Week in review

[Adam in CO]

Monday, March 20th
Treasuries extended gains Monday on lower rate hike expectations. Lackluster consumer spending and tame inflation data last week firmed expectations that the target for the fed fund rate will only rise to 5.0% from 4.5% now. Gains were modest and volume was light amid a dearth of data today. In late trading the 10-year note was up 3/32 to 98-23/32 to yield 4.66%.

Tuesday, March 21st
The producer price index plunged 1.4% in February after a 0.2% gain in January. The decline was led by a 4.7% drop in energy prices although most other components fell as well. Excluding food and energy from the index the core PPI rose 0.3% last month and was up 1.7% over the past twelve months. Wholesale inflation remains contained for now but pipeline pressures are building. Prices remained elevated for intermediate and crude goods but have not yet been passed through to producer prices for finished goods.
In remarks made to the Economic Club of New York last night, Fed Chairman Ben Bernanke, in true economist fashion, made the case for a higher fed funds target rate as well as a case for a lower target rate. The Chairman has jumped right into the fray early on by addressing possible explanations for the "conundrum" i.e. why are long term rates so low? Since June 2004 the Fed has raised the target on the fed funds rate 14 times from 1.0% to 4.5% while the benchmark 10-year Treasury yield has remained range-bound between 3.75% and 4.75%. This has created a flat yield curve which has inverted at times, which is often interpreted as a precursor to slower economic growth. Bernanke said that smaller supplies of long term bonds and high demand from pension funds would require a higher target rate while high foreign savings rates that weaken investment demand would call for a lower target rate.

Wednesday, March 22nd
The MBA mortgage applications index fell 1.6% to 565.0% for the week that ended March 17. The purchase index fell 2.3% on the week while refinance index dipped 0.6%. Both home buying and refinancing activity continue to trend lower as mortgage rates move higher. Housing related activity is expected to slow further in coming months.

Thursday, March 23rd
Home re-sales rebounded in February, posting the first gain in six months as warm weather in January brought out buyers whose transactions closed last month. Existing home sales which include single-family, town homes, condos and co-ops jumped 5.2% in February to a seasonally adjusted annual rate of 6.91 million units. Expectations were pegged for a mild decline. Home price appreciation continues to rise rapidly with median prices up 10.6% from February of a year ago. Economists at NAR expect to see appreciation rates moderate from double digit to single digit growth this year as rates continue to rise.
Long term mortgage rates edged lower for the second week in a row on recent reports that showed inflation remained in check. 30-year fixed rate mortgages averaged 6.32% this week compared to 6.34% last week. 30-year fixed rates averaged 6.01% for the same period one year ago.
Jobless claims fell 11k to 302k for the week that ended March 18. Claims in the prior week were revised higher to 313k, the highest level this year. Regardless, jobless claims filings remain subdued and are consistent with monthly job creation of around 200k.

Friday, March 24th
New home sales fell 10.5% in February to a seasonally adjusted annual rate of 1.080 million units well below consensus estimates. Additionally the previous month's sales were downwardly revised. Demand for new homes is retreating, inventories are climbing and prices are weakening. Deteriorating fundamentals suggest that that the housing activity will continue to trend lower going forward.


Stock Market Close for the Week
Index Latest A Week Ago Change
DJIA 11279.97 11279.65 +0.32 or +0.00%
NASDAQ 2312.82 2306.48 +6.34 or +0.27%



WEEK IN ADVANCE
The FOMC meeting highlights on an economic calendar filled with mostly second tier data releases this week. While a quarter point hike is widely expected there are some uncertainties surrounding this policy meeting. This is Bernanke's first meeting as Chairman which could affect the policy statement. Also, given where the Fed is in the tightening cycle, hopes are for a clear indication of when it might end.
Key Interest Rates Latest 6 Mos Ago 1 Yr Ago
Prime Rate 7.50 6.57 5.57
Fed Discount 5.50 4.57 3.57
Fed Funds 4.69 3.65 2.71
11th District COF 3.347 2.757 2.183
10-Year Note 4.67 4.23 4.59
30-Year Treasury Bond 4.69 4.51 4.84
30-Yr Fixed (FHLMC) 6.32 5.80 6.01
15-Yr Fixed (FHLMC) 5.97 5.37 5.56
1-Yr Adj (FHLMC) 5.41 4.48 4.24
6-Mo Libor (FNMA) 4.9907 4.0817 3.1495
Sources: IBC' s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco

[CO Hummer]

Adam,
Can you bring handouts of the this important information to Moab? I'd hate to miss out.

[Adam in CO]

Originally posted by CO Hummer:
Adam,
Can you bring handouts of the this important information to Moab? I'd hate to miss out.

I will bring you one, but everyone else will just have to miss out.

[KenP]

Originally posted by Adam:
Home price appreciation continues to rise rapidly with median prices up 10.6% from February of a year ago. Economists at NAR expect to see appreciation rates moderate from double digit to single digit growth this year as rates continue to rise.

http://home.hamptonroads.com/stories...343&ran=158902

VIRGINIA BEACH — It’s a real estate market Yogi Berra would understand: Home values are deja vu all over again. For the third year in a row, residents are looking at double-digit increases in their real estate assessments.

This year, it’s 22 percent.

In 2005, housing property-tax assessments jumped 21.7 percent. In 2004, it was an increase of 11.7 percent on average.

Hey Adam, you should move here. Lot's of work for you.

[Adam in CO]

It doesn't make any difference to my business, Ken. I deal with clients in CA who get 30% a year, and some in CO that get no appreciation what-so-ever. I work across the nation now anyway, and people always still need to borrow money, plain and simple.

[CO Hummer]

<bdo dir="rtl">
Monday, March 20th
Treasuries extended gains Monday on lower rate hike expectations. Lackluster consumer spending and tame inflation data last week firmed expectations that the target for the fed fund rate will only rise to 5.0% from 4.5% now. Gains were modest and volume was light amid a dearth of data today. In late trading the 10-year note was up 3/32 to 98-23/32 to yield 4.66%.

Tuesday, March 21st
The producer price index plunged 1.4% in February after a 0.2% gain in January. The decline was led by a 4.7% drop in energy prices although most other components fell as well. Excluding food and energy from the index the core PPI rose 0.3% last month and was up 1.7% over the past twelve months. Wholesale inflation remains contained for now but pipeline pressures are building. Prices remained elevated for intermediate and crude goods but have not yet been passed through to producer prices for finished goods.
In remarks made to the Economic Club of New York last night, Fed Chairman Ben Bernanke, in true economist fashion, made the case for a higher fed funds target rate as well as a case for a lower target rate. The Chairman has jumped right into the fray early on by addressing possible explanations for the "conundrum" i.e. why are long term rates so low? Since June 2004 the Fed has raised the target on the fed funds rate 14 times from 1.0% to 4.5% while the benchmark 10-year Treasury yield has remained range-bound between 3.75% and 4.75%. This has created a flat yield curve which has inverted at times, which is often interpreted as a precursor to slower economic growth. Bernanke said that smaller supplies of long term bonds and high demand from pension funds would require a higher target rate while high foreign savings rates that weaken investment demand would call for a lower target rate.

Wednesday, March 22nd
The MBA mortgage applications index fell 1.6% to 565.0% for the week that ended March 17. The purchase index fell 2.3% on the week while refinance index dipped 0.6%. Both home buying and refinancing activity continue to trend lower as mortgage rates move higher. Housing related activity is expected to slow further in coming months.

Thursday, March 23rd
Home re-sales rebounded in February, posting the first gain in six months as warm weather in January brought out buyers whose transactions closed last month. Existing home sales which include single-family, town homes, condos and co-ops jumped 5.2% in February to a seasonally adjusted annual rate of 6.91 million units. Expectations were pegged for a mild decline. Home price appreciation continues to rise rapidly with median prices up 10.6% from February of a year ago. Economists at NAR expect to see appreciation rates moderate from double digit to single digit growth this year as rates continue to rise.
Long term mortgage rates edged lower for the second week in a row on recent reports that showed inflation remained in check. 30-year fixed rate mortgages averaged 6.32% this week compared to 6.34% last week. 30-year fixed rates averaged 6.01% for the same period one year ago.
Jobless claims fell 11k to 302k for the week that ended March 18. Claims in the prior week were revised higher to 313k, the highest level this year. Regardless, jobless claims filings remain subdued and are consistent with monthly job creation of around 200k.

Friday, March 24th
New home sales fell 10.5% in February to a seasonally adjusted annual rate of 1.080 million units well below consensus estimates. Additionally the previous month's sales were downwardly revised. Demand for new homes is retreating, inventories are climbing and prices are weakening. Deteriorating fundamentals suggest that that the housing activity will continue to trend lower going forward.


Stock Market Close for the Week
Index Latest A Week Ago Change
DJIA 11279.97 11279.65 +0.32 or +0.00%
NASDAQ 2312.82 2306.48 +6.34 or +0.27%



WEEK IN ADVANCE
The FOMC meeting highlights on an economic calendar filled with mostly second tier data releases this week. While a quarter point hike is widely expected there are some uncertainties surrounding this policy meeting. This is Bernanke's first meeting as Chairman which could affect the policy statement. Also, given where the Fed is in the tightening cycle, hopes are for a clear indication of when it might end.
Key Interest Rates Latest 6 Mos Ago 1 Yr Ago
Prime Rate 7.50 6.57 5.57
Fed Discount 5.50 4.57 3.57
Fed Funds 4.69 3.65 2.71
11th District COF 3.347 2.757 2.183
10-Year Note 4.67 4.23 4.59
30-Year Treasury Bond 4.69 4.51 4.84
30-Yr Fixed (FHLMC) 6.32 5.80 6.01
15-Yr Fixed (FHLMC) 5.97 5.37 5.56
1-Yr Adj (FHLMC) 5.41 4.48 4.24
6-Mo Libor (FNMA) 4.9907 4.0817 3.1495
Sources: IBC' s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco

It puts the lotion on it's skin, or it gets the hose again!

</bdo>

[KenP]

Originally posted by Adam in CO:
It doesn't make any difference to my business, Ken. I deal with clients in CA who get 30% a year, and some in CO that get no appreciation what-so-ever. I work across the nation now anyway, and people always still need to borrow money, plain and simple.

It's great to have that ability. You can do loans from here to there... condos to timber mills, 2nds to 3rds. That's awesome.