FNMA 4% is about even on the day today...the threat of next week's added supply seems to temper the nervousness over the forthcoming release of "stress-test" results. Remember the feds "stress tested" 19 major banks and we are starting to get rumors from the results that are due out on May 4th. This could be a HUGE market mover so hang tight. If the banks are "adequately funded" and deemed healthy by the "stress tests" money will likely flow into the stock market and out of bonds for the time being.
Perspective: This is the time of year that corporations are reporting their profit from the first quarter...and MANY are coming in better than expected. This is normal...and money will tend to flow into stocks and away from investments like mortgage backed securities. That is why rates tend to go up in June and July every year before relaxing again in the late fall. (When money flows BACK into investments like mortgage backed securities...rates go down.)
New HOME sales report was put out today indicating that new home sales are UP quite a bit higher than expected for March. This is more evidence that things may be starting to normalize. Remember the key for investors is "expectation"...they invest with an "expectation" of what the future may hold. When we exceed expectation...this is positive for the psychology of the markets. When buyers begin to feel comfortable again, they will purchase homes. Another note: an estimated 50% of the sales in March were considered "distressed". This is where the sales price is less than what is owed, it is a bank owned property or the sellers are behind on their payments and facing possible foreclosure. What does that mean? There are some real deals out there...but also asking prices are going to be affected by this. Asking price tends to be REALLY close to the bottom line if you are a seller that just needs to get out.
Dow is up OVER 100 points on the day and has been up over 8,000 for many of the trading days this month. This is good. Ford reported a "better than expected" earnings by reporting "less than expected" losses this morning...and their stock was up 21%. Microsoft and other market leaders emerged today on positive news.
Have a great weekend and remember to call if there is anything we can do.
Have you MetChad?
www.metchad.com
406 522 0922
