Oct. 22, 2007: Mortgage chatter with the 10-yr Treasury yield down to 4.40%

Oct. 22, 2007: Mortgage chatter with the 10-yr Treasury yield down to 4.40% Rob Chrisman

This mortgage gig just isn’t working out, so early last week I put all my money into the stock market. Oh well… Stocks took a nosedive Friday, and world-wide over the weekend, after investors starting believing that the rally might be ending, banks earnings were dismal, the economy is sliding, the dollar is crumbling, energy prices are increasing, and that the housing market, nationwide, is still in the doldrums. Traditionally, in a slow economy, rates are low to spur growth, and this might be no exception. (On the “plus side”, oil prices have dropped into the $8/barrel range.)

Fed Fund futures indicate an ease next week and over the next six months overnight rates could be 100 basis points lower. That is bound to help 30-yr mortgage rates, but remember there isn’t a 1:1 correlation. As you will see, although they trend together, there is no precise correlation: http://library.hsh.com/?row_id’

This week is pretty light for economic data. In fact, there is none today or tomorrow, so rates could reflect whatever happens in the stock market.  On Wednesday we have September’s Existing Home Sales, September’s New Home Sales & Durable Goods will be posted on Thursday, and then on Friday the University of Michigan updates their Index of Consumer Sentiment for this month. The Treasury will be auctioning off 5-year Notes, which helps gauge investor interest in fixed-income securities.

After he was defeated by the Americans in Texas, Mexican General Santa Anna was exiled to New York. Like many of his countrymen, Santa Anna chewed chicle. One day he introduced it to inventor Thomas Adams, who began experimenting with it as a substitute for rubber. Adams tried to make toys, masks, and rain boots out of chicle, but every experiment failed. Sitting in his workshop one day, tired and discouraged, he popped a piece of surplus stock into his mouth. Hmmm… In 1870, he opened the world’s first chewing gum factory making “Adams New York No. 1”. The first flavored gum was called Black Jack. Don’t say you never learn anything by reading to the bottom of this commentary!