Today's Market News...really ain't that all new

Today's Market Commentary
The past 48 hours have been among the most confusing in years as the Fed, by delaying its announcement of its liquidity facility for 18 hours after the FOMC meeting, created wild market swings and added to concerns that they are behind the curve. Bond prices plunged on Wednesday, sending the two-year's yield up 21bp and the ten-year up 10bp, almost completely erasing Tuesday's equally sharp rally in bonds which followed the FOMC meeting. In the 24 hours following the FOMC's meeting, the two-year traversed a 35bp range, traveling a total of 55bp overall. Stocks soared initially on Wednesday, cheered on by the Fed's liquidity promise, but faded by the close and ended only slightly higher on the day.  The CEOs of FNMA and FHLMC "delivered competing words of regret for having to take painful steps to shore up their businesses," according to the Washington Post. Both predicted housing prices will fall 10% or a touch more from their peak. According to the Post, FHLMC's Chief Richard Syron said that a 30 percent decline, as one economist has said could happen, "We're all going long apples and boxes to sell them in." In addition, the Producer Price Index rose 0.4% while core PPI rose 3.2%, well above estimates. PPI has been volatile and less useful in recent years. Year-over-year, PPI is up 7.2% and core PPI is up 2.0%. Energy prices were the biggest cause of the spike, rising over 14% in November, even so, gas and oil prices are far less than Starbucks. Treasury bond prices are weak this morning as the flight-to-quality is reversing in response to the Fed's liquidity promise.

So...can you say gross?  We need to get things moving in the mortgage markets to get these rates down enough to stimulate buyers to grow and getting the real estate markets moving.  Stay tuned.