Mortgage rates were under pressure this week as the 3.50% Coupon Bond closed just beneath support at the 50-Day Moving Average. The Treasury auctioned $16B in 30-Year Bonds on Thursday and the results were miserable. Gyrations in the stock market due to Eurozone concerns made for no shortage of volatility in the Bond Market. The 3.50% Coupon hit a weekly high of 102.56 and a low of 101.31 and settled at 101.59 down 16 basis points.
All things considered the Bond Market held up relatively well and headed into the weekend on a positive note. Hence, my recommendation to float, not lock rates at this time, but be prepared to move quickly.
“When The Moon Hits Your Eye Like A Big Pizza Pie That’s A Bailout”
Italy’s problems are not as dire as Greece, but they are a larger country and the seventh largest economy in the world. Their debt crisis will be much harder to contain. Italy’s 2, 5 and 10-year Notes were Yielding 7% at their peak this week. A dangerous record high. Yields have risen because the concern is Italy won’t get out of this mess without international assistance. Slimy Silvio Berlusconi looks to be stepping down and the country is looking to form a new government around Mario Monti the European Unio Competition Commissioner. This is a positive as it demonstrates Italy’s understanding that they must move quickly to save their economy.
Hopefully, our elected officials and the Fed are learning something from this. Like, STOP SPENDING MONEY WE DON”T HAVE!
Economic News
Initial Jobless Claims were reported at 390,000, better than expectations and below the important psycological 400,000 number.
Consumer Sentiment Better than expected in September, Reuters/U of Michigan index at 64.2.