Many of you may have noticed that worldwide equity markets suffered big losses in the past day or two. Most of this is due to thoughts the US economy is heading towards recession and also an unfavorable view of President Bush’s economic bail out plan. As a result, the Fed cut the Fed Funds rate this am by ¾%. This was the first ¾% reduction in approx 23 years and also the first time since 9/11 that the Fed has made an emergency rate cut.
Interestingly, as we know, the Fed is scheduled to meet on the 30th of Jan and futures market traders are still pricing in a 100% chance of another ½% rate cut at that meeting.
The stock market and bond markets are very volatile at the moment; I will let you know of any further significant changes.
Tuesday, January 22, 2008
Thursday, January 10, 2008
The week in review for Jan 7
(from mortgagemarketdaily.com)
Last Week in Review
"THE BEST WAY TO APPRECIATE YOUR JOB IS TO IMAGINE YOURSELF WITHOUT ONE." Oscar Wilde And unfortunately, last Friday's Jobs Report indicated that many more Americans than expected are not just imagining themselves without a job, they truly are without a job.
The Unemployment Rate jumped up to 5.0% from 4.7%, and new job growth in December was reported at a paltry 18,000 jobs...with private-sector job growth actually falling by 13,000, the largest private sector drop in more than four years. And here's an interesting note - Hourly Earnings actually moved higher than expected. While this seems somewhat contradictory to a slowing jobs number, perhaps it means that employers are attempting to save money by paying more dollars to fewer workers, rather than hiring more staff.
Many experts feel that even the lower than expected number of jobs created is an overstatement, due to averaging that is used by the Labor department, and that this number will eventually be revised lower. Job growth is a leading indicator of economic health, and the latest read points to a strong possibility of a recession in 2008.
Overall, the Jobs Report was much weaker than anticipated - and remembering that negative economic news is generally bad for the Stock market, but good for the Bond market - Bonds enjoyed some nice gains, sending home loan rates about .25% lower throughout the week.
RIGHT UNDER YOUR NOSE, YOU MIGHT BE HELPING LARGE FINANCIAL INSTITUTIONS COVER THEIR LOSSES FROM THE PRESENT FINANCIAL MARKET TURMOIL...FIND OUT HOW TO PROTECT YOURSELF, IN THIS WEEK'S MORTGAGE MARKET VIEW!
Forecast for the Week
The economic event calendar slows down significantly this week, with only one meaningful report scheduled to arrive on Thursday - Initial Jobless Claims, giving a look at the most recent reports of filings for unemployment. Considering the recent stats on higher unemployment levels, this report will be given special attention.
And notice how prices have recently separated far from their 25-day Moving Average, shown as a green line. Many securities tend to gravitate back towards their 25-day MA once they stray too far above or below it. This is called the "Leash Effect". Imagine a puppy on a leash straying too far...its owner will tug on the leash to bring the puppy back. Mortgage Bonds have historically shown a similar reaction; once prices stray far from their 25-day MA, they tend to snap back towards it. Notice how this happened about a month ago in the chart below. It is likely that Bonds will again be reined in by the "Leash Effect" in the week ahead, which suggests a bit higher rates.
Bond prices have run up higher in recent days, and in turn, home loan rates have improved. In fact, they've improved so much, that they are somewhat ripe for a reversal. In the absence of any unexpected news - don't be surprised to see home loan rates worsen a bit in the coming week.
Last Week in Review
"THE BEST WAY TO APPRECIATE YOUR JOB IS TO IMAGINE YOURSELF WITHOUT ONE." Oscar Wilde And unfortunately, last Friday's Jobs Report indicated that many more Americans than expected are not just imagining themselves without a job, they truly are without a job.
The Unemployment Rate jumped up to 5.0% from 4.7%, and new job growth in December was reported at a paltry 18,000 jobs...with private-sector job growth actually falling by 13,000, the largest private sector drop in more than four years. And here's an interesting note - Hourly Earnings actually moved higher than expected. While this seems somewhat contradictory to a slowing jobs number, perhaps it means that employers are attempting to save money by paying more dollars to fewer workers, rather than hiring more staff.
Many experts feel that even the lower than expected number of jobs created is an overstatement, due to averaging that is used by the Labor department, and that this number will eventually be revised lower. Job growth is a leading indicator of economic health, and the latest read points to a strong possibility of a recession in 2008.
Overall, the Jobs Report was much weaker than anticipated - and remembering that negative economic news is generally bad for the Stock market, but good for the Bond market - Bonds enjoyed some nice gains, sending home loan rates about .25% lower throughout the week.
RIGHT UNDER YOUR NOSE, YOU MIGHT BE HELPING LARGE FINANCIAL INSTITUTIONS COVER THEIR LOSSES FROM THE PRESENT FINANCIAL MARKET TURMOIL...FIND OUT HOW TO PROTECT YOURSELF, IN THIS WEEK'S MORTGAGE MARKET VIEW!
Forecast for the Week
The economic event calendar slows down significantly this week, with only one meaningful report scheduled to arrive on Thursday - Initial Jobless Claims, giving a look at the most recent reports of filings for unemployment. Considering the recent stats on higher unemployment levels, this report will be given special attention.
And notice how prices have recently separated far from their 25-day Moving Average, shown as a green line. Many securities tend to gravitate back towards their 25-day MA once they stray too far above or below it. This is called the "Leash Effect". Imagine a puppy on a leash straying too far...its owner will tug on the leash to bring the puppy back. Mortgage Bonds have historically shown a similar reaction; once prices stray far from their 25-day MA, they tend to snap back towards it. Notice how this happened about a month ago in the chart below. It is likely that Bonds will again be reined in by the "Leash Effect" in the week ahead, which suggests a bit higher rates.
Bond prices have run up higher in recent days, and in turn, home loan rates have improved. In fact, they've improved so much, that they are somewhat ripe for a reversal. In the absence of any unexpected news - don't be surprised to see home loan rates worsen a bit in the coming week.
Wednesday, January 2, 2008
The week in review for December 31st
(from mortgagemarketguide.com)
"YOUTH IS WHEN YOU'RE ALLOWED TO STAY UP LATE ON NEW YEAR'S EVE. MIDDLE AGE IS WHEN YOU'RE FORCED TO." Bill Vaughn And battle weary Traders may be looking to hang it up early for the night, after enduring days and weeks on end of extreme market volatility. And last week was no exception, as the assassination of former Pakistani Prime Minister and current opposition leader Benazir Bhutto brought on even more volatile moves in the markets.
There is global concern over the possibility that the Pakistani government may become destabilized - and if this should happen, which political faction may end up in power with control over its nuclear arsenal. This is a very good example of how unforeseen political events from around the world can impact home loan rates, as Bonds trade in response to the headlines. Following the assassination, Bond prices moved higher upon the increased demand for the "safe haven" found in Bonds, and home loan rates improved by about .125% for the week overall.
BRING THE CHAMPAGNE...AND THESE FASCINATING BITS OF NEW YEARS TRIVIA...TO YOUR HOLIDAY CELEBRATIONS, BY READING THIS WEEK'S MORTGAGE MARKET VIEW. AND MOST IMPORTANTLY - I WISH YOU AND YOURS A VERY HAPPY AND HEALTHY 2008!
Forecast for the Week
The financial markets will be closed early on Monday, and fully closed on Tuesday in observance of the New Year. But the balance of the week contains several important economic releases, including the "Minutes" from the Federal Reserve's last policy meeting. Since not all voting members agreed with the decision to cut the Fed Funds Rate by .25%, the discussion between voting and non-voting members could be fairly interesting, and provide insight as to the Fed's moves in the New Year.
Remembering that when Bond pricing moves higher, home loan rates move lower - and vice versa - the chart below shows how volatile the action has been in recent days and weeks. This is why we feel it is so important for us to be well informed, and in turn, keep you advised. The climate has been volatile both for rates and the mortgage industry at large - so we know that it is more important than ever that you, your friends, family members, clients and neighbors have an association with a real professional who is "in the know". If you know anyone who would like to receive this informative newsletter - just let me know, and I will add them free of charge. And as this New Year opens, please contact me if I can be of service to you at this time.
"YOUTH IS WHEN YOU'RE ALLOWED TO STAY UP LATE ON NEW YEAR'S EVE. MIDDLE AGE IS WHEN YOU'RE FORCED TO." Bill Vaughn And battle weary Traders may be looking to hang it up early for the night, after enduring days and weeks on end of extreme market volatility. And last week was no exception, as the assassination of former Pakistani Prime Minister and current opposition leader Benazir Bhutto brought on even more volatile moves in the markets.
There is global concern over the possibility that the Pakistani government may become destabilized - and if this should happen, which political faction may end up in power with control over its nuclear arsenal. This is a very good example of how unforeseen political events from around the world can impact home loan rates, as Bonds trade in response to the headlines. Following the assassination, Bond prices moved higher upon the increased demand for the "safe haven" found in Bonds, and home loan rates improved by about .125% for the week overall.
BRING THE CHAMPAGNE...AND THESE FASCINATING BITS OF NEW YEARS TRIVIA...TO YOUR HOLIDAY CELEBRATIONS, BY READING THIS WEEK'S MORTGAGE MARKET VIEW. AND MOST IMPORTANTLY - I WISH YOU AND YOURS A VERY HAPPY AND HEALTHY 2008!
Forecast for the Week
The financial markets will be closed early on Monday, and fully closed on Tuesday in observance of the New Year. But the balance of the week contains several important economic releases, including the "Minutes" from the Federal Reserve's last policy meeting. Since not all voting members agreed with the decision to cut the Fed Funds Rate by .25%, the discussion between voting and non-voting members could be fairly interesting, and provide insight as to the Fed's moves in the New Year.
Remembering that when Bond pricing moves higher, home loan rates move lower - and vice versa - the chart below shows how volatile the action has been in recent days and weeks. This is why we feel it is so important for us to be well informed, and in turn, keep you advised. The climate has been volatile both for rates and the mortgage industry at large - so we know that it is more important than ever that you, your friends, family members, clients and neighbors have an association with a real professional who is "in the know". If you know anyone who would like to receive this informative newsletter - just let me know, and I will add them free of charge. And as this New Year opens, please contact me if I can be of service to you at this time.
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