Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – May 24, 2010

Spain's Troubles Show Signs Of Euro Weakness

Large Spanish Bank Fails

The continued financial troubles, in Europe, keep pushing Mortgage-Backed Securities to areas that I couldn’t even have dreamed of, one month ago.  CajaSur, one of Spain’s largest banks, has FAILED and has been taken over by The Bank of Spain, Spain’s Central Bank.

Economic Recovery

The National Association for Business Economics (NABE) has pronounced a few existing figures, to the market, today.  They are claiming that the U.S. Economy will grow at an unanticipated rate of 3.2%, compared to the expected 3.1%.  Some good news on the employment front, was that they expect unemployment to drop to 8.5% by the end of 2011.  These numbers aren’t as hopeful as our government’s numbers, however, they are probably more realistic.  They also pin-pointed the economic recovery date to June of 2009.

US Treasury Auction

Starting tomorrow, the U.S. Treasury will auction off $42 Billion of 2-Year Notes.  Wednesday will see $40 Billion of 5-Year Notes, and Thursday will show another $31 Billion of 7-Year Notes.  These auctions can cause wild market reaction, however, with Europe’s troubles on the wing, who knows what can happen!

It Doesn't Get Much Better Than This!

Locking Advice

With a ton of economic information and the auctions, for this week, I would be comfortable Locking!  With the completely unexpected values of Mortgage-Backed Securities, I would take advantage.

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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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Chico, CA Interest Rates Market Report – Economic Influences – April 20, 2010

Continued Volatility Will Push People To Want To Lock

Fighting For Investors

There are no real economic factors to report today, so Bonds will move in the opposite direction of Stocks while each fight for investors’ attention.  I think Stocks will win, however, later in the week, and into May, expect Stocks to lose and Bonds to rise, lowering interest rates…but only expect that if you have any trust in what I have to say…just puttin’ it out there.  I feel Stocks are primmed for a reversal.  As earnings reports continue to roll out, this and next week, I don’t think the Dow can remain over 11,100.

Watching England

The United Kingdom (UK) Reported a Consumer Price Inflation rise of 3.4%, last month.  The government mandates inflation to read at or below the 2.0% level, similarly to the United States.  England is suffering from a horrible recession, and therefore their government is not prepared to raise their interest rates, to combat inflation.  However, eventually, they will be pressured to do so…and the longer they wait…the harder the inflationary pressures and results will be; pushing rates higher…resulting in a competition with the United States…as the United States will have to raise their rates, to be competitive in a world market.

Treasury Auctions

Tomorrow, the United States’ Government will announce the value of the auctions set forth for Monday through Thursday of next week.  The results of that auction might surprise people, as they have TIPS on Monday, and 2, 5, & 7-Year Treasury Note Auctions on each consecutive day.

Can You Stomach The Ride?

Locking Advice

If you can stomach the ride…and try and be patient…I’d float into the next couple of weeks and see if the Stock Market moves lower, benefiting dollars for Mortgage-Backed Securities and lower rates.

Related Must Reads

Why Be Leery…A Look Into Short Term / Long Term Treasuries

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Chico, CA Interest Rates Market Report – Economic Influences – March 19, 2010

Danny's 2nd Office

YOU DON’T WANT TO MISS THIS EVENT!!!

Scott St. John will be speaking at The Big Room At Sierra Nevada The , 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!

JUST ANNOUNCED!!!!

Joining us on Friday, March 26th is Private Mortgage Insurance Company’s (PMI) own Nancy Early.

Nancy has been with PMI for 8 years and in the Mortgage Industry for 25 years. She supports  Northern and Central California, Northwest Nevada and Hawaii and lives in Roseville, California.  Come learn about some of the structured transactions that MI companies are using to lower buyer’s monthly obligations.  We’re excited to add her to the venue.

We Were Down 19, To Be Par Already Today

Rates Taking Direction From Stocks

There are no market mover announcements effecting interest rates, today, so technical factors will influence Mortgage-Backed Securities’ direction.  And that they have done!  Typical to common markets, Stocks shot off this morning, causing rates to increase, relatively substantially, until, yet another credit rating company announced their concern over the AAA rating of large economies, including the United States.  Fitch Ratings mentioned that the United States has some difficult decisions to make regarding spending.  Thanks for that enlightening information, Fitch.  With that announcement, rates came plummeting back down, and Stocks did, too.

Short For Time Periods...May As Well Lock

Locking Advice

Read yesterday’s advice.  It still stands!

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