Happy Saturday Investors, have a quick update to keep you up to speed on where we are.
Bonds
This week, bonds took a bit of a beating, largely due to events overseas, and even internal info coming out of the economic sector back here in the States. First off, Greece is adamant about their claims of having reached an agreement with the Euro Nations on their ‘bailout’. It appears that this agreement should be in place by the end of the day, Monday the 20th. While I’m still skeptical, it appears that this might actually happen this time — no, really. If that’s the case, expect a little flurry of investors to start investing some capital into stocks, and thus liquidating some of their safer assets like bonds and mortgage backed securities. This could put a little pressure on the price of bonds and thus raise rates slightly.
At Home
The news on the home front was positive and for the most part in line with the numbers expected. There was a .9% rise in gasoline prices here in the states for January that contributed to pushing the Consumer Price Index to it’s highest level in 4 months. If you take out the more volatile food and energy and look at the core rate of inflation, it rose in line with the experts expectations. One thing definitely worth noting is the core rate of inflation has climbed over the past 12 months, signaling that the rate of inflation may be waking from it’s slumber. Remember, Big Ben has been desperately anticipating inflation to increase, so he may finally get his wish. It is still way too early to tell. This is important to note though, as it may cause the Fed to hold off on moving forward with Quantitative Easing part III, or as we’ll title it QE III — the Fed’s direct purchase of the longer term bonds and mortgage backed securities. If inflation is starting to increase, and it is consistently increasing, there will be no need to enact such a measure.
On to next week. It would be a shortened week for investors at the Wall, starting with Tuesday Wednesday and Thursday, the Fed will be looking to sell off $99 billion in 2, 5 and 7 year notes. If the auctions go well, expect mortgage rates to remain steady, whereby poorly bid auctions could send rates upwards.
We will also get January’s report for existing home sales Wednesday, and on Friday the government will release data for new home sales.
Current Rates:
30-YR. FIXED RATE FOR SFR WITH 20% DOWN WILL GET YOU 5.125%
30-YR. FIXED RATE FOR 2-4 UNITS WITH 25% DOWN WILL GET YOU 4.875 – 5.0%
Everyone have a safe and enjoyable 3-day weekend for those lucky enough to have Monday off.
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