Two Minutes with Todd - 10.13.08. Another week of excitement...

Hi Team,

First I want to welcome all of my new subscribers and to thank everyone who has referred new viewers and new clients this week. I truly appreciate it.

Last week was a dismal week for the financial markets. Normally when we see a big sell off in stocks, bonds will benefit. Last week the sellers sold their mortgage bonds as well…pushing fixed rates up almost .5% by weeks end. It was a quiet week from an economic report perspective, so as I predicted the financial markets responded to the emotion and fear of the historic government bailout.

Now into the usual summary for the week: The Freddie Mac Primary Mortgage Market Survey for last week was 5.94% with .6% Fees/Points for a 30 year fixed rate loan (down from 6.10%). The 15 year fixed rate was 5.63% with .6% Fees/Points (down from 5.77%). NOTE: after Freddie released this report mortgage bonds had two horrible (very horrible) days where we saw rates go higher. If Friday’s rates hold this week we will see the average up at least .25% or more next week.

What will move bonds this week? People and where they decide to place their money this week. The equities market is seeing a great day (so far). The beg question will be how the mortgage bond market reacts tomorrow. Will people be buying mortgage bonds again or will they keep their “safe” money on the sidelines or will they be tempted to throw it in the stock market?

The "high impact" reports this week that will move bonds will be Wednesday’s release of the Retail Sales Numbers. This measures consumer spending and will be watched closely both with and without auto sales (auto sales have been terrible!). On Thursday we will have the Philadelphia Fed Index and Producer Price Index (PPI) readings. This will give us an indication of manufacturing and of inflationary pressures. As you know, inflation is the arch-nemesis of mortgage rates. That said, the market is still reacting to fear and emotion more so than the fundamentals. The one thing for certain is that it will be interesting week!

As always I'm here for questions, comments, and concerns. Have a great week. Todd