Mortgage News

The 30 year FNMA Mortgage Bond has dropped 219 basis points in 4 days, popping the rates up.

The Federal Reserve led a global coordinated emergency interest rate cut that included the European Central Bank, Canada, UK, Switzerland and Sweden.  The Federal Funds Rate was lowered by 50bp to 1.5%, while the discount rate was also cut by 50bp to 1.75%.  The joint effort was to ease the economic effects of the worst financial crisis since the Great Depression.  

The coordinated effort helped keep the currency markets in balance - this gave our Fed the green light to cut, without the inflationary concerns from a weaker Dollar.  Additionally, the strong Dollar is keeping oil prices in check...much different from the past string of isolated US cuts that led to a much weaker Dollar and skyrocketing oil prices.  The European Central Bank, which had turned its back on rate cuts (they actually hiked not too long ago) because of its single mandate of fighting inflation, gains cover in making the move to avert a global collapse.  Look for more cuts ahead, especially from the ECB (3.75%) and the Bank of England (4.5%), which both have room to cut rates.  Australia lowered their benchmark rate by 1 full point to 6.0%.  Iceland is seeking an emergency bailout from Russia and the Russians unveiled an aid package for their own banks.  This is truly a global credit crunch and a coordinated effort of central banks may be needed, in order to restore liquidity and confidence.

The Fed and Treasury Department announced they are developing a plan to purchase short-term commercial paper that many companies rely on to finance their day-to-day operations.  This plan would make the Fed a credit source for commercial banks, investment firms and non-financial businesses as well.  This plan will help many businesses with their short-term credit and funding needs, thus helping lift some uncertainty and restoring confidence.  

One year to the day after climbing to its peak of 14,164.53, the Dow Jones Industrial Average sank 678.91 points, its third-largest point loss on record, to finish at 8,579.19, pushing the index under the 9,000 level for the first time since August 2003.  The Dow's close ON Thursday, leaves it 5,585.34 points, or 39.4%, under its year-ago high.

The Columbus Day holiday will give us a respite as markets close early today and are closed on Monday.

Current Oil Prices –$81.60 / barrel, down $12.37 from last Friday, $23.70 in the last 2 weeks, falling from a high of $147 in July.     

US Dollar – Up against the Euro (1.3556) and down against the Yen (99.43)

Economic Report	For	Estimate	Actual	Prior
Jobless Claims (Initial)	4-Oct	475K	478K	498K
Balance of Trade	Aug	-$60.0B	-$59.1B	-$62.2B

Next Week – Busy week for reports.  Will they take a back seat to other news?  September results for - Consumer Price Index (inflation at retail), Producer Price Index (inflation at wholesale), Retail Sales, Housing Starts, Building Permits and Consumer Sentiment (University of Michigan)