two previous months’ numbers, painted a brighter number than originally reported.  This number falls short of the reported 190,000+ jobs that were expected, however, the government reported that they only hired about 48,000 temporary census workers.  So, had they hired the originally anticipated 75,000, we would have been right in line with expectations.

Where Rates Have Gone…

So, just as prognosticated, interest rates have moved up 0.5% Point since the government’s $1.25 Trillion Mortgage-Backed Security Purchase Program fell to the way-side.  With a lot of market volatility, expect the trend to continue, for higher interest rates.

Good Friday

They day will end early, today, in observance of Good Friday.  Have a blessed Easter, as well.  We’ll see ya Monday!

MBS Purchase Program Ends...

Locking Advice

See pic:

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