Fed Acts, Mortgage Markets React
November 4, 2010 by Dan Hartman · 3 Comments
The long-awaited Federal Reserve Open Markets Committee meeting concluded yesterday, and the worst-kept secret in financial markets was revealed. The Fed views the economy as growing insufficiently quickly to correct its biggest problem – unemployment. It’s action? Over the next 9 months, the Fed has committed to purchase $600 billion in medium term Treasury securities.
GDP Results On Target, Quantitative Easing Speculation Dominates Markets
October 29, 2010 by Dan Hartman · 2 Comments
The Commerce Department reported on growth in US GDP this morning, indicating that the economy grew at a modest pace of 2.0% in the third quarter. This matched analyst expectations prior to the report, but added more fuel to the bonfire of speculation that has erupted around next week’s Federal Reserve Open Markets Committee meeting.
GDP Growth Revised Slightly Higher, Unemployment Claims Edge Lower – Daily Mortgage Rate Update for September 30th, 2010
September 30, 2010 by Dan Hartman · 1 Comment
At last week’s Fed meeting, the Open Markets Committee announced its intention to provide more support to the economy through a channel widely referred to as “quantitative easing” if it felt that necessary. Late last week, and earlier this week, there has been substantial market chatter about this probability. Yesterday, though, the presidents of the Federal Reserve Banks of Philadelphia and Boston spoke, and their words left substantially more unclear the criteria under which the Fed might actually act.
Global Economic Weakness Comes Home; Existing Home Sales Tumble – Daily Mortgage Rate Update for August 24th, 2010
August 24, 2010 by Dan Hartman · Leave a Comment
The National Association of Realtors reported on existing home sales in July this morning, and the results were dismal. Home sales declined at a year-over-year pace of 27.2%, falling to a pace of 3.83 million units per year. While this information sounds very bad, bear in mind that the figures reported by NAR annualize a single month’s results. The housing sector has been viewed as the destroyer of the economy, and is widely seen as the sector that will lead the economy back to normalcy in the future.
Fed Makes Its Move – Daily Mortgage Rate Update for August 11th, 2010
August 10, 2010 by Dan Hartman · 2 Comments
The Federal Reserve has discovered a problem with its position. Because of abnormally low interest rates, many mortgages are getting refinanced, meaning that the Fed’s $1.25 trillion portfolio of MBS has decreased by roughly $70 billion due to early payoffs and regular principal repayments. Today, the Fed announced it would reinvest the funds coming in from those early payments to purchase US Treasury notes on the secondary market.
Why the Productivity Drop is a Good Thing – Daily Mortage Rate Update for August 10th, 2010
August 10, 2010 by Dan Hartman · Leave a Comment
I believe that the Fed’s next action will be to cut the interest it is paying to banks on their reserves to force banks to lend more. This could pump more money into the economy, and that could lead to more consumer spending, ultimately pushing towards more job creation and a positive, albeit small, level of inflation.
