Last week was another wild ride as we expected. Once again, on several occasions, the “mood swings” were even intraday, so I hope you were holding on throughout the week. The good news is that bonds ended the week in much better shape and rates dropped about .25%as a result.
The week started with the Fed making some unusual moves, including brokering the Bear Stearn’s deal and a cut in the discount rate. They again cut rates .75% on Tuesday, but it was slightly lower than what the markets had been expecting. Stocks, nevertheless, had their biggest rally in 5 years and bonds dropped on the day.
Other market moving news was the earnings reports of Lehman Brothers, Golman Sachs and Morgan Stanley, all beating expectations. The OFHEO also decided to lift the capital restrictions on Fannie and Freddie, allowing them to take on $200B more.
The week ahead will likely keep volatility in play as we are loaded with data. The data will cover the spectrum, from housing, overall economy and inflation. By far, the main event for the week will be Friday’s PCE report. I expect rates will be higher by the end of the week.
Here is a quick rundown on what lies ahead:
- Monday: Existing Home Sales (10:00)
- Tuesday: Consumer Confidence (10:00)
- Wednesday: Durable Goods Orders (8:30), New Home Sales (10:00), Crude Inventories (10:00)
- Thursday: Initial Jobless Claims (8:30), GDP (8:30), Chain Deflator (8:30)
- Friday: Personal Consumption Expenditures Index (PCE) (8:30), Personal Income (8:30), Personal Spending (8:30), Consumer Sentiment (10:00)
Technically speaking, bonds are still in the overbought condition and likely will need a correction this week. Bonds are trading on the high side of a wide trading range right now, so lower prices are likely in store (higher rates). Since the PCE is the Fed’s favorite gauge on inflation, a jump higher, or even continued levels above 2.0%, could send bonds lower.
On a side note, I will be on a vacation cruise this week, so I will likely not be able to comment further this week. I recommend locking in general this week. Happy Easter!!!
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Enjoy your nice get-a-way!
Who should I get in contact with about a states own laws about mortgage broker bonds and as such, how would I get a mortgage bonds form? I life in England and am considering moving to America, don’t know where yet however I was doing some general reading about housing and came across the term mortgage broker bonds and am a little confused, is it a mortgage or a loan to acquire a mortgage?
Also if I want to set up life insurance do I need insurance bonds? Or can I simply open a policy with a company? I’m a little confused by some of the jargon. I am not moving anytime soon but thought I should be aware of things I will need to understand.
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