We will continue to Float into the weekend. The capital markets were on the quiet side today with not much action for most of the session. The 3% coupon finished the week at 104.69, up 12bp, so there was little change in mortgage Rates. Stocks closed lower due to no deal being struck yet and without any progress in the fiscal cliff talks. The Dow dropped 35.71 points to 13,135.01, the S&P 500 fell by 5.87 points to 1,413.58 while the Nasdaq lost 20.83 points to 2,971.33.
Our hearts and prayers go out to those families impacted by the tragic shootings in Connecticut.
There was no change in the Fed Funds Rate at the Feds meeting on Wednesday. The Fed said they will keep the Fed Funds Rate at 0.25% as long as the Unemployment Rate remains above 6.5% and will continue to purchase MBS to the tune of $40B per month and will also purchase $45B in Treasury securities when Operation Twist ends at the end of December. Bernanke said the Fed doesn’t have the tools to offset falling off the fiscal cliff and that the labor markets may be weaker than what the unemployment rate suggests.
Economic News
Earlier this week the National Federation of Independent Business (NFIB) reported that its small-business optimism index plunged in November after two major events took place…Superstorm Sandy and the National Elections. However, most small business owners cited the election as the major factor in declining optimism and expect worse business conditions in the next six months. The feeling is that Washington does not have the needs of small businesses in mind.
Housing News
In housing news, Freddie Mac released its National Housing Survey yesterday saying that home loan rates will remain near record lows for the first half of 2013, but will slowly rise in the second half although remaining below 4%. Freddie said that home prices could increase by as much as 3% nationally next yearwith some localized areas showing even larger gains.