Daily Update on Mortgage and Financial Markets

Hello Team! Well, I am home today about to take the chance on having 5 high school kids pain my home to work off scholarship money for our Young Life trip to Malibu Camp in Canada next week. This should be interesting. I was all excited to get a better quality video today and set my digital camera up on the tripod instead of my low quality webcam only to spend an hour trying to get it to work. Needless to say, you don't get to see my ugly mug today. The Dow Jones and the rest of the stock market opened ugly on a few geo-political and global tension messes. First, Oil spiked over $5 dollars a barrel at open putting an all time high record at $147. This of course caused stocks once again to go into the red. This should have been good news for mortgage back securities and it actually was the first hour or so of trading but I think in this ugly Bear market, bond traders are tying to find a bit of silver lining in this dark cloud and are selling off bonds to capture the week long gains in mortgage backed securities. So for the day we retreated from being up 28 basis points to only 6 as I type. Part of the oil spike this morning was due to the continued tension in the Middle East with comments being made by Israel and Iran and Iran's missile testing earlier this week and to add to the fun, rebel threats in Nigeria on the oil plants as well as a planned worker strike for the oil companies in Brazil, all bad news for oil price stability. What should have been good news by the Treasury Secretary, Henry Paulson, yesterday did not sit well with traders this morning. Paulson had made the comment yesterday that Fannie Mae and Freddie Mac are important entities in our housing market going forward and that the government would step in a possibly take over if values and liquidity for both companies continued to drop. This caused a major sell off and panic this morning as traders feel if the government steps in, Fannie and Freddie would lose all value. Already this morning, both companies’ values are down 40% on the news. So interesting Friday or Frantic Friday as I feel like I am going to start calling it. Have an awesome weekend and Be Blessed as always! Travis