Danny Salas

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

Intial Jobless Claims Around Expectations

So, 550,000 new claims occured this week.  They expected 560,000, so it was better than expected, but still pretty terrible.  The number of continuing claims moved down to 6.09 Million people.  Moving down, you’d think, would be good…however, how many people are just losing their benefits because they’ve been receiving unemployment compensation for too long, and therefore, not eligible any more…I think a lot!

Treasury Note Auction

The verdict is in!  The Auctions went well, again.  AND, foreign appetite for our Treasuries were relatively favorable, as well!  The United States’ yields are a bit higher than the rest of the world, right now, so foreign investment fared well.  But, once other countries start to increase their yields, we’ll need to watch closely and see if that will effect our yields, and therefore interest rates, in the near or distant future. 

Where Yields Are

So, we’ve beaten the 200-Day Moving Average and that has become a nice level of support for interest rates.  Expect to see rates in the range of 4.75%* to 5.0%** if we can stay at current levels.  Going into Friday, things may change a little before the weekend, but the closer to October…rates should be around 4.75%…we’ll see…

 

*= APR 4.965%

**=APR 5.219%

Chico, CA Interest Rates Market Report – Economic Influences – September 3, 2009

I Told Ya So!

In yesterday’s article, I mentioned that it may have been a good time to lock, first thing this morning.  Keep in mind, that I write these article early.  We ended up locking in numerous loan rates, late yesterday.  Here’s why:

Bustin’ Through Trend Lines

We have broken through all of the lines of resistence regarding Trend Lines and where Mortgage-Backed Securities have been.  We, actually, approached the best level we have seen since March.  So, rates were in the 4’s for the afternoon.  When we approached these higher levels (meaning rates are down), we figured we see a sell off, and we did!  So, it was a great opportunity for a lot of buyers. 

What’s happening Now

My advice has been to float for some time now.  We have risen 281 Basis points since August 7, 2009.  That’s almost 3.0% Points, or $6,000 on a $200,000 loan.  Are you glad you listened?  If you haven’t Locked In, or if you’re in a 60 day escrow.  I THINK RATES ARE GOING TO GET EVEN BETTER!  On August 21, even in the face of rising rates, I still indicated that I though rates would be lowering.

Treasury Auctioning More Bonds

That’s right.  The Treasury Department will announce, today, 3, 10, & 30 Year Bond Auctions and how much they’re going to auction.  Keep in mind that the longer the term of the Bond, the more difficult to reap a profit.  If these Auctions don’t fare well, rates will suffer.  However, I think we’ll be fine when the 3rd Quarter Earning’s for Corporations start to come out…starting at the end of this month and going into October. 

Unemployment Figures

The number of Americans filing for unemployment compensation fell by 4,000, however, it’s still higher than expectations, at 570,000.  The other bummer is the four-week average of claims rose to 571,250.  That’s an eight week high.  So, bad for labor, but good for rates.  A nice catch 22. 

Will The Fed Stop Buying MBS?

There is toying with the idea of extending the Mortgage Backed Security Purchase Program AFTER December.  The idea is that the housing industry is too fragile to mess with, right now.  Some Fed members disagree with this idea.  If it’s extended, it should help to keep rates lower, however if they decide not to extend, after October, expect rates to steadily increase to the 6% range by January. 

Locking in?

Ahead of all of the Treasury Auction information and jobs numbers; if you’re in a short escrow…I’d consider locking in.  If you’re beyond 30 to 45 days, I’d wait for a while to lock.  Unemployment will be interesting to see tomorrow morning.  I’ll have an explanation as to the numbers for you…tomorrow.

Chico, CA Interest Rates Market Report – Economic Influences – October 2, 2007

Blah Blah Blah!

A lot of boring statistics to report on this week, so let’s get right in there and attempt to make this interesting.  Durable Goods was reported at -4.9%.  This should be good for bonds, but we’re stuck on the 200-day moving average and bonds are afraid to go either way until Friday’s Job Report is released.  Bonds have touched this level of pricing six of the last seven days.  Gross Domestic Product (GDP) indicated that the US economy is growing at a quick-paced 3.8% rate.  Initial Jobless Claims was reported at 298,000, which was far below expectations.  We’ll have to see if this is setting the stage for Friday’s Jobs Numbers. 

New Home Sales for August was at 795,000.  We expected 830,000 and the inventory of unsold New Homes rose to 8.2 months.  This was a weak report. 

STILL, Foreign Appetite for our bonds…Wow!?

Last week we mentioned that we would be waiting on the news of the Core Personal Consumption Expenditure Index (Core PCE).  This is the Federal Reserves favorite gauge on inflation.  The report came in at expectations, however, the more closely watched year-over-year Core rate was at 1.8%.  This has steadily been declining on a monthly basis.  And, since the Fed wants inflation levels to remain between 1 and 2%, This; coupled with the fact that this last week, two days of US Treasury auctions went quite well.  $18 Billion in Two-year Notes as well as $13 Billion in Five-year Notes!  Foreign appetite for our Bonds was quite strong, and if you remember from previous articles, this is a HUGE factor keeping our interest rates low. 

Interestingly, the Personal Income and Spending report showed that consumers are still willing to spend, spend, spend.  We had the highest monthly growth rate in spending, in three years.  Auto Sales Incentives played a large part to the increase. 

More Subprime Woes…Watch This!!!

We had some more Sub-Prime Mortgage concerns enter the news again, as Citigroup Bank forecasted a significant decline in third-quarter profit. 

So, until Friday’s Jobs Numbers, we feel as though interest rates will remain close to current levels and hover around the 200-day moving average.  Even though the stock market broke record levels and ended the day above 14,000 on Monday, this 200-day moving average is just too strong, acting as a layer of support for some economic information and a layer of resistance for other economic information.  Friday’s Jobs Report will determine which direction we’re headed…so…Until next week…