Posts Tagged ‘Cyprus Crisis’

Market recap for week ending 03/29/2013

Posted on: March 29th, 2013 by Fred Bohman No Comments

The markets are closed today for Easter, but at the time I am writing this, mortgage interest rates are less than 1/8th of a percent lower than they were last Friday.

The Euro zone continued to shake up the markets this week. During the last weekend Cyprus was able to secure a bail out by raiding banks accounts with balances over 100k from the 2 banks that were in trouble. Most of the large account holders were Russian nationals that used Cyprus as a tax haven. The banks opened up yesterday after a 2 week bank freeze. The banks are open but there is a 300 Euro a day withdrawal limit to prevent a bank rush.

Even though it seems that the Cyprus Bank crisis has been avoided for now investors fear that similar problems are brewing in Spain, Portugal, and Italy which has sent those countries bonds tumbling. With money flowing out of risky government bonds it is going into “safe” investment such as US bonds causing US interest rates to fall.

There has been much negative news over in Europe, but the US stock market continues to set new highs. Many people are calling for a pull back since the stock market seems overbought, but every time it starts selling off it quickly rebounds. This week we saw a slight dip in rates, but unless we start seeing enough negative economic news here in the US to slow down the stock market I think the long term outlook for rates is still higher.

Market recap for week ending 03/21/2013

Posted on: March 22nd, 2013 by Fred Bohman No Comments

At the time I am writing this, mortgage interest rates are less than 1/8th of a percent lower than they were last Friday.

The Euro zone is back center stage in the news this week. On Monday it was announced that Cyprus has asked from more emergency funding from the European Central Bank (ECB). The ECB is requiring that Cyprus comes up with 10B Euros before providing any more funding. Since Cyprus does not have the 10B Euros they closed all banks and proposed a plan where they would raid all bank accounts at a certain percentage of the total account balance. Obviously the people of Cyprus did not like this strategy very much and started rioting. The banks are still closed but no accounts have been raided as of yet. Yesterday the ECB officials told Cyprus that they have till Monday to raise the money or the deal is off.

The crisis in Cyprus caused a big flight to safety rally on Monday. When investors get nervous about uneasy situations they tend to move their money into safe investments like US bonds. When money flows into bonds mortgage rates drop. On Tuesday and Wednesday we saw rates come back up a little but then we saw another drop on Thursday. The key thing to keep an eye out for is if the crisis will spread past Cyprus or be contained there. If the crisis starts spreading past Cyprus or worsens there then rates should drop further. On the flip side if the crisis is resolved looks for rates to go back up.