Blog of Bonnie

Howard Vernick

DHS Mortgage Solutions

Office: 954-868-6879

Email: howard@DHS123.com

website:

Staying in touch with the Market

Sunday, January 22, 2012

This Week; after last week’s increase in rates this week has a lot of potential impact on rates. Treasury will auction $99B of notes ($35B 2 yrs on Tuesday, $35B of 5 yrs on Wednesday, and $29B of 7 yr notes on Thursday). Tuesday night the State of the Union address to Congress. Wednesday the conclusion of the FOMC meeting. Friday the first look at Q4 GDP. Mixed in all of it, a few key economic reports. Technically, the 10yr treasury has broken its key averages at 2.02%, the MBS market also has moved below its 20 day average on the price, but still is holding its longer term 40 day average.

The FOMC meeting won’t likely have any new policy implications; the Fed will continue to keep the FF rate at 0.0% to 0.25% as Bernanke indicated months ago. We are not looking for another QE from the Fed; Europe for the moment has stabilized somewhat and the US economy is likely to have grown 3.1% in Q4. Europe’s impact on US markets has lessened recently with Italy and Spain able to auction debt at better rates than two months ago. The debt problems however, are far from being over, it will continue to be a factor throughout this year and at times roil US markets. We are looking for flat markets early this week.