January 5, 2010
January 5, 2010 by admin
The stock market experienced a minor selloff on Tuesday, the second day of trading in the New Year. January could be a wildcard for the market to springboard ahead for the balance of the year or fear of growth could return setting the market up for a roller coaster ride. Mortgage loan rates have been moving up, and have found little resistance in January to slow down. Yields on the closely followed Ten Year Treasury remain above their sixty day moving average and could approach the four percent level with a strong Non Farm payroll report due out this Friday. Long term fixed mortgage rates remain well above five percent for thirty year loan terms, fifteen year loan terms are hovering in the high four percent range with most national mortgage lenders this week. The ADP private sector payroll report due out on Wednesday will also have an impact on setting the stages for a rally past the 11,000 mark or continued uncertainty in the markets.
Today, the markets looked to extend some momentum from a sharp rally on Monday, but the real estate industry delivered a strong dose of uncertainty with the release of the pending home sales report which dipped over fifteen percent in the month of Decmeber. Home sales remain a large concern for the overall market rebound, and one thing is very certain the market is very much relying on government subsidies for the foreseeable future. The housing market has benefitted from the government tax credits which were extended until the end of April and the low mortgage rates, thanks in large part to the FOMC commitment to purchase mortgage backed bonds. Its reasonable to assume home sales to rebound over the next few months as buyers again will be pressed to lock in contracts or risk losing out on tax rebates up to $8,000. The long term housing prospects remain a larger concern as its not clear when the market will be able to stand on its own, especially as home foreclosures continue to drag down home values and add unnecessary inventory.