Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – October 26, 2009

3rd Quarter Earnings Still Helping Stocks

Record Treasury Auction

Starting today at 10:00 a.m., Pacific Standard Time, the initial rolling out of this week’s record Treasury Auction, will pour into the market.  $123 Billion worth of Treasury Notes will be auctioned throughout this week.  Today, $7 Billion worth of 5-Year Treasury Inflation Protected Securities (TIPS).  The rest of the week shows 2, 5, & 7-Year Treasury Notes that have generally fared well for interest rates.  Particularly due to the fact that they are short term notes, compared to 10 and 30 Year Treasury Notes.

3rd Quarter Earnings

They are still helping Stocks by reporting better-than-expected numbers.  Verizon reported better earnings, however, I’m still not convinced that cutting the bottom line is true economic growth.  We’ll have to see how this plays out, in the future.

Wall Street Journal Prepares For Higher Interest Rates

On November 4-5, 2009, The Federal Open Market Committee (FOMC) will have their next meeting.  On the 5th, it is expected that they will report on how, and when, they will start to increase the overnight rate.  With their Mortgage-Backed Securities Purchase Program scheduled to end on March 30, 2010, you can bet on higher interest rates…period.  Are your buyer’s prepared?

Economic Activity

This week is full of economic activity, however, today is dead.  So, Stocks will play a large roll regarding where interest rates will head.  With 3rd Quarter Earnings continuing to surprise, and not much support left for rates, we’ll be watching the lock button closely, after Friday’s losses.
Related Must Reads

Why Be Leery Paragraph. Why short term bonds are less risky than longer term bonds
To Put It Simply, Stocks Are Overbought…Will This Trickle to 4th Quarter?

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Chico, CA Interest Rates Market Report – Economic Influences – September 28, 2009

It's Yom Kippur!

It’s Yom Kippur

Congratulations to our Jewish friends that are celebrating this holiday, today.  Generally, holidays are light trading days, and light trading days can be extremely volitile.  So, I hate to be so repetative, however, it’s a good idea to keep your finger on the “lock” button.

Slow Day

Not much economic activity to report on today, however, the rest of the week will be full of information.  One important note is that the Fed will be making another annoucement regarding the Treasury Auctions.  The annoucements have hurt interest rates, in the past.  However, the actual auctions themselves, have been quite promissing for interest rates, as of late.  It will be interesting to see how the market plays out, after the Feds annoucement last week, regarding the winding down of the Mortgage-Backed Securities Purchase Program, scheduled to occur the first quarter of 2010.

Related Must Reads

August 26, 2009 – Read about Treasury Auctions
The Start of The Auctions in 2008

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Chico, CA Interest Rates Market Report – Economic Influences – September 22, 2009

Rates are Bouncing Back & Forth

Fed Statement Nervousness

Mortgage-Backed Securities are bouncing back and forth between the floor of support, at the 25-Day Moving Average, and the ceiling of resistance, at the 200-Day Moving Average.  Today’s nervousness has to do with an auction of $43 Billion of 2-Year Notes.  While these auctions have fared well, as of late, with the Fed meeting yesterday and today, and publically speaking tomorrow…investors may be hesitant to purchase bonds until they know a little more about what the Fed’s position on the economy is. 

Signs Of The Recession Turning

The private Conference Board reported their Index of Leading Economic Indicators was up for the fifth month in a row.  This is the first steady increase of this index since March of 2009.  Interestingly enough, this indicator has been accurate in all recessions since 1960.  So, if history sets a precedent, we are, currently, at the bottom of the recession. 

Housing Prices

The Federal Housing Finance Agency released their “Housing Price Index” for July.  The bad news was the housing prices, nationally, had declined by 4.2%, however, the good news is that housing prices actually increased 0.3% from June to July.  This supports Warren Buffet and Ben Bernanke’s Statements made this past month, that we’re moving out of the housing slump and out of the recession.

Why Buy Now

Rates are at historic lows.  Home buyers will wish that they would have acted now, before the Government runs out of its purchasing power of Mortgage Backed Securities.  The Fed has purchased $870 Billion of the $1.25 Trillion it has promised to the program.  Not to mention that the program is scheduled to end at the end of this year.  When that purchasing power is gone, rates will go up.  So, tell your friends, clients, buyers, refinance opportunities, to make their move…and soon.

Locking Advice

We’re in a float mode, however, again, watching the market very delicately.

Chico, CA Interest Rates Market Report – Economic Influences – September 21, 2009

A Lot Happening This Week

War…What Is It Good For…

Absolutely Nothing…Yeah, I’ll say it again; Absolutely Nothing!  Uh, except lower interest rates.  Israel and Iran and feuding, and if war breaks out between the two countries, investors will move their money from stocks, to a safe-haven, like bonds.  But, I’d rather see peace, than lower interest rates.  Just so ya know…

3rd Quarter Ending

So, the 3rd Quarter is ending next week.  This is the opportunity that I have been talking about for quite some time.  I don’t think Stocks will look too Rosy.  Also, it’s a time when portfolio managers will sell off their poor Stocks to buy trendy, hot good stocks.  This is known as “window dressing.”  Again, that should be good for interest rates. 

Treasury Auction

Wow!  $112 Billion Treasury Auctions starting Tuesday.  2, 5, & 7-Year notes will be auctioned.  We’ve seen a healthy appetite for these recently, however, when will the well dry up?  It will be interesting to see if foreign appetite is still apparent.  If it is, coupled with the above information on Stocks, rates should really look good.  If not…the opposite could happen.

Fed Meeting

Good ‘Ole Ben Bernanke and his chronies are meeting this week.  Expect Wednesday’s comments to the public to have some weight on it, and that could move markets too. 

Floating

We’ll continue to float today.  This week could be a huge opportunity for interest rates…keep checkin’ in!