Week In Review December 1-5, 2008

Another wild week in the U.S. economy.

Friday capped the week off with the DOW closing in the green up 259.18 pts (positive note), although the day started out negative with job losses that mirrored 1974 numbers, and more of the same old bleak news in regards to mortgage delinquencies and foreclosures.  MBS end the day down -38bp which could be a reflection of the fact that even with Bonds and Notes positioned as the haven of  safety and solid place to park money.  The return and yields have been driven down to the point of minimal ROI.  This is a textbook example of Monetary Policy; drive rates low, increased borrowing stimulates the economy with capital. Consumers spend, driving profits and production higher for business. Businesses borrow to grow and expand, thus increase employment.  Investors find higher returns in equities vs. bond market, thus pushing the stock market higher.  If you follow this theory, now is the time to start investing in the stock market.  The only issue with this textbook example of Monetary Policy; it’s never had the opportunity to be tested in an economy that has endured a historical credit crunch and contract law that was throw out the window.   This should be an interesting recovery, given the U.S. consumer would normally be encouraged to go out and “borrow”, with credit guidelines as tight as whale in spandex not many individuals qualify for even the most basic credit.

On a brighter note I was quoted on Winning Workplaces Blog post “More People to Follow on Twitter”
I also joined Cramer for SEC Chairman Did you?

Week in Review.
The market started the week taking a beating:

Monday the DOW closed down 679.95 points and After the official announcement by the National Bureau of Economic Research stated that the current Recession started December 2007.

Tuesday the chatter began to hit the street, that the Fed will enter the Bond market and buy Fannie and Freddie bonds in the pragmatic fashion of lowering rates (Monetary Policy 101). (Has not come to fruition as of today)

Wednesday the noise became deafening  every nightly news covered the speculation that the Treasury is working a plan to manually lower interest rates, in an attempt to a achieve a 4.5% overall rate on a Vanilla 30 YR Fix.  Basically the Treasury would become the investor and under bid the market.

Thursday the FNMA 30 YR closed in the green today gaining 31bp for the day, the first positive day in MBS since last month (Nov, 28). The DOW gave up 251.45 points. The 10 YR and 30 YR Treasury Notes witnessed their lowest yields in 50 Yrs.

Mortgage Rates have been the prime beneficiary given the recent volatility in the Stock Market. Mortgage Interest rates are approaching 4 YR (Historical Rates).  Feel FREE to contact me for a No Obligation Mortgage Planning Consultation.

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