Monday Market Commentary: Watching and Waiting

by Alex Stenback on September 29, 2008

Last Week:
Mortgage rates stayed mostly flat to slightly higher last week as the markets essentially went into a holding pattern awaiting news on a government rescue plan for the financial industry.

Meanwhile, WAMU failed, Goldman Sachs got a huge (and expensive) infusion of cash, and Morgan Stanley did the same via Mitsubishi.  All of which failed to stabilize the financial markets.

Most mortgage rates deteriorated by .125% by Friday.

This Week:
Now that there is a plan, it remains to be seen whether the plan itself (update: if it passes, which it didn’t) will be well-received by the markets. Any broad sellof in stocks, or more fear driven flight to quality by investors, could help mortgage rates improve.  Accordingly, rescue/bailout related news will dominate the markets this week.

As for the economic calendar, which still bears watching:

  • Today’s (August) Personal Consumption Expenditure index showed a consumer in retreat on the spending side, though the income pictured improved somewhat.
  • Chicago Purchasing Mangers Index (PMI) will give a read on the manufacturing sector.
  • Friday’s payroll report: Will give us unemployment and payrolls data for September – a poor showing here could help mortgage rates.

This Week’s Detailed Economic Calendar [Barrons]
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{ 3 comments… read them below or add one }

Darin September 29, 2008 at 11:58 pm

Mortgage rates just went up here in Canada by about 30 basis points today. Should be interesting to see how things pan out in the U.S. pending this bailout agreement.

richard October 2, 2008 at 2:55 pm

There’s reason to believe that mortgage rates are headed higher with or without the bailout package. Without the package, liquidity remains tight, which pushes rates higher. With the package, the dollar gets weaker in the long run (after possibly enjoying a short-term emotional bump). A weaker dollar is inflationary, so again, interest rates move higher. Today’s rate of 6.10% might prove to be a pretty good deal in retrospect.

מחשבון משכנתא October 3, 2008 at 12:15 pm

Great post!

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