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 coupons by reinvesting principal payments of their holdings from the previous quantitative easing. Interest rates were also driven lower Thursday after the downgrade of Bank of America, Wells Fargo, and Citigroup by credit ratings agency Moody’s.
Friday morning saw a retreat from the best levels of Thursday as mortgage rates rose throughout the day. The Dow Jones Industrial Average has taken a beating on this weak economic outlook. It dropped over 500 points at one point on Thursday before ending the day down just under 400 points with a close at 10,734.
Alpharetta based Kids II announced on Friday its intent to move its headquarters and corporate showroom to Buckhead. The company, which produces baby toys under the names Bright Starts, Taggies, Baby Einstein, and Baby Disney, will relocate to Buckhead's Terminus 200 office tower.
In Georgia news, Savannah based Citi Trends announced on Friday that they will elimante 40 positions in its corporate offices, distribution centers and stores. This comes after the June announcement that they will close their Savannah distribution center and eliminate 107 jobs.
With interest rates now hitting record lows, this will stimulate more refinancing. Home owners can stil ltake advantage of some refinancing programs like Fannie Mae's DU Refi Plus, Freddie Mac's Open Access, and FHA and VA's Streamline refinance.
As long as the employment situation remains bleak, many potential home buyers will continue to sit on the fence rather than purchasing. Job creation and more stability will give there buyers the encouragement that they need.
