Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – January 26, 2010

Japan's Woes Are America's Gains

Japan’s FICO…Below 620?

Seems as though the world is concerned with Japan’s credit rating and investors are dumping their Japanese Bonds and moving to the safe-haven of US Bonds and Mortgage-Backed Securities.  This is currently helping interest rates.  Standard and Poor’s warned that Japan’s rating would move to negative.  How did Japan get there?  By creating huge stimulus programs and spending programs to try and help stimulate the economy.  This has created massive debt, for them, and they’ll have to re-pay this debt at high interest rates.  Uh…sound familiar? 

China’s Tightening Credit

So China is tightening their capital reserve requirements, making it more difficult to obtain credit.  This is alarming because China is a HUGE purchaser of US exports, and if their credit standards restrict companies from buying our exports, it could hurt the US economy even more. 

$44 Billion in 2-Year Notes

That’s right. 2-Year Treasury Notes are being auctioned today.  If the auction fares well, with a lot of foreign appetite, we could see rates move slightly lower.  With the problems in Japan, we might see a healthy auction all week.  We will see 2-Year, 5-Year, and 7-Year Note Auctions this week.  With the shorter terms, we may see more of an appetite for these investments. 

Consumer Confidence

Well, this reading came in higher than expected.  This reading kinda cracks me up, because who’s setting that level of where the consumer should be confident or not?  I think we have a long way to go, but I guess that things are looking a little better. 

Locking Advice

With the Fed Meeting coming to fruition tomorrow and the Treasury Auctions occurring this week, we’d better have a finger on that lock button.  But it’s safe to float, into the day.  We may see a lot of volatility this week.  So, buckle up! 

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Chico, CA Interest Rates Market Report – Economic Influences – December 23, 2009

Rates Holding Firm With Poor Economic Data

Economic Reports SHOULD Cool Rates…But…

The Fed’s Favorite Gauge on Inflation, The Core Personal Consumption Expenditure Index (PCE) came in at a year-over-year reading of a calm, cool, 1.4%.  Estimates were set for a 1.5% reading, and remember, inflation is interest rates worst enemy.  The PCE, for the month of November, came in at 0.0%.  Now that’s cool!  Personal Spending was down to a 0.5% reading, when experts expected a 0.7% figure.  Personal Income increased, but at 0.4%, when they expected a 0.5% increase.  Personal Savings remained at a steady 4.7%.  So, what all this points to is that people are making less, spending less, and saving more.  All signs of a cool economy and generally this information would significantly benefit interest rates, however, other things are brewing, in the background.

Treasury Auction Announcement Pausing Markets

The Next Treasury Auction Announcement is due for release today.  Here’s the concern:  With a HUGE auction announcement expected, and people all around the world taking time for the holidays, making it another short week, next week, the auction is expected to disappoint.  So, the speculation is that there will not be much interest for the Treasuries, and therefore, rates will need to be increased to lure interest.  With this instability, if you don’t lock, and watch the market, you’re risking another downward trend.  I might count my blessings and just protect myself, during these nervous moments.

Chico, CA Interest Rates Market Report – Economic Influences – December 7, 2009

After 6 Days Of Higher Rates...We're Finally Floating Again

Rates Getting Better

Finally, after six straight days of increased interest rates, mortgage-backed securities are finally making a move in the other direction, to the benefit of rates. 

Treasury Auction

With no real economic information to influence markets this week, interest rates will likely follow technical factors and results of the Treasury Department’s Auctions, throughout the week.  Tomorrow, $40 Billion in 3-Year Notes will be auctioned.  Wednesday will auction off $21 Billion in 10-Year Notes and Thursday will see $13 Billion in 30-Year Notes. 

Ben Bernanke

Ben Bernanke is speaking at the Economic Club of Washington today.  His statements may be alarming, following Friday’s Jobs and Unemployment Surprises.  There is talk that the Fed may increase the overnight rate sooner than most thought.  This is causing the Dollar to gain value at the cost of stocks, gold, and oil. 

Locking Advice

After the change in trading this morning, we should float into the day and see what happens with the first Treasury Auction tomorrow.

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Chico, CA Interest Rates Market Report – Economic Influences – November 20, 2009

Rates Are Too Low NOT To Lock

No News Day

There are no economic reports to discuss today.  No news means that bonds will likely take the opposite direction of Stocks.  It’s the third consecutive day that Stocks are falling, so Bonds should fall…therefore have higher yields, therefore higher rates.  But it’s a close call, as Bonds have remained at high levels, giving us excellent interest rates this past week.  I would lock, however, as it doesn’t get any better than this.

To See Rates

Just click on the blog and go about half-way down the page, on the left hand side, as you’ll see the US Average Rates…24/7!

Recond Treasury Note Auction

Next week, we’ll see a Record Auction of Treasuries…AGAIN!  I’ll report on this, probably Tuesday!  I’m off to Austin, Texas for the weekend to see a friend get married!  Have an excellent weekend and if you don’t hear from me Monday…you will on Tuesday!

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