Good Afternoon,
It feels as if this crisis will never end. Monday and Tuesday’s bond market has opened up considerably. Rates continue to drop due to economic uncertainty and recession fears in Asian and European Markets.
Monday’s only economic data was September’s Leading Economic Indicators (LEI). This index attempts to measure future economic activity, particularly during the next three to six months. It was expected to show a decline of 0.3% but revealed an increase of 0.3%. This means that the economy may strengthen during the next few months when it was expected to worsen. However, offsetting this news was a downward revision to Augusts’ reading. What was previously announced, as a 0.5% drop in August is now believed to be a 0.9% decline. That revision is helping to offset the surprise jump in this month’s reading.
The primary focus was on Chairman Bernanke’s testimony before the House Budget Committee. He updated the committee on the status of the economic recovery, which included a prediction that the economy would be weak for several quarters. He also encouraged another economic stimulus package that may benefit taxpayers. His words are being taken as favorable to bonds, so look for some improvement as the morning goes on. If another stimulus package is given, it may result in further doom for bond markets.
There is no relevant economic data scheduled for Tuesday or Wednesday. This will likely keep bonds fairly calm unless the stock markets are volatile again. If they are volatile again, expect major reprices from major banks.
Overall, I am expecting to see a fairly good week for mortgage rates, assuming the stock markets are not wild again. The most important day was Monday and major banks showed improvements. However, just because it is a light week in terms of economic news, we should not let our guard down as the markets can implode or rally at anytime these days.
Please give me a call if you would like a quick quote or need help with your home finances.
Wed, Oct 22, 2008
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