Market Outlook
Wednesday, October 21, 2009 7:05 AM
Price Trend: Negative Price Volatility: High _________________________________________________________________
Current Conditions: Today’s Economic Data (PST)
FNMA 4.5 GNMA 4.5 10yr Yield
100-18 (-11) 100-23 (-12) 3.413
Fed Beige Book 11:00
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Commentary:
There is not a lot of news out this morning. The MBA reported that mortgage applications were down about 14% last week. The end of the tax credit program is being seen as the culprit for the decline. There has been a great deal of talk in Congress about extending and even expanding the program and it looks like something will get done, but probably not before the current program expires. Later today the Fed will release its Beige Book which is the central bank’s assessment of the economy. This will certainly get a good deal of attention.

Market Outlook

Thursday, October 15, 2009 7:10 AM

Price Trend: Negative

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Current Conditions:

FNMA 4.5 100-21 (-5)

GNMA 4.5 101-05 (-6)

10yr Yield 3.434

Today's Economic Data

CPI 5:30

Jobless Claims 5:30

Empire State Index 5:30

Philly Fed 7:00

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Commentary:

Bonds are down again this morning after reports were released showing core inflation a little higher than

expected and an increase in manufacturing activity in the Northeast. The CPI report indicated higher than

expected but still benign core inflation (excluding food and energy). At the same time CPI was released,

jobless claims came in lower than expected and appear to be moving toward breaking below 500k.

Rounding out the early morning data was the NY Fed index which posted its highest reading in 5 years.

These reports helped bonds continue the downward pressure that began after the release of the FOMC

minutes yesterday. The Philly Fed survey, which is another manufacturing report, conflicted with the Empire

Index and was reported below expectations. Stocks have not had much impact on bond prices this morning

even after Golman and Citi reported earnings.

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"If you're keeping it for 20 years, at some point you're going to be putting a new roof on that property. You're going to be putting in new appliances and doing some major repairs," Cain said. If you're only planning to own a property for five years, by contrast, you'll probably want to avoid making any major improvements unless you're sure you can recoup the cost with a higher sale price. with a shorter time horizon. Although your rental will almost certainly appreciate over 20 years, it could easily lose value in the next five, particularly if you're buying in an overheated market. You'll need a bigger potential annual return to make up for that risk.

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