Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – May 10, 2010

More Volatility Coming From Europe

European Fix

The European Central Bank (ECU) and The International Monetary Fund (IMF) announced that they will be lending 750 Billion Euro ($955 Billion) to European Countries to help stabilize the Euro and restore confidence in European countries’ debts.  They have also agreed to start purchasing the debt, as well as government Bonds, of struggling countries like Spain, Portugal, Ireland, and you guessed it…Greece.

Eerily Similar To US

This strategy sounds awfully familiar to the United States Troubled Asset Relief Program (TARP), and $1.25 Trillion Mortgage-Backed Security Purchase Program.  Seems as though these tactics have, so far, worked for the United States, and therefore, Europe is interested in their temporary relief benefits, as well.  What is alarming is that these programs can be quite inflation causing, when the government unloads this massive debt in the future.  That’s all anyone needs, is hyper-inflation, all over the world…

Treasury Auctions

Tomorrow, the Treasury will start it’s auction of $38 Billion in 3-Year Treasury Notes, followed by Wednesday’s $24 Billion in 10-Year Notes, and finally Thursday’s auction of $16 Billion in 30-Year Treasury Notes.

Europe's Influx of Cash

Locking Advice

Careful Floating, as the Stock Market and Bond Market determine what the IMF and ECB’s influx of funds will do to these markets

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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 29, 2010

Volatility Is Back!

Whatta Week!

There is a lot occurring this week.  Wednesday ends the Fed $1.25 Trillion Government Mortgage-Backed Security Purchase Program.  Once that program ends, expect rates to climb a little.  We expect about .25% in rate, as we have already moved approximately .25% higher after last weeks taste of market nervousness, after a not-so-good auction of Treasuries.  Thursday will provide us with the new Jobless Claims Numbers.  This week, the Fed will announce next weeks auctions of 10-Year TIPS, as well as 3, 10, & 30-Year Treasury Note Auctions.  There are FINALLY investors, sitting on the sidelines, waiting to purchase these securities, however, without the U.S. Government purchasing some of them, we’ll have to see where the returns will have to be (yields), in order to capture investors’ attention.  Which translates to higher interest rates!  Finally, we’ll see the Jobs Report Number on Friday.  Due to market volatility, temporary hiring of census bureau workers, and weather across the country, getting better…these jobs numbers could be hot, so if you’re not locking…better have an itchy lock finger.

Inflation Vacation

The Fed’s Favorite Gauge on Inflation, the Core Personal Consumption Expenditure Index (PCE), came in at a tame 0.0%.  This left the year-over-year PCE at 1.3%.  The Fed desires to keep inflation between 1.0 and 2.0%.

Good Friday

With this Friday, being Good Friday, Stocks and Bond Traders will have a small window, in order to cash in, or buy their investments.  When this occurs, it creates shifts in the market that can’t handle the volume.  So, like a hose that gets smaller and smaller, pressure builds and rushes prices to next levels exponentially.  So, Friday’s gonna be a potential mover of markets.

Carefully Float Into The Day

Floating Advice

Careful floating (and I mean careful), could be the theme of the morning.  However, as mentioned earlier…you’d better have a finger on the lock button…volatility is the name of this game.

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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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