Some recovery today…gold hits $1000/ounce so inflation "expectations" are alive.
Have you metChad…lately?
FNMA 4.5% : recovered 16 bps today after being up for most of the day. Weak stock market usually spells investment for mortgage backed securities…but not lately.
Spending report (put out Thursdays) showing NY Fed bought $19.9B of Mortgage Backed Securities between Feb. 12 and Feb. 18. Year-to-date the feds have purchased about $135Billion dollars worth of mortgage backed securities. Remember: the plan was to purchase $500 Billion worth of MBS in the first 6 months of this year to "artificially" create a marketplace that would support lower rates. The feds ARE purchasing "ASSETS" in the form of mortgage backed securities…which WILL post a return on their investment over time. With the added "demand" for the security: mortgage rates improve.
DOW: Off 100 points and at levels we haven't seen in years…Yikes. There are "bargains" to be had though. One analyst pointed out that Bank of America stock was "the best deal EVER on the New York Stock Exchange." Remember that eventually the stock of well diversified and conservative institutions will MOST likely "come back" from the dismal dollar amounts they are trading for lately. Note here: it has been interesting to see what has been happening to financial stocks as rumors of "nationalizing" banks continue to circulate.
DJIA 7,365.67 -100.28 NASDAQ 1,441.23 -1.59 SP500 770.05 -8.89
What is it? Consumer Price Index (CPI): This is a look at a "fixed basket" of goods/services…and measures the changes in "prices" paid by consumers. There are nearly 200 categories looked at so we get a pretty broad perspective… Things we wouldn't really think of like increases/decreases in "user fees" and even "taxes" associated with goods or services are measured as well. Because it looks at the changes in pricing for the same set of goods/services…we get a feel for how fast "inflation" is happening.
Because "food" and "energy" cost can vary WEEK to WEEK…and sometimes day to day…analysts remove those items from the CPI to also report the "CORE CPI" which is a more focused look at "TRUE" inflation…supposedly.
The "CORE" CPI released today suggested "year over year" inflation (rolling 12 month average) is at about 1.7%. Inflation generally comes in at the 3-4% range so that is low.
GOLD! Gold hit $1000/ounce today…yikes. Part of that is due to increased "demand" as investors seek a "safe haven" from expected "hyper-inflation" due to government overspending among other factors. Remember: when money is simply "printed" and put out into the economy…it "waters down" the perceived "value" of the rest of the "money" that is already circulating. When ANYTHING becomes increasingly easy to get a hold of: it tends to lose value. There it is: Supply and Demand.
Sherrie Kitto! has shared a great flyer with me that I can email you for your review. It has much of the same information that I shared earlier this week but in a different format. Thanks Sherri!
Have a great Weekend! Please don't hesitate to take advantage of my website: www.metchad.com for new loan applications, calculators or questions and answers.
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Chad Schauers
Have you metChad?
MetLife Home Loans
406.522.0922
406.522.0924 (fax)
1924 W. Stevens, Ste. 202
Bozeman, MT 59718
Cell: 406 799 8613
ccschauers@metlifehomeloans.com
