James Bowen

I know, I know, I didn't blog yesterday. I guess I was in one of those moods where the market looked so horrible I really didn't have the words to describe it. Today looks no better, but....I can't leave my faithful blog readers in the dark for 2 business days!!

No real answers on the Fed bailout proposal came out today and that has kept investor concerns that the "big bailout" wasn't really necessary in play in a big way. Congress has to act quickly (could be difficult for them) if the market questions are to be answered and some positive direction gained.Other news adding to market woes focuses on a record year over year drop in Home prices and another consecutive monthly drop from June to July. August data does not suggest anything different.

We are seeing signs that there could be a glimpse of the sun coming. Fannie and Freddie (or US Mortgage Co 1 and 2) have again hinted that there will be no choice but to loosen some the NOOSE TIGHTENING (or guideline restrictions) that has occurred since the big bust.

When you look at current National Average Mortgage rates for 30 yr terms, you are seeing roughly 6.25% which is up almost .375% from a week ago. BUT MY LENDER WITH THE LOWEST RATES IS OFFERING A 5.875% PAR RATE TODAY,SO RATES ARE STILL BELOW 6%.

THIS IS MY OPINION ONLY AND NOT THAT OF EAGLE NATIONAL BANK. ALWAYS CHECK WITH YOUR MORTGAGE PROFESSIONAL REGARDING YOUR TRANSACTION

So, now the news on the street is that the government is to form "a home for bad debt". Everything soared after this rumor hit the wires. This move would "clean the slates" for BANK BOOKS that are a deep shade of red these days. No one really knows exactly how this would affect each of us . Are we now going to be the owners of a multibillion dollar LOSS HAVEN?

Anyway, investors sure did react quickly after this came out. It seems as though all sectors benefited as well as BONDS. However, there is evidence that LONG term bonds (IE 10 yr note) will fall in the wake of this news. Yield closed today at 3.44% up slightly from Wednesday's close at 3.42%. I am reading news that is suggesting post close activity is driving yield up closer to 3.53% range, so it is a safe bet that rates will reflect this by the morning.

THIS IS MY OPINION ONLY AND NOT THAT OF EAGLE NATIONAL BANK. ALWAYS CHECK WITH YOUR MORTGAGE PROFESSIONAL REGARDING YOUR TRANSACTION.

Wow!! The stock market is down close to 10% in the last few days. After some "phantom" optimism yesterday helped the DOW gain back some of the prior days 500+ point hit, it was all eaten away again by the taxpayer acquisition of AIG. There really appears to be no good news on the economic front. Doubt looms large that the Federal Government can really keep the American Banking System from further collapse. The DOW now sits at 10,609, 80 points away from the 52 week low.Today's loss "on paper" was reported at $700 billion, so I guess the Government's 85 BILLION buyout dollars was small in comparison. Look for Washington Mutual's fate to be the next "sector shaker".

So where is the silver lining? BONDS ROSE to "PRE AIG" announcement levels. Yield was up and down today, but settled at 3.41, down .08 from last night's close. I still think there is further improvement in rates to be seen over the next few weeks. BUT 30 YEAR RATES ARE STILL at 5.5% and 15 year rates today were at 5.375%.

THIS IS MY OPINION ONLY AND NOT THAT OF EAGLE NATIONAL BANK. ALWAYS CHECK WITH YOUR MORTGAGE PROFESSIONAL REGARDING YOUR OWN TRANSACTION

After preaching no tax dollars to bailout AIG, the FED flipped today and pumped 85 BILLION into it and now owns a position in the company at 80%. In another Fed moment today, the FOMC kept the key bank rate at 2% and therefore prime remains at 5%. This was contrary to investors hopes after BONDS had pretty much priced a rate reduction into yesterdays big rally. The Fed did hint that it would act if financial woes continue. Other good news out that consumer prices dropped for the first time in 2 years (primarily due to oil) helped stocks regain some of yesterdays 500 point loss. As a result of stock gains, bonds had a bit of trouble after the Fed decisions today. There was slight pricing adjustment but nothing that really had any significant impact.

Stay tuned to what should be a pretty interesting week with lots of earnings news. There could be daily swings so act accordingly.

THIS IS MY OPINION ONLY AND NOT THAT OF EAGLE NATIONAL BANK. ALWAYS CONSULT WITH YOUR MORTGAGE PROFESSIONAL REGARDING YOUR TRANSACTION.

I'm sure you've all read or watched news reports about the weekend activities affecting WALL ST. Lehman Bros. has officially filed for Chapter 11 bankruptcy protection and Bank Of America has structured a purchase of Merrill Lynch. What this action has done is to put the possibility of another FED rate cut back in play when it meets tomorrow. Prime rate is now at 5% and the key bank to bank interest rate is at 2%, both lowest in several years. There are murmurs out there that the FED may feel the need to once again lower the key rate, some say by at least 1/4 pt and others say maybe a more aggressive cut by 1/2 pt. Prime would also adjust by the same increment. Oil has made a significant pull back in the wake of all this financial turmoil and is now hovering around $95/BL, a 35+% drop from highs just a few months go. With the Financial sector demise, comes strong gains in Treasury investments as the 10 Year TNOTE yield has dropped sharply, now near 3.52% after Friday's close at 3.73%. The 52 week low of 3.28% is in sight, as the yield has dropped over 2/10ths since Friday. Rates are sure to change at some point this afternoon as the market struggles to fully comprehend all this news and the possible Fed action coming tomorrow.

It certainly is tough to watch the devaluation of the market and other news today that industrial production output dropped much more than expected has helped to fuel the retreat from stocks today. I have heard reports that 90% of American financial deposit holders do have sufficient liquidity to cover their deposits and I do hope that there won't be a "run on banks" in the upcoming weeks. There must be a light at the end of the tunnel somewhere ahead!

THIS IS MY OPINION ONLY AND NOT THAT OF EAGLE NATIONAL BANK. ALWAYS CHECK WITH YOUR MORTGAGE PROFESSIONAL REGARDING YOUR OWN TRANSACTION