October 28, 2009
October 28, 2009 by admin
The stock market is losing ground fast trying to close out the month of October on a positive note. The equity markets have come under strain from a number of economic reports over the last week that show continued signs of weakness remain in the economy, despite the DOW rallying past the 10,000 level earlier this month. The consumer confidence report released on Tuesday was much lower than most were expecting, considering the positive news that is being trumpeted from the FOMC and Wall Street. Today, a report covering new home sales for the month of September sent a clear message to the market and government for the current state of the real estate market and the potential for a potential housing slump in the near future. Today’s report showed a decline in new home sales of almost four percent last month, much lower than experts were predicting. The report provides further evidence that the end to the real estate tax rebates could dramatically impact home sales into next year.
The market continues to come back full circle as it relates to the state of the economy. There is a growing divide between Main Street and Wall Street, as evidence continues to mount that the lack of job growth and creation are likely to be the economies Achilles heal. The October jobs report, due to be released next week could help to pull the market out of the downward spiral, or set the ground work for a large sell off.
The dismal news from the equity markets have provided a bit of relief for mortgage rates. Interest rates have been steadily moving up for the month, driven by inflationary pressure from higher oil prices and the equity market rally. Yields on the ten year Treasury bond have dropped nearly ten basis points this week. The ten year bond closed at 3.41% on Wednesday, moving rates on thirty year fixed rate loans closer to 5.125-5.25% with most national mortgage lenders. The recent upward movement with interest rates has begun to carry over to lenders, who have reported a sharp pullback with mortgage applications over the last two weeks. Expect the trend of refinance activity to lighten in the near term, with a strong possibility of a surge in home purchase applications over the next two weeks as borrowers race to close prior to the end of November. The immediate prospects for the mortgage rates remain relatively stable. There is not likely to be a significant move up or down until the jobs report for October is released, which could push rates above or below their thirty day moving averages.