Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – December 15, 2009

Inflation Readings High On PPI

Inflation Rearing Its Ugly Head

The Producer Price Index (PPI) was significantly higher than expected, at 1.8%, when experts expected a 0.8% reading.  Energy prices was the main reason, however, even after taking out the energy prices, the Core PPI stood at 0.5%.  That’s the highest reading since October of 2008.  This was enough to scare the markets into Bond Values plummeting, and therefore their yields and interest rates increasing about .375% Point compared to pricing, yesterday.  We were able to bounce back, a little bit, so we’ll have to see how the market absorbs this latest reading on inflation.  There’s no real inflation concern, with the exception of this report, so hang in there…let’s see the Consumer Price Index (CPI) reading before we jump to any conclusions…

Open Market Committee Meeting

The Fed starts its two day meeting today.  It will be interesting to see how they read today’s inflation numbers, coupled with tomorrow’s release of the Consumer Price Index.  Tomorrow at 2:15 Eastern, 11:15 a.m., our time, the Fed will speak about what their meeting entailed.  Keep in mind that investors will be listening to every word, trying to determine what their feeling is on the future of the economy.  Rates can move on speculation regarding what the market feel the fed will say, so hold your hat down!

Manufacturing Down – Production & Utilization Up

Something that’s not mentioned too often in my column is the New York Empire State Index.  It’s a reading on manufacturing, and it was the lowest monthly decline ever!  However, Industrial Production and Capacity Utilization were up!  So, given the fact that we’re manufacturing less, production and utilizing employee output is up, therefore, there is room for companies before they start hiring new people.

Locking Advice

At this point, we may as well hope that Bonds can remain above the 100 & 200-Day Moving Averages.  If we fall too far below, things could get ugly, however, let’s hope that inflation, on the consumer level, is not too much of a concern, tomorrow.  I told you it would be a bumpy ride…

What To Subscribe To:

Get Our Twitter Updates
Get Our Blog Blast
Connect With Us On Facebook

Chico, CA Interest Rates Market Report – Economic Influences – December 14, 2009

Bond Market Holding Steady

Headline News More Significant Than Economic News

A lot is happening in the headlines, this morning, but no economic reports until the rest of the week.  First, Citi has agreed to repay $20 Billion of the $45 Billion Bail-out funds that they received.  Dubai has been given $10 Billion by Abu Dhabi to assure the world that Dubai World has the ability to repay its debts.  This has given a feeling of stability to European Banks and Asian Markets.  Exxon has agreed to buy Energy Entity XTO, pushing the energy sector up in value, too.  Rates are remaining stable, even in the face of all of this relatively good economic information traveling the globe this morning.

HR 4173 Passes House

The Wall Street Reform Act and Consumer Protection Act passed Congress and is being sent to the Senate, today.  This bill would allow the Government Accountability Office to audit The Federal Reserves monetary policy decisions.  One the one had, you’d think that after the Global Credit Crisis, that this would be a good thing.  Perhaps helping regulate an industry that, obviously, got completely out-of-hand.  On the other hand, many feel as though government involvement in monetary policy can lead to higher inflation and higher interest rates.  This is what history has shown us, anyway.  But, we’ve never had a global meltdown like the one we experienced after, basically, no regulation in monetary policy was present.

The CFPA

This bill also proposes a new governmental agency to monitor and regulate the housing and credit industries.  The Consumer Financial Protection Agency.  Apparently, this Agency is structured to release more credit and lending regulations to states and smaller authorities, according to the Mortgage Banker’s Association.  ”Regrettably, the House moved forward and passed a bill that could adversely impact borrowers and lenders alike.  By not creating a uniform, national regulatory standard, the bill continues the conflicting and confusing patchwork of state and local laws that result in increased costs for borrowers,”  stated Chairman Robert E. Story.  We’ll have to see how this rolls out.

Locking Advice

We’ll have to cautiously float into the week and see if this week’s economic information can negate some of the losses from last week.

Related Must Reads

Dubai World Crisis with Other Links

What To Subscribe To:

Get Our Twitter Updates
Get Our Blog Blast
Connect With Us On Facebook

Chico, CA Interest Rates Market Report – Economic Influences – December 10, 2009

Rates Moving With Employment Numbers

Auctions Not Doing Well

Yesterday saw rates nervously move up and down, as investors waited for the results of the 10-Year Treasury Auction before committing to where to move their funds.  In the end, it wasn’t a rosy picture for Mortgage-Backed Securities (MBS) and the day ended in negative territory.  This morning is shaping out to be the same story, with MBS in negative territory and we’ve moved below the 25-Day Moving Average.  The next layer of support is about 20 points lower than we currently are…the 50-Day Moving Average.  With the 30-Year Treasury Auction occurring today…I’m nervous as well. 

Jobless Claims Higher Than Expected

Initial Jobless Claims came in at 474,000, however 455,000 losses were expected.  Normally, this would be good for interest rates, however, since the Continuing Claims fell to 5.16 Million, and that being the lowest Continuing Claims numbers since February, the market actually took that as a positive, as opposed to a negative…and therefore, rates are reacting negatively.  Careful to assess, though.  Keep in mind that this time of year there are numerous part-time or temporary positions that are filled, somewhat skewing these figures. 

30 Day Prognostication

Over the course of the next thirty days, expect the market to be very choppy.  Let’s give one example.  These Unemployment Numbers, reported Friday, were healthier than expected.  Today’s claims were higher than expected, but averaging the last four weeks together shows increases in employment.  Don’t be surprised that if, after the holidays, these numbers start to dissapate, somewhat.  This information will lead to a bumpy ride, probably into the second quarter of 2010.  So, you’ll have ups and downs, and when you have a slight dip, you’ll have advantages on when to lock.  Working with a banker that understands these rides is imperative to happy buyers.  Make sure your banker is prepared, or if you’d like to work with my office, I am available always, and have some of the lowest rates in the Western United States. 

Locking

May as well ride out the day and see if we’ll have to lock, if MBS move below the 50-Day Average.  Since we opened 22 Points below yesterday’s close, and only have 20 points to go to the 50-Day Moving Average…let’s be nervous together…

 Related Must Reads

Bonds, Moving Averages, And Trends Lines
$1.25 Trillion Question: Where Will Rates Go AFTER March of 2010?

What To Subscribe To:

Get Our Twitter Updates
Get Our Blog Blast
Connect With Us On Facebook

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

Treasury Auction Fared Well!

Dubai And Greece Facing Financial Woes

Seems as though Dubai may be having more troubles than just their privately held company Dubai World protrayed.  Also, Greece’s credit rating has been lowered and they’re in more financial troubles and having a greater hardship, than previous recognized.  These surprises lead to a global panic attack regarding Stock Holders funnelling their funds into the safe-haven of U.S. Bonds.  This helped rates, but should only be short lived. 

3-Year Treasury Auction

Yesterday’s Auction of $40 Billion in 3-Year Notes fared fairly fair.  The above mentioned turmoil helped a bit, and hopefully, will carry into today and tomorrow’s auctions, as well. 

TARP Extended

The Obama Administration annouced that they are going to extend the Troubled Asset Relief Program (TARP) until next October.  The program will be used to help homeowners facing foreclosure and help with credit to banks that lend to small businesses.  Small business is a huge employer, so this should help the economy. 

Locking Advice

Again, it doesn’t get much better than we’re currently seeing.  If you choose to float, better do so cautiously.  So, locking might be prudent, however, keep in mind that the Treasury Auctions might bring rates slightly lower.  Get Twitter updates on when good times to lock are!  Sign up below…

 

Related Must Reads

Dubia’s Initial Troubles
Dubai Clarification
Why Be Leery…Will 10-Year And 30-Year Treasury Auctions Fare As Well…A Look Into The Risks

What To Subscribe To:

Get Our Twitter Updates
Get Our Blog Blast
Connect With Us On Facebook