The Million dollar question as always. What is happening with interest rates??? this is a more difficult question to answer now than it usually is since the markets are not reacting to news as one would expect.
In the past month we have seen a fairly significant run up in interest rates, bouncing from the high fives quickly into the 6's... At one point it looked like we were going to break into the 7's, luckily we have seen things settle down now and rates are slowly settling (just not that noticeably... it has been a slow move for the dust to settle.)
This is a quiet week in the financial reporting world, here is this weeks Calendar:
- Monday 10/20: September LEI, Was in line with expectations and was not a market mover
- Monday 10/20: Bernake spoke at the House Budget committee. This was considered a wild card of the week, but did not cause any hic-ups in the market
- Tuesday and Wednesday: No News... (I told you it was a slow week!)
- Thursday: as usual, the initial Jobless claims from the previous week, expected to be up 9000. not likely to move the market, but is supportive of the more important October number that is due out the beginning of November.
- Friday 10/24: Existing home sales for September, expected up .2%. This is priced into the market. If the number peaks above 1% we may see rates edge higher, and a low number would be supportive of steady to fractionally lower rates
The good news is there was buying in the mortgage markets today and we have seen some significant price movement in mortgages... (price up=yield down in the credit markets). The Market is in a confused state. Third quarter earnings are due from corporations, if these numbers are stronger than expected we may see some buying of stocks which is likely to pull some cash from the credit markets and push rates higher. In addition the markets will keep a close eye on the short term credit markets, if the liquidity crunch shows signs of going away it could signal that the Global injection of cash is working and we will probably see a rally in stocks.
Traditionally we would have see Big gains in mortgages and bonds with the turmoil in the stock market as money flows from stocks to bonds raising prices in bonds/mortgages thus lowering yields. That did not happen in this most recent sell off as banks began to hoard cash as the liquidity crisis peaked. There is money out there, but on a corporate and Bank to bank level credit has dried up. There is still more than enough money to fund mortgages.. But the interest rate environment remains an unsettled one... So at this point the safe bet would be to lock since the swings up are much harsher than the swings down.
Have a wonderful week
Rob
Robert Rauf
Whew! That was a longwinded way to say... GEEZE the market isn't easy to predict right now!
Rob, thanks for the economic update. I heard Rush Limbaugh say that home sales are up 64% in California?!?!?!
I wonder how it compares to other election years fluctuation.
Hi Amanda,
It has very little to do with the election. It is the global liquidity crisis that has the markets confused. and banks are hoarding cash. Once liquidity returns and trading gets back to normal in the credit markets we should see things settle down. The sell offs in the stock market we have seen in the past few weeks have just been the side show to what was happening in the credit markets.
Robert, thank you! I just re-blogged this and posted it on our website as well.
Thank you Mirela!