Posts Tagged ‘Debt celing’

Market recap for week ending 03/1/2013

Posted on: March 1st, 2013 by Fred Bohman No Comments

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

This week mortgage bonds broken out of the tight range they have been trading in. On Monday we saw a sharp selloff in the stock market which drove mortgage rates down. This sell off was sparked by negative news out of Europe. The main piece of news was that the Italian elections were a mess. The outcome of the election was that the power was split between two parties with different ideas on how to deal with the financial crisis. With Italy being one of the countries that are at default risk, investors saw political uncertainty as a big negative.

After the big sell off on Monday the stock market recovered it losses the following days and on Wednesday it closed just 89 points shy of its all-time high set back in 2007. So far it has not been able to break that all time high, but the fact that we are this close to it shows that investors are confident in the economic recovery. On Tuesday and Wednesday the Federal Reserve (FED) president Ben Bernanke did his semiannual testimony in Washington. At the testimony he reassured that the Fed will continue to keep interest rates low for as long as needed and that they will give clear signals ahead of changing this policy.

Looking forward the US government will run out of money on March 27th unless the debt ceiling is raised again. As usual our two parties in Washington don’t agree on how to solve this problem.

Market recap for week ending 02/08/2013

Posted on: February 8th, 2013 by Fred Bohman No Comments

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

This week was a quite week in terms of economic reports and news out of Washington and Europe. With not much to move markets they stay relatively calm all week. The December trade deficit report came out today and was better than expected by 10 billion dollars, but it did not have much of an effect on the markets.

Looking ahead this month the focus will be on the sequester spending cuts set to kick in March 1st. They are $85B in mandatory spending cuts set up by President Obama in 2011. The point of the spending cuts is to offset the increase in the debt ceiling. As usual our two parties can’t agree on how to handle this and as we get closer to the deadline look for increased market volatility.

Market recap for week ending 01/18/2013

Posted on: January 18th, 2013 by Fred Bohman No Comments

At the time I am writing this mortgage interest rates are almost unchanged from last Friday.

During the early part of the week rates were slowly drifting lower, but yesterday they went back up. The reason for the spike yesterday was a better than expected unemployment claims report. As mentioned above even though we had a spike yesterday rates are back to where they were last week.

I don’t see rates going up much further in short term until our leaders in Washington have resolved the debt ceiling problem. On the flip side I don’t see rates going any lower with the recent good economic reports coming. Expect mortgage rates to stay in a narrow range for next few weeks.

News out of Europe has not had any large impact on our markets as investors have been focused on our domestic problems with the Fiscal Cliff and debt ceiling.

Market recap for week ending 01/11/2013

Posted on: January 11th, 2013 by Fred Bohman No Comments

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

This week kicked off earning season for US public companies. On Tuesday after the market closed companies started reporting their Q4 earnings. Reporting was mixed with some companies beating estimates and some falling short.

Congress is out until next week so this week was mainly quiet. When they return next week they will start the debate on debt ceiling which needs to be resolved by early March in order to keep the Government form running out of money. Once again the two parties are far off on how to resolve the problem and will cause market volatility until resolved.

Today we saw a small spike in rates which was caused by some of the Federal Reserve (FED) members speaking their mind on quantitative easing (QE). Some FED members issued concerns that continued QE will causes issues down the road. The FED is not going to stop QE anytime soon but any talk about stopping it tends to spook investors.

Market recap for week ending 1/04/2012

Posted on: January 4th, 2013 by Fred Bohman No Comments

At the time I am writing this mortgage interest rates are almost 1/4th of a percent higher than they were last Friday.

This was a short week again as Tuesday was New Year’s Day. Our leaders in Washington waited till the last possible minute, but were able to come to an agreement to avoid going over the Fiscal Cliff and taxes increasing for a majority of Americans.  Unfortunately the deal failed to deal with many other import issues that were on the table such as spending cuts and entitlement reform.  These issues will have to be dealt with later this year. Rates increased slightly when the deal was announced, but not as much as many expected since the deal failed to address many important issues.

Yesterday the minutes of the Federal Reserve’s(FED) last meeting was released and rocked the market. The minutes showed that there is disagreement among the FED members on when to stop quantitative easing (QE). QE is the process of artificially lowering interest rates by buying long term securities such as mortgage bonds. Most investors thought the FED would continue QE into mid-2014, but the minutes showed that some members wanted to stop at the end of 2013. Interest rates saw a big spike on the news.

Next on the table in Washington is the debt ceiling. You may remember the debt ceiling debates from last year, well the same problem is back again. Our country has once again run out of money and we are running on emergency funds. The debt ceiling sets a maximum amount of debt that we as a country allow ourselves to borrow and we have reached that limit. We can no longer borrow more money to continue spending it until the debt ceiling has been raised or we pay down some of our debt.  Since our government is currently spending a lot more than it takes in, paying down the debt is not an option. Current estimates are that the government will be completely out of money in early March unless something is done. Once again the 2 parties leading our country are disagreeing on how to solve the problem. We can expect a great deal of uncertainty and market volatility leading up to the dead line.