March 10, 2010
March 10, 2010 by admin
The stock market has been trading a bit sideways following last weeks surge after the non farm payroll report. The stock market has struggled to rally the last two days, but it appears more likely investors have gained a new confidence in the health of the economy and the likelyhood that the economy will begin to grow itself out of the recession as the years moves along. Mortgage rates remained relatively unchanged over the past two weeks, despite a nice rally in equities. Yields on the ten year treasury bond remain around the 3.7% range and have stayed in a steady trading pattern for the past month or so. Long term fixed mortgage rates have moved up slightly over this period of time, and thirty year home loan rates are now just above the five percent mark. Shorter term fifteen year loans are still comfortably in the mid four percent range, where they have been for the better part of the past twelve months.
The stock market has benefitted from a growing belief that the governments reform of the financial markets may not be able to pass a divided congress. There is now a growing belief that the proposed Volcker rule will face an uphill battle towards approval as concerns over how to push through this legislation have emerged. Despite an angry and upset voice from Main Street America over the lack of regulation that caused the financial meltdown and the subsequent failure for Congress to implement reforms, there appears to be a strong divide in Congress with how to appropriately pull back on the reigns given to the banking market with the elimination of the Glass Steagal act. Financial stocks have enjoyed a nice rally based on the belief that large banks (Citigroup, JP Morgan, Bank of America) may not be forced to break up and sell of assets to conform to the new regulations proposed by President Obama.
International markets continue to become a larger influence on the US stock market. China has been a key contributor to the emerging market headlines as growth appears to again be gaining some momentum. There is also a renewed confidence that Greece may have put its financial crisis behind itself. The stronger the International markets become, the greater influence they will have on driving up the US Stock market, which could work to pushing up bond yields and long term mortgages rates at some point over the next 6-12 months.