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Atlanta, GA Market Week in Review - September 18-24, 2011
The week was relatively light of economic data. As last week evidenced, more has been driving the market that domestic data alone. The debt issues of Europe and the potential implications of a default of Greece has been the primary focus of the global market.
On Tuesday, housing starts came in at 571,000. This was much lower than the 590,000 that had been predicted.
Wednesday morning saw Existing Home Sales rise 7.7% in August. The actual was 5.03 million. This is more than the prediction of 4.7 million. All eyes were on the 2:15 pm EST Federal Open Market Committee statement on economic policy. Investor speculation was that the Fed was going to introduce Operation Twist. This plan is where it sells short term assets and uses those profits to buy longer term assets.
Treasuries were driven to unrepresented lows on Thursday after the Fed's announcement on Wednesday. In order to stimulate the financial markets, the Fed will initiate a program of buying $400 billion of longer term securities up to 30 years. They will use the profits made from selling shorter term securities.
Investors were surprised by the Fed’s desire to re-enter the mortgage backed security market (MBS). They will be buying the lower ... more
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