September 15, 2009
September 15, 2009 by admin
The anniversary of the collapse of Lehman Brothers is being taken in stride by the stock market which is looking to extend its streak of positive gains for the month of September. The market sees no signs of falling into a traditional September funk as all signs for the Stock market to finish the month higher are holding firm. Investors have been forced to make decisions without the benefit of traditional corporate guidance and assurances as the month is quiet on the news front. Headlines of the day, include another report from the Federal Reserve and Ben Bernanke, indicating that the economy is turning the corner and signaling and end to the economic recession.
The testimony from the Federal Reserve is almost identical to the earlier testimony on the state of the U.S. economy. The testimony today, reflected back on the challenging economic times brought on by the fall of Lehman Brothers, and the subsequent damage that was sent through the global economic system. To date, the Federal Reserve has yet to acknowledge, allowing Lehman Brothers to collapse was a mistake. The result of the collapse of Lehman Brothers, was one of the key forces behind the collapse of the lending system and credit markets. The loss of confidence in the marketplace was seen as the driving force behind the beginning of the meltdown, which soon carried over to every area of the economy. The testimony is peculiar by the Fed in that they have failed to acknowledge the damage caused by the collapse (over three million job losses in the U.S.) and Billions of dollars in lost wealth, which likely could have been tempered with a more proactive approach to dealing with Lehman and other institutions at an earlier stage. This is not to acknowledge that the Fed was faced with a difficult challenge, as they had limited authority in their previous role, but could have been more forceful in demanding additional government interaction and oversight of the unwinding process.
The stock market, has reacted favorably to belief that the fundamentals of the global economy are steadily improving. Today, the major headlines arrived from a stronger than expected report on retail sales. For the month of August, retail sales were up by almost three percent, thanks in large part to a strong showing in the auto sector. This report, was a welcome sign to investors and consumers, as the previous month, sales were down in a surprise showing.
The net effect on the mortgage industry has been a slight pressure on the trading of bond yields. The yield on the ten year Treasury bond has moved off of its six month low in the 3.3% range, and is now at 3.43%. This upward tick in the bond market yield, has carried over to long term fixed mortgage rates which have moved up approximately .125% over the same period. Most national mortgage lenders are now offering thirty year fixed loans at 5.25% or higher without points. Rates on fifteen year fixed loans remain under five percent. September mortgage rates, remain near historic lows and consumers who are willing to pay points, may be able to negotiate a better fixed interest rate.