The FOMC- Federal Open Market Committee, met last week to consider the future direction of interest rates, and it agreed to hold its short-term rate target at 0 -- 0.25 percent, the same level it has held since last December. The Fed adjusted the language of its statement just slightly, placing just a bit more emphasis on signs of improving economic activity. This gradual shift paves the way for the eventual time when the Fed will need to raise rates to a more normal level. But for now, the Fed confirmed its position that short-term rates will remain at their exceptionally low levels "for an extended period."
The consumer is not as confident as the economist have said, "big suprise" yeah right! Consumer confidence for September was reported at 53.1, a fair amount lower than expectations at 57.0% and whispers of an even stronger reading. On this news stocks reversed lower, boosting Mortgage bonds this week.
The Case-Shiller Home Price Index showed home prices fell 13.30% year over year in July versus expectations of a 14.20% year over year decline. The report, which uses the 20 largest cities, also showed only 2 cities (Las Vegas and Seattle) with month over month declines. This news was better than expectations, but still not a good number. However, the month over month numbers appear to indicate that that the worst of the housing price declines are behind us. I am not 100% sold on this trend as I think in 2010 we will see a huge wave of foreclosures due to the fact that many homeowners are still in bad loans with no equity add in the high unemployment rate and it seems to me a bad recipe.
This friday's employment report is anticipating only 180,000 jobs lost in September. A fairly mild number compared to August and the lowest monthly totals so far this year. Probably due in part to the large losses over the year as a whole and the fact that we are entering the latter part of the year. Stay tuned for more market updates to come!
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