Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – April 27, 2010

Trouble In Greece Is Helping Our MBS

Greece X

The uncertainty, in Greece, has caused investors to park their investment funds in the safe-haven of U.S. Treasuries and Mortgage-Backed Securities.  We’re currently up 34 Basis Points and we’ve broken through the very tough ceiling of resistance, at the 50-Day Moving Average. The biggest concern is, can we remain here?  Will The European Community save the day, again, for Greece?  Will money pour back into the Euro, if a resolution results?  These are questions that continue to go unanswered, however, will have significant implications on interest rates.

Earnings Reports

For the most part, earnings have been stronger than I had anticipated.  We ran into this last year, and my calculations were a few months behind, and that might be what’s happening, currently, as well.  While I am extremely excited for the United States, and the rest of the world, to climb out of this financial nightmare, while trying to remain optimistic, the reality is that until the labor market experiences more significant growth, the economy will continue to drag its ugly tail.

Consumer Confidence

As if to slap me right in the face, for my labor comments above, Consumer Confidence sharply catapulted to 57.9.  This is the highest reading since September of 2008 and significantly higher than last month’s disappointing 52.3 reading.  Consumer Confidence is so important because it measures the willingness of the American People to spend money; boosting the economy.

Fed Meeting Starts Today

The Federal Open Market Committee opens their two day meeting today.  Their Rate Decision and Policy Statement will be released tomorrow, after the meetings, at  11:15 PST.  you can rest assured that the high Consumer Confidence Numbers will be a matter of discussion.

Treasury Auction Starts

Today, $44 Billion worth of 2-Year Treasury Notes will be auctioned off, starting the week off of 2, 5, & 7-Year Treasuries.

Greece's Troubles Are Helping Rates

Locking Advice

Now, is the time to float…however, EXTREMELY carefully!  We’ve managed to climb above some very tough resistance.  And if another resolution to Greece’s troubles is negotiated, money could fly from the U.S, and back to Europe.  However, if not, we could see even better pricing.  Register your loans for locking…but wait until the news changes, before doing so.  It sure is a bumpy ride, however, you knew it was coming.

Related Must Reads

Related Must Reads From Greece
Earnings Surprise: A Look Back At October of 2009
Why Be Leery: A Look At Short Term Treasuries Desirability Compared To Long Term Treasuries

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Chico, CA Interest Rates Market Report – Economic Influences – April 9, 2010

Expect More Volatility

It’s A Dead Day

Not much to report on, today, except Greece.  Europe is structuring another financial rescue package for the country.  With help on the way, the dollar is weakening and funds are moving back out of Mortgage-Backed Securities, putting pressure on rates.

Carefully Float Into The Day

Locking Advice

Yesterday afternoon, locking became prudent, as MBS started to dive.  We’re still in good territory, however, there is really no support except for the lows we experienced, earlier, in the week.  So, as Greece is rescued, if you’re not locking, pay attention closely!

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

The Big Room At Sierra Nevada Brewing Company

YOU DON’T WANT TO MISS THIS EVENT!!!

Scott St. John will be speaking at The Big Room At Sierra NevadaThe , Friday, March 26, 2010.  Scott is a 3rd-Term Governing Board Member of Freddie Mac.  You’ll have an opportunity to inquire into expected economic future of the United States, Real Estate and its REO future, and what’s happening behind the scenes that is making closing loans to more timely and difficult, these days.   REGISTER AT THE CHICO OR PARADISE BOARD OFFICES.  $10 includes appetizers.  $15.00 AT THE DOOR!

Rates Are Still Smokin'

Happy Spring!

Spring is in the air, and that what mortgage-backed securities have managed to do, this morning; spring off the 50-Day Moving Average and remain, so far, just above the 25-Day and 40-Day Moving Averages.  This has managed to help interest rates move slightly down.

$1.25 Trillion

So, over the course of the next two weeks, there are only $14 Billion left in the arsenal of funds that the Fed had set aside to purchase Mortgage-Backed Securities.  Also, this week, alone, the Fed is auctioning $44 Billion of 2-Year Notes, $42 Billion of 5-Year Notes, and $32 Billion of 7-Year Notes, to help pay for the ever expanding deficit.

A Difference of Opinion

Some say that rates will spike severely, after the Fed’s $1.25 Trillion is used up.  Others say it will not have too much of an effect, as there is an adequate amount of cash, on the sidelines, to sort of, pick up the pieces.  I believe that the average rate will be effected by approximately .25% in rate.  Without a major buyer, in the market, I feel like there has to be a negative result.

Short For Time Periods...May As Well Lock

Locking Advice

Again, I advise that if you’re looking at a long escrow, take advantage of the fact that you don’t have to lock.  If you’re in a shorter one…than now is about as good as it gets!

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Chico, CA Interest Rates Market Report – Economic Influences – March 15, 2010

Were Currently Sitting On Some Support

FOMC Meets Tomorrow

At 11:15 a.m., tomorrow morning, we’ll hear from Good ‘Ole Ben Bernanake and his other Federal Open Market Committee members.  Will the “extended period,” comment continue to be mentioned?  There has been some concern, as of late, and some dissenting members of FOMC, regarding inflation concerns, and when to start increasing the overnight rate to curb inflation.  Most feel as though the “extended period” portion of the Fed’s statement will remain.

Economic Interests

The Empire State Manufacturing Report came in near expectations, at 22.86.  Industrial Production was 0.1% and Capacity Utilization was 72.7.  This is a low reading, and low readings of Capacity Utilization usually keeps inflationary concerns astray.  However, what’s frightening about lower levels of CU is that it could lead to the closing of factories, if they’re not being “utilized.”  We’re starting to see this in Europe.

Speaking of Europe

Greece is back at the top of concerns, as their Prime Minister, George Papandreou, stated at the Brookings Institution in Washington, this weekend, “If the European crisis metastasizes, it could create a new global financial crisis with implications as grave as the U.S.-originated crisis two years ago.”

The Domino Effect

So, Greece is in financial turmoil.  The European Union (EU) needs to rescue Greece, or experience worse financial disaster.  The EU consists of Big Wigs, like Germany, France, and the United Kingdom.  So, here’s the rough part…Moody’s, one of the world’s largest credit rating firms, is considering lowering the current AAA Rating for all of these countries, AND the United States’, too.  This would really hurt these nations, as a lower credit rating would increase risk, and therefore interest rates on debt.  Everyone’s having enough trouble, these days, let alone higher debt payments.  And, if foreign markets need to you more of their funds to pay their higher debt payments, than they won’t have funds to buy US Treasuries and Mortgage-Backed Securities…thereby, increasing interest rates.  Whoa!  We’d better figure out a “Grecian Formula,” for success, hey!?

Locking Advice

We’re sitting right above the 50-Day Moving Average.  Actually, we’ve bounced right off it if, the last three trading days.  However, the 25-Day and 40-Day Moving Averages have been a layer of resistance, as we bounce back and forth between these lines.  It’s really up to you…we could lock, and protect what’s there, or we could use the support we have, at the 50-Day, and see what economic turmoil in Europe and Moody’s can bring to Stocks and Bonds.  Support shows us to float, but you’d better do so cautiously!

Related Must Reads

Mutiny On The Policy: A Look Into How The “Extended Period” Effects The Carry-Trade
The Carry Trade Phenom
Greece’s Financial Woes
Greece Two
Greece III
Greece IV
Eenie-Meanie-Miney-Moe – Catch a Country’s Financial Woes

YOU DON’T WANT TO MISS THIS EVENT!!!

Scott St. John will be speaking at The Big Room At Sierra Nevada, Friday, March 26, 2010.  Scott is a 3rd-Term Governing Board Member of Freddie Mac.  You’ll have an opportunity to inquire into expected economic future of the United States, Real Estate and its REO future, and what’s happening behind the scenes that is making closing loans to more timely and difficult, these days.   REGISTER AT THE CHICO OR PARADISE BOARD OFFICES.  $10 includes appetizers.  $15.00 AT THE DOOR!

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