Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – March 8, 2010

Careful Floating Into The Morning

Greece IV

It looks like the European Union (EU) will reluctantly bail out Greece.  The uncertainty, in Greece, has helped Mortgage-Backed Securities, as of late, however, the recent developments will definitely change the playing field, and put pressure on interest rates.  With no real economic reports, being released, until Thursday, we’ll have to watch the Stock Market and other technical factors to get a glimpse of where rates will head.

This Week’s Auctions

Tomorrow, $40 Billion in 3-Year Notes will be auctioned.  $21 Billion in 10-Year Notes followed by $13 Billion in 30-Year Notes will finish the week.

Careful Floating Into The Morning

Locking Advice

I like the idea of floating into the day and watching bonds, closely.  We may have to switch to a lock mode.  Earlier this morning, we were down 12 Basis Points, however, currently, we’re down 3.  Not too much movement, but enough to hold steady and see if rates and bond values can remain above the 100-Day Moving Average.

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Chico, CA Interest Rates Market Report – Economic Influences – March 5, 2010

Nailed It!

Right on the Button!  We watched rates, yesterday, until the afternoon.  Gained 19 basis points…had a re-price for the better two times, for a total of .25% and Locked!  On a $200,000 loan that would save a client $500 in fees, to get into a loan.  Not to mention that it transitioned us into a lower interest rate, by .125%.  So, again, saving clients over $5,400 in monthly payments, through the life of a 30 year fixed rate loan.  That’s why we watch the market, so closely.  I LOVE saving clients money!

Unemployment Rate Holds Steady

The Labor Department reported that the U.S. Economy only lost 36,000 jobs, last month.  They expected well over 50,000 loses, however, the bigger surprise was that the unemployment rate held at 9.7%.  That was surprising, as there are so many claims for Emergency Unemployment Benefits.  So, we’ve dropped over 50 basis points, this morning.  That’s $1,000, on a $200,000 loan.  A lot of money, for a first time home buyer!

Turning To A Lock Mode

Locking Advice

I’d Lock

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Chico, CA Interest Rates Market Report – Economic Influences – March 4, 2010

We've Already Been Down This Morning...

Jobless Claims

The numbers rolled in at 469,000 new claims.  Wow!  But, that’s what the market was prepared for, go figure!  Continuing Claims were 146,000 lower than last month, but 5.7 Million people are claiming Emergency Unemployment Compensation, so, their numbers aren’t even calculated into the “government numbers,” being reported to monitor how the economy is truly doing…so, it sort of fakes out the market and media, into a false sense of security.  Maybe faking out Senator Bunning, too!

< 60 Days To Get Into Contract

Pending Home Sales were reported at a -7.6% reading for January.  That’s a little disapp0inting, considering we were expecting a 1.0% increase.  The National Association of Realtors contributed this loss to the horribly bad weather. Remember that 49 of the 50 States had snow one day, in January.  You’d think more buyers would be jumping off the fence, to receive the tax credit for home purchasing.  Remember, there’s more than one opportunity!  Think of it…you have less than 60 days to be get qualified for a loan, find an agent you’re comfortable with, look for houses, if you find the one you love…what if it’s a short sale, or a bank owned property that could take more than four weeks to get an answer from, go through the loan process and close by June 30, 2010, in order to receive your tax credit!  Fence sitters…get off your fence!

Good News on Job Front

Well, sort of good news.  Productivity rose by 6.9%, the fourth quarter of 2009.  This, compared to 6.2% the previous quarter.  For the  2009 year, Productivity rose by 3.8%.  Unit Labor Costs were slashed by 5.9%, the fourth quarter and 1.7% for the 2009 year.  So, with productiviy increasing, and labor costs decreasing, it’s generally a sign that businesses will start hiring.  However, be patient, as we’ve written before, businesses are getting a lot more out of the employee than they used to.  So, they’ll squeeze what they can, out of the employee, before adding on more costs and hiring.

Take Advantage Of Where We Are...Today

Locking Advice

So, Unemployment Numbers will be released tomorrow.  It should be depressing!  However, as I have been stating, there’s not much further bond values can rise (and therefore, lower interest rates).  We have the temporary hiring of the census bureau, we already have a market that expects an ugly number, so anything better than expectations can have a temporary effect on rates.  I think that the risks are too great, to not take advantage of today’s rates.  I’d wait for today’s best pricing, then I’d lock!

Related Must Reads

The Real Jobs Numbers
Senate Approved Tax Credit Extension

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Chico, CA Interest Rates Market Report – Economic Influences – March 3, 2010

We're Above Support Currently

ADP Reports Losses

American Data Processing, which is America’s largest payroll company, reported that we lost 20,000 jobs, in February.  That’s in the Private Sector alone.  The government, generally, hires workers, so that number could be skewed a bit, however, keep in mind that we’re currently having the census bureau hire many Americans to help take statistics all over the country.  That will have an effect on the jobs numbers, too. The revised jobs numbers, for January, were even more alarming.  They revised the 22,000 jobs lost, to a 60,000 jobs lost number.

Yesterday’s Losses

We were in a lock pattern, the last couple of days, and yesterday was a wild roller coaster ride.  We maneuvered below the 100-Day Moving Average, bounced off of the 25-Day Moving Average and ended the day, right where we started.  So, to avoid a heart-attack, locking was more relaxing.  Today, we’ve moved right back down to the 100-Day Moving Average, but so far, we’ve avoided piercing that level of support.

Obama’s Health Care Statement

President Obama is scheduled to talk, today, about the stale-mate that’s currently occurring with Senator Bunning’s consistent objections to the $10 Billion Obama Health Care Plan.  He may indicate that he will file to move ahead with a reconciliation plan that only needs 51 votes, as opposed to 60 votes, in the Senate, for approval.  Bonds may not like these statements, as the United States deficit will have to increase, in order to financial support a bill, like this one.

Signs Point To Floating...However...

Locking Advice

With the Jobs Numbers slated for Friday, this is a tough call.  We have support, at the 100-Day Moving Average, and it’s going to be tough to break through the highs (or lows, for interest rates) of the last six months, so, I would lock.  Even though things could get better, it’s only a chance, and if they do get better, I think it will be for a short time, as investors will realize this, and cash in on their earnings.

Related Must Reads

ADP is O-F-F: A History of Non-Reliable Information
How Moving Averages Effect Interest Rates

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