Special offer

Market Update 06-26-2008

By
Industry Observer with NMLS ID: 40831

US Stocks are falling like a rock as the Dow has hit its lowest point of the year, down over 250 points from yesterday's modest gains.  Mortgage Bonds are trading in the black, building on a positive finish Wednesday.   

Stocks are facing extremely high selling pressure with 29 of the 30 Dow components trading lower.  Goldman Sachs set the tone, downgrading US Brokers industry wide from attractive to neutral, while moving Citigroup to a sell rating.  GDP for the 1st quarter was revised slightly higher to 1.0% from 0.9%, but this has been offset by the accompanying upward revision for inflation from 2.1% to 2.3%.  Initial Jobless Claims came in above expectations, and show weakness in the labor market as continuing claims hit their highest level since February 2004 .  Meanwhile, Oil and Gold pricing are once again on the rise.   

Mortgage Bonds are positive for the day, responding to the Fed's decision to hold rates steady.  More importantly, the Fed statement seems to have matched expectations as they talked tough against further inflation, but are buying more time for the prior rate cuts to fully take effect.  While their statement indicates a willingness to act against inflation by raising rates, it did not indicate when such a rate increase would be necessary.   

I am recommending to float rates today, while we see just how deep the current Stock selloff goes.  Mortgage Bonds have been turned back by technical pricing resistance each of the previous 6 trading days, and today we have broken through higher than we've been in 2 weeks.  With the Stock market selloff going Transatlantic (Europe is at their lowest point since 2005) there should be a "flight to quality" of capital from Stocks to Bonds.

 Make it a great day!

Ron Brown

615 E Pioneer Ave.
Puyallup, WA 98372
(253) 520-0000

Comments (0)