Market Forecast Week Of January 12, 2009

After an impressive first week of 2009, rates have moved up slightly to start the week higher. MBS closed relatively unchanged, although early pressure pushed prices down, putting lender in the position to increase rates by .125% and hold them there for the day. Rates are still crazy LOW!

Market moving activity doesn’t come to play until mid week, with the Consumer Price Index (CPI) holding the most weight.  It is unclear as of yet how much participation the Fed will exert in regards to their MBS buying protocol this week. If the Fed is tight on their buying activity we could see a very lethargic week in rates, check back on Friday for the week review.

Other notable news:
Friday (1/09/2009) A legislation draft from the House Financial Services Committee requiring that a minimum of $40+ billion of the remaining $350 billion TARP funds be allocated to Foreclosure Mitigation.

Bespoke Investment Group “Estimated Change in Home Prices” calculates the S&P/Case-Shiller median home price indices of 10 major cities (see chart).  According to the analysis San Francisco is expected to lose another -18% market value. This could be due to all the Option ARMs that are set adjust in 2009. With the lack of liquidity in the Jumbo market and nonexistent Limited (Stated) Doc loan programs this could send many homeowners into default. With homes going into default, foreclosures and short sells commence, thus bringing down the market/property value.

Date	ET	Economic Report	For	Estimate	Actual	Prior	Impact
Wed. January 14	08:30	Retail Sales	Dec	-1.1%		-1.8%	Moderate
Wed. January 14	08:30	Retail Sales ex-auto	Dec	-1.2%		-1.6%	HIGH
Wed. January 14	10:30	Crude Inventories	1/09	NA		6682K	Moderate
Thu. January 15	10:00	Philadelphia Fed Index	Jan	-35.0		-32.9	HIGH
Thu. January 15	08:30	Jobless Claims (Initial)	1/10	NA		467K	Moderate
Thu. January 15	08:30	Core Producer Price Index (PPI)	Dec	0.1%		0.0%	Moderate
Thu. January 15	08:30	Producer Price Index (PPI)	Dec	-1.9%		-2.2%	Moderate
Fri. January 16	08:30	Consumer Price Index (CPI)	Dec	-1.0%		-1.7%	HIGH
Fri. January 16	08:30	Core Consumer Price Index (CPI)	Dec	0.1%		0.0%	HIGH
Fri. January 16	09:15	Capacity Utilization	Dec	74.7%		75.4%	Moderate
Fri. January 16	09:15	Industrial Production	Dec	-0.8%		-0.6%	Moderate
Fri. January 16	10:00	Consumer Sentiment Index (UoM)	Jan	60.0		60.1	Moderate

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