Cheerleading from Washington, but Reality is Driven by Bond Purchasers

There was pressure on bonds during the week from two fronts, but even with a bit of an unfavorable slide in MBS, Signet's 30-year residential mortgage rates stayed at 4.750% for the price of an origination and normal closing costs. Pressures came from economic news threatening some inflation and from supply and demand of bonds being issued (primarily from the US Treasury.) Here are some touch points on economic activity:

• Retail sales drew attention from the cheerleaders, but a closer look says nearly flat for 3 months and over 6% off from where we were 2 years ago.
• Treasury bond issues have increased; Feb 2010 set a record for deficit spending: over $220 B in one short month. (Trillion dollar deficits are frightening, click here for a global study showing the US is not alone down this scary path.)

What to watch for in this and coming weeks:

• Tuesday- announcement from FOMC. Remember that the Fed raised the Discount rate to 0.75% last month while keeping the Fed Funds rate at 0-0.25%. Wording of the announcement at 11:15 pdt will be important. To date they have been hinting of keeping it near zero at least into June (click here for last month's announcement.)
• Thursday/Friday will be announcements of PPI and CPI inflation indicators.
• Only 16 more days of Fed purchases of MBS. Where will rates go? Here are some views.
• One month remains to get your tax returns in (sorry!)
• Only 46 days remain (April 30) to have a binding contract in force to qualify for the Homebuyer Tax Credit. FAQ here.

We'll keep our eye out for activity that might affect real estate values and interest rates. Check out the video presentation on getting out of debt faster below. Also see Saturday's Bulletin article about how to choose a mortgage lender and please let your friends and family know that you have a trusted resource in the lending world. Make it a great week!

[originally posted March 15, 2010- for real time email of blogposts, email me at dave@signetmortgage.com]