The Mortgage Man

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Friday October 24, 2008

Mortgage bonds move below 200 day average.

It is really amazing how much the global money markets are intertwined.  Overnight, Japan’s stock market plummeted after lower than expected earnings were reported for Samsung and Sony.  That ripple effect moved over to Britain’s markets where the economy shrank for the first time since 1992, signaling a confirmed recession.  The combination of the foreign markets having a really bad day led the Dow Futures to halt trading before the open this morning.  Halting trading on Dow Futures is extremely rare, and a sure sign of volitility.

In normal market conditions, a selloff in stocks would mean money was moving into bonds, and would typically signal a good day for mortgage rates.  Today, however, because of the continued liquidity issues with the market, the rush seems to be towards cash for safety.  Mortgage bonds moved below the 200 day moving average which is generally a sign of long term trends.  If you have an active mortgage file that has not yet been locked, it would be prudent to do so today ahead of uncertain volitility and worsening rates.

Some good news came out today.  Existing homes sales soared to a 13 month high signaling a boost in the real estate market.  And, Oil was trading as low at $64 per barrel.  This is due in large part to the strenghening dollar as compared to other global currencies.  But, when you are at the pump getting gas for $1 less than 3 months ago, few people care why, they are just glad to see it.

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