May 1, 2009
May 1, 2009 by admin
The month of May brings renewed optimism that the economic recession is edging closer to being over. The stock market has enjoyed two straight months of increases and starts the month of May above the 8,000 point level. This month investors will continue to digest key reports such as the jobs report due out next week and follow progress in the housing markets.
The stock market appears to be taking the news of the Daimler Chrysler bankruptcy in stride. The overall effects of the bankruptcy on the economy are difficult to gauge, but government has pledged to perform the process with speed and efficiency. The major news of the day was the government’s announcement that they would be releasing results of their stress tests next week. Rumors circulated earlier this week that two of the nations largest banks (Citigroup & Bank of America) would be required to raise additional capital. These two banks have some of the most toxic assets on their balance sheets and have been heavily criticized for their lending practices. Citigroup, today moved to try and address their balance sheet with the sale of a Japanese banking unit.
The ten year bond has moved above 3%, from it low point of 2.26% earlier this year. The ten year bond is often viewed as a leading indicator for following movement with fixed mortgage rates. Fixed mortgage rates have edged up this week and are now above 5% with most major national lenders for thirty year loan terms. You can generally secure a lower rate (below 5%) if you are looking to refinance into a 15 year term or are willing to pay points to buy down the mortgage rate. The move up with mortgage rates, follows a strong run by the stock market over the past two months, however during this period mortgage rates have not moved as much as would have been anticipated, considering the large move in the mortgage sector. Fixed mortgage rates are likely to remain at lower levels, thanks to the commitment from the Federal Reserve to continue purchasing mortgage backed loan securities and keep credit flowing to banks and consumers.