October 6, 2009
October 6, 2009 by admin
The stock market surged for the second straight day in early trading on Tuesday, as the market is hoping to pull itself up for the month of October. Investors are piling back into equities, following a 600 point sell off over the last three weeks. In early trading on Tuesday, stocks jumped over 100 pts, looking to post consecutive 100pt increases in the Dow for the first time in the last thirty days. The market appears to be refocusing on corporate earnings, analyst upgrades and potential policy changes that could spur additional job creation.
Mortgage rates started the day moving higher. Bond yields have moved up slightly over the last week, following the sharp drop in yields as the market rebalanced during the recent stock market sell off. Yields on the Governments Ten Year Treasury Bond, have moved up approximately ten basis points and were hovering near 3.25% on Tuesday. The upward move in yields has lifted fixed mortgage rates on thirty year loan terms back above five percent with most national mortgage lenders. Fifteen year fixed rate mortgage loans remain below five percent, and you can pay points on either loan program to bring your interest rate lower. There remains little immediate concern for a spike with mortgage rates and all indications point to long term rates remaining at or around their current levels for the balance of the month of October. Historically, October has been a bearish month for the equity markets, which tend to help keep October mortgage rates attractive.
Today, investors are clearly looking at all of the corporate headlines and a series of upgrades in the financial sector from Goldman Sachs. The market is somewhat light on news with AIG back in the news. The beleaguered insurance company could finalize a deal to sell of an Asian based insurance entity over the next two weeks, provided a bit more capital as it works to repay the government and taxpayers.
The International markets have helped to influence the U.S. stock market this week as well. News from Great Britain that home prices have increased for the third consecutive month is great news for investors who are in international real estate funds, and a good sign for the global secondary market that invests in mortgage backed bonds. The other key headline for the day is the continued drop in value of the U.S. dollar and the historic rise of gold. Gold futures have now surpassed $1035 per ounce, a historic move up considering equities have also moved higher this week.
News from Washington policymakers has also been viewed positively by the markets today. Following last weeks dismal job report, there is growing pressure that the government will need to put additional resources to work towards creating jobs. There are early indications that the government would likely look towards tax cuts or potential spending programs, but no guarantees of another round of stimulus for the economy. To date, the governments focus to emphasize infrastructure spending (roads, bridges, etc) has yet to trickle through to the balance of the economy. The government has a number of issues in focus including health card and reform of the financial system, and has yet to make good on any of the early campaign promises and is facing more and more political pressure on a daily basis from both sides of the aisle.