Marty Sievers, CMPS, Senior Loan Officer
Arrowhead Home Loans, Inc.
marty@arrowheadhomeloans.com
909-709-7318
There are no economic reports scheduled for release today. Stocks are presently trading slightly lower, which normally might push some money over into Bonds - but for now, Bonds are relatively flat after pulling back from a long-term ceiling of resistance at multi-year highs.
Last night, San Francisco Fed President Janet Yellen stated she is seeing a larger than expected economic slowdown take place since the last Fed meeting. Yellen is the third Fed official in the past week to suggest additional interest rate cuts might be required, in order for the economy to avoid a recession. Although Yellen is not currently a voting Fed member, she is highly regarded and influential, so her words will carry some weight with the voting members. Another cut on December 11th looks likely - and as we've been saying, the biggest question is the size of that anticipated cut. This Friday's important Jobs Report will probably give some clues. If the Jobs Report meets or comes in below current expectations of 70,000, we may see a .50% cut by the Fed. And that would not likely be well received by the Bond market, as a Fed Rate cut will spur additional spending by businesses and consumers alike, therefore driving inflation into the economy.
Bonds are still riding the "Up Escalator" higher, which means over the long term, pricing may continue to improve. However, in the short term, yesterday's pullback from long-term ceilings of resistance at multi-year highs could lead to some further selling pressure on Bonds. Additionally, the Bond has also pulled away from the 25-day Moving Average of late, which makes prices vulnerable to the "Leash Effect", meaning that the Bond could be pulled lower back down towards the 25-day Moving Average ... just like a dog on a leash that has strayed too far from its owner. You can clearly see this by looking at the Bond Page with the 25-day Moving Average displayed. Once Bond prices drift away from the 25-day MA, it often gets reined back in by this "leash effect".
For all your Mortgage Related Needs, Please Contact me at Arrowhead Home Loans, Inc.
Marty Sievers
Information published by The Mortgage Market Guide
Comments