May 26, 2009
May 26, 2009 by admin
The stock market surged following the Memorial Day holiday. Investors jumped back into equities following a surge in consumer confidence. The stock market rallied over 200 pts in afternoon trading as the gauge of consumer confidence marked one of its largest gains in the past thirty years.
The entire economy could get a jolt if confidence continues to improve. The country appears to be optimistic that the job markets will begin to change course, and this would be a critical move in helping to end the challenges of the past twelve months. Consumers appear more optimistic that the worst news is in the past and the stock market rally off of its low point in early March is more likely to hold moving forward.
One of the key ingredients in the countries confidence may be a sense that the real estate market could find a bottom in 2009. Historically low mortgage rates, combined with government rebates may be the catalyst to bringing buyers back into the marketplace. The addition of upbeat confidence could help to push a large percentage of buyers off of the fence. Nationally, home prices are continuing to erode. A report released today from Case Schiller indicate that home prices dipped over two percent in the month of March and are now off by close to twenty percent nationally. The decline in home prices closely follows the surge in home foreclosures and bank owned properties, which have been significantly impacted by job losses nationally. Improving confidence, may allow for the excess inventory to be purchased and a necessary step in stabilizing home values.
Mortgage rates continue their move upward. The yield on the ten year bond is now at 3.45%, up over fifty basis points since early April. Fixed mortgage rates have seen their rates increase by .25 to .375 basis points. As investors push more money into the stock market (equity positions) the bond market continues to see yields move lower, leading to higher prices with fixed bonds and mortgage rates. The market could begin to see a more significant upward movement with interest rates if the stock market begins to rally above the 9,000 point level and could come under additional pressure if oil prices continue to climb above $60 per barrel.