Aaron Abed

Rate Lock Advisory - Thursday Oct. 9th

Thursday's bond market has opened down sharply despite a lackluster opening in stocks. The stock markets are mixed with the Dow down 16 points and the Nasdaq up 20 points. The bond market is currently down 33/32, which will likely push this morning's mortgage rates higher by approximately .375 - .500 of a discount point.

The markets still seem to be lost and unable to gain and solid traction. I am surprised that bonds are taking as much of a beating today as they are, especially with no solid gains in stocks. However, this could mean some traders feel the bottom is near for the stock markets and that funds are likely to shift back into stocks very soon. Accordingly, we may want to consider locking a rate is still floating and if closing in the immediate future.

There was no monthly or quarterly economic news released today. The only data posted was weekly unemployment figures from the Labor Department. They reported that 478,000 new claims for benefits were filed last week. This was a decline from the previous week's 498,000 claims but was slightly higher than forecasts. But, since this data is not considered to be of high importance since it tracks only a week's worth of claims, it has not been able to help bonds this morning.

August's Goods and Services Trade Balance will be released early tomorrow, but is not likely to cause much of a change in mortgage pricing. It will give us the size of the U.S. trade deficit, but usually does not lead to significant movement in bond prices or mortgage rates. It is expected to show a $59.0 billion trade deficit.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Wednesday's bond market has opened in negative territory again, following the path of stocks and other markets despite the Fed rate cut news. The stock markets are showing another round of volatility this morning with the Dow down 60 points and the Nasdaq up 10 points but both well off earlier highs. The bond market is currently down 18/32, which will likely push this morning's mortgage rates higher by approximately .250 of a discount point.

In a surprise move, the Fed announced an emergency rate cut of a half point to the benchmark Fed Funds rate. This was coordinated with several other international central banks in an effort to spur global economic activity. The markets initially took this as very good news, hence the strong opening in stocks. However, it was short-lived as skepticism about it being enough to fix the crisis rose. The bond market is suffering today, but as previously mentioned, I believe there is still more room for stocks to fall befo re bottoming out. This could mean bonds become the preferred investment and lead to lower mortgage rates in the immediate future.

Yesterday's release of the FOMC minutes and words by Fed Chairman Bernanke actually helped fuel the theory that the Fed was getting ready to lower key rates again. But, not many people expected today's move, particularly the involvement of other central banks. Still, it does signal that the Fed is in tune to the current crisis and ready to act at anytime to help slow or end the market meltdowns.

The only data scheduled for release tomorrow is weekly unemployment figures from the Labor Department. They are expected to show that 475,000 new claims were filed last week, down by 24,000 from the previous week. Unless they vary greatly from forecasts, I don't think this data will affect mortgage rates much.

The only factual economic data of the week will be posted Friday morning. August's Goods and Services Trade Balance will be released that day, but is not likely to cause much of a change in mortgage pricing. It will give us the size of the U.S. trade deficit, but usually does not lead to significant movement in bond prices or mortgage rates.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

I found this interesting and thought I would share.

Time Not Timing

Sometimes the best selling strategy for investor's may simply be - don't.

Total market days between 01/03/1978 and 12/31/2007 is 7,571 days 1

* Average Annual Total Return

Remember, it's been time invested in the market not market timing.

· Over the past three decades the market has endured, the Iranian hostage crisis, a Savings & Loan collapse, the stock market crash of 1987, the fall of the dotcom stocks, an attack on the U.S. and two wars.

· Investors often make the mistake of trying to time the market by simply selling out of it.

· Historically, some of the worst short-term market fluctuations and losses were followed by periods of substantial market recovery.

· Asset Allocation, diversification and periodic rebalancing are tools investors can use to help weather market downturns.

· Having the right investment mix doesn't mean that the value of holdings will never go down but rather helps strike the right balance between risk and reward.

· You should consider your goals, time horizon, risk tolerance, and overall financial situation when making an investment or asset allocation decision.

1. Source: Ned Davis Research

Past performance is no guarantee of future results. Asset allocation and diversification do not ensure a profit or guarantee against loss. Investing involves risks, including the loss of principal invested.

The Standard & Poor's (S&P) 500 Index tracks the performance of 500 widely held, large-capitalization U.S. stocks. Unlike mutual funds, indices are not managed and do not incur fees or expenses. It is not possible to invest directly in an index.

Article Provided by:

Daniel R. Stella, CFP®, ChFC

CERTIFIED FINANCIAL PLANNER^TM professional Senior Financial Advisor An Ameriprise Platinum Financial Services practice
Ameriprise Financial Services, Inc.
1907 Wayzata Blvd. Suite 350 Wayzata, MN 55391
Office: 952.449.6683 | Fax: 952.473.7062 Dan.R.Stella@ampf.com ameriprise.com CA Insurance License #0E64467

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Ameriprise Financial Services, Inc. offers financial advisory services, investments, insurance and annuity products. RiverSource® products are offered by affiliates of Ameriprise Financial Services, Inc., Member FINRA and SIPC.

Tuesday's bond market has opened in negative territory as the volatility in the stock markets continue. After opening in positive territory, the Dow and Nasdaq have fallen into negative ground. The Dow is currently down 60 points while the Nasdaq has lost 20 points. The bond market is currently down 15/32, but I am not expecting to see much of a change in this morning's mortgage rates.

If the major stock indexes continue to flip flop between positive and negative ground, we will likely see bonds and mortgage rates fluctuate also. Until the markets stabilize, it will be difficult to predict movement in mortgage pricing. However, I still believe that there is more room for stocks to fall, which would likely improve bonds and lower mortgage rates. In fact, I would not be surprised to see the 10,000 Dow benchmark be a ceiling for the immediate future. Accordingly, I am cautiously holding the float recommendations for the time being.

The first news of the week comes this afternoon when the Fed will release the minutes to the last FOMC meeting. These may be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over inflation and the Fed's next move. If the Fed members were concerned about inflationary pressures, we may see the bond market move lower and mortgage rates higher tomorrow afternoon. However, if they indicate that inflation is easing and that a rate increase is not likely in the coming months, we should see the bond market rise and mortgage rates drop during afternoon trading.

The only factual economic data of the week will be posted Friday morning. August's Goods and Services Trade Balance will be released that day, but is not likely to cause much of a change in mortgage pricing. It will give us the size of the U.S. trade deficit, but usually does not lead to significant movement in bond prices or mortgage rates.

If I were consider ing financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Monday's bond market has opened up sharply after this morning's stock markets are selling off again. The Dow is currently down 450 points while the Nasdaq has 100 points. The bond market is currently up 29/32, which will likely improve this morning's mortgage rates by approximately .375 of a discount point.

This morning's stock losses has pushed the Dow below the 10,000 mark for the first time since late October 2004. I appears that this trend may continue, at least for the short-term and should benefit bonds as investors seek safe-haven. Accordingly, I am shifting to a float recommendation across the board. This may change back to lock at any time, but as long as stock are moving lower we should see mortgage rates follow suit.

This week brings us only one monthly economic report for the markets to digest and it is not considered to be of high importance. This means that the week will be left mostly up to the stock markets and other influences since there is a lack of factual data for bonds to trade on. In addition to the one report, we will also get the minutes from the last FOMC meeting that can also cause movement in rates if it reveals any surprises.

The first news of the week comes tomorrow afternoon when the Fed will release the minutes to the last FOMC meeting. These may be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over inflation and the Fed's next move. If the Fed members were concerned about inflationary pressures, we may see the bond market move lower and mortgage rates higher tomorrow afternoon. However, if they indicate that inflation is easing and that a rate increase is not likely in the coming months, we should see the bond market rise and mortgage rates drop during afternoon trading.

If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.