Danny Salas

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

We Twittered On November 30, to Lock

Employment Looking Better

Unemployment Claims came in at 457,000 as opposed to the 480,000 that was expected.  This is the lowest reading in 14 months!  We really need to see new claims below 400,000 before we get excited about the labor market even coming close to correcting itself.  Keep in mind, that with the Tax Credit Extension, unemployment benefits were extended, as well, for those who had previously lost their ability to continue their claims. So, expect this number to be difficult to reach the below 400,000 level for some time.

Ben Bernanke Up for Re-Election

President Obama recommended Ben Bernanke for another four year term, as our Fed President, back in August.  He’ll probably get voted back in, however, what will really be interesting is if the government wants to take over the Federal Reserve.

Obama’s Job Forum

The White house is hosting a job forum of CEO’s, economists, and other leaders to determine what can be done to help the job market.  And Speaking of Jobs, the White House Commented that they think that tomorrow’s Jobs Report and Unemployment Numbers will see a slight increase.  Economists are expected a loss of 125,000 jobs.  I think it might come in a little better than that, and as far as the unemployment rate goes…even if it’s worse, I don’t think we’ll see the interest rate lows that we’ve enjoyed this past month.  I think we take advantage of what’s available and lock in before tomorrow’s Jobs Numbers.

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Chico, CA Interest Rates Market Report – Economic Influences – November 12, 2009

25-40-50-Day Moving Averages

As I write, Mortgage-Backed Securities (MBS) are sitting directly on the 25, 40, & 50-Day Moving Averages.  All three averages are sitting almost at exactly the same place.  We, actually, dipped below those lines, however, have rebounded and are awaiting the 30-Year Treasury Auction report. 

Auction Results Will Effect Rates

The 30-Year Treasury Auction should not fare too well.  At the cost of sounding pessimistic, it’s just difficult to have foreign investors like a longer term, when investing in these bonds.  However, to be fair, the 3-Year and 10-Year Treasury Auctions have fared well this week.  This is a somewhat encouraging sign. 

Jobless Claims Getting Better…BUT…

The other news pushing bonds and MBS down is the fact the government reported the number of workers filing new claims for jobless benefits dropped by 12,000 last week.  The four-week moving average of new claims, considered a better gauge of underlying trends, fell by 4,500 for the period.  During the latest week for which data is available (week ended October 24^th) enrollment in extended benefits programs decreased by 28,240 while the Emergency Unemployment Compensation program enrollment rose by 22,400 (somewhat offsetting the decrease).  So, while the media continues to paint a brighter picture of the labor market, I don’t see it.  Particularly coupled with the fact that the new legislation signed by Obama will extend unemployment benefits for the people not working full time.  This will definitely change the outlook of the continuing claims numbers.  We’ll keep an eye on this…

Locking

I think its prudent to lock.  Even with the level of support we have directly under us…I don’t see the 30-Year Treasury Auction surprising us, and the Labor Statistics are being received as joyous information by the media.  Stocks will benefit at the expense of bonds. 

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