Mortgage Backed Securities Quote: FNMA 4.5% bond is down on the day by 31 bps and hovering in the $100.00 range. We saw a quick rally this morning followed by a session where the bond was underwater for much of the day. The reasons speculated: Beige book is showing increases in Manufacturing in most sectors. Inflation indicators are tame and retail sales and investment are UP according to numbers released this morning. There has been talk about modifying the language used by the feds stating that the fed's interest rates will "remain low for an extended period of time." Bernanke affimed this morning that there is no urgency to change that language. Naturally, one would wonder what the implications of making the assertion we will start raising interest rates soon would have. It is interesting that there is such a connection between the slightest hints given by the feds to the market at times...and at other times there doesn't seem to be.
Crude inventories report showing a decrease in supply for Crude Oil and the per barrel price went up by over two bucks. We are in the 86 dollar/barrel range for oil.
Retail sales reports are showing a positive 1.6% which was better than the estimate of a positive 1.2% and much better than last month's number: 0.5% When automobiles are taken from that number we see better than expected numbers but less than last month's figure. People bought MORE stuff...and less autos evidently.
THESE are GOOD things! Another thing reported in the beige book is the general consensus that we are to expect a "moderate recovery" over the next few quarters. Analysts expect a 3% growth rate in the GDP which is just about normal. However: Because this is such a HUGE system and many people didn't "feel" the downturn for so long, many won't feel the "up-tick" either for some time.
Hopefully soon, the "fear" will somewhat subside.
Rates still in that low 5% range and we are excited to be able to offer them. Have a great afternoon, Chad
