Monday Market Commentary: Where do we go from here?

by Alex Stenback on September 22, 2008

Last Week:
Early in the week, mortgage rates were once again testing the lows for 2008.   The fear gripping the credit markets after the Lehman brothers bankruptcy filing (and other generalized panic in the money markets) helped push bond prices higher and interest rates lower as investors rushed to put funds in safe harbor during all of the chaos.

By the end of the week, which saw several, previously unimaginable, federal interventions in the markets, investor confidence was buoyed, stocks went on a two day romp, and mortgage rates were pushed up as money flowed out of the safe haven of bonds and back into other investments.

Rates finished the week slightly worse than where they began.

This Week:
As the Wall Street Journal notes, the world financial order has been changed. This week, Congress and the administration will work to pass what amounts to a blank check for the Treasury department to purchase bad paper from banks to prop-up and restore confidence in our financial system.

It would border on irresponsible to hazard any sort of a guess as to how the markets (mortgage or otherwise) will react to the extraordinary events last week, and the nascent bailout proposal which will be passed in some form this week – so the best bet is to gird yourself for some volatility if you are rate shopping, and hope for the best.  There is a lot at stake here.

Given the import of events at hand, the economic calendar this week will be relegated to second-tier status.  That said, Durable Goods Orders (Thu), Weekly Jobless Claims (THU), and GDP (FRI) will give a snapshot of how functional the real economy is beneath all of the financial market chaos.

It is however worth nothing that mortgage rates remain at very low levels – sub 6% for most iterations of 30 year fixed rate home loans.
This Weeks Economic Calendar [Barron's]

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