November 23, 2009
November 23, 2009 by admin
The stock market jumped to start a holiday shortened trading week on Monday. Equities cruised to push DOW 500 well above 1,100 and close in on 2009 highs. The market started early with a push in the value of the dollar and then gained further momentum with the release of existing home sale data for the month of October. The market has gained nearly 4,000 points since the low levels of March and it is evident that more cash is coming off of the sidelines and entering into the market. The mortgage industry is breathing another sigh of relief with the better than expected housing numbers. Most experts assumed that October and November would be strong months for home sales as the potential for the new home buyer tax credit to expire would certainly push buyers off of the fence.
The resale housing figures for October were a clear indication that buyers were compelled to take action. Combing the tax rebate and a drop in fixed mortgage rates, the market showed a ten percent increase in home sales, well above consensus expectations. The housing market could carry the momentum through the end of the year and into the first quarter of 2010. Despite the strong rally of equities in November, fixed rate home loans are still near their low levels for the year. Long term thirty year interest rates were at 5.25% or lower with most national mortgage lenders, and fifteen year terms were well below the 5% level. Mortgage rates are not likely to have significant pressure to move higher as long as the Fed commits to supporting the secondary MBS market and that is likely to be the case through early 2010.
The political landscape could be an outlying factor in the markets for the balance of 2009. Health care remains a very controversial topic and one that will continue to gather headlines and debate in all areas of the press. The potential for a reform bill to pass into law could be one of the larger unknown market variables to watch for over the next forty days. The stock market is historically challenging in the month of December as investors begin to analyze their market positions relative to tax consequences, all setting the stage for what should be an interesting balance of the year for the markets. The ten year bond closed back above 3.4% on Monday and the next major hurdle would be crossing 3.5%, the sixty day moving average which could have an impact on interest rates.